Sam Goldfarb

For Lawmakers and IRS, Declarations of Dependence Are Long-Standing

In January, House Ways and Means Chairman Dave Camp came forward with a bold idea to change the way financial derivatives are taxed.

Under the Michigan Republican’s proposal, all derivatives used to make speculative bets would be subject to “mark to market” taxation, meaning their increase in value would be treated as ordinary income even if they weren’t sold. Meanwhile, derivatives purchased by businesses to hedge against risk would continue to be taxed as they had in the past.

Restructuring the IRS May Carry Liabilities

Congress has tried before to improve functions at the IRS, but has gotten only mixed results.

In 1998, lawmakers passed legislation signed by President Bill Clinton that significantly reorganized the agency, centralizing more of its power in Washington.

Lerner to Invoke the Fifth, Former IRS Commissioner Describes 'Dismay'

The IRS official in charge of the division accused of improperly targeting conservative groups will invoke her Fifth Amendment rights against compelled self-incrimination at a committee hearing Wednesday, a sign of concern that the political controversy is heading into the criminal arena.

Lois Lerner, the director of the IRS Exempt Organization Division, is still expected to appear at a House Oversight and Government Reform Committee hearing but will refuse to answer questions, citing the criminal investigation into IRS actions.

Shulman, IRS Officials Heading to Congressional Firing Line This Week

Current and former IRS officials will face a barrage of questions this week as they testify before Congress about the agency’s scrutiny of conservative groups applying for tax-exempt status.

Although the Ways and Means Committee subjected the outgoing leader of the IRS, Steven Miller, to intense questioning on May 17, committee hearings this week could be even more intense, as lawmakers dig deeper into the details of the controversy that has embroiled the revenue-collecting agency.

For Troubled IRS Division, Scandal Was Years in the Making
Screening guidelines were finalized more than two years after tax-exempt searches began

The breakdown in IRS management that led the agency into a scandal over the improper targeting of conservative groups began with long-standing problems at the division that oversees tax-exempt organizations, according to interviews with former IRS officials.

Tasked with regulating hundreds of thousands of nonprofit groups with a staff of about 900 people, roughly 100 of them in Washington, officials at the IRS’ Exempt Organizations Division have complained frequently about a lack of resources and their seemingly awkward position within an agency chiefly concerned with collecting revenue.

Camp, House Republicans Consider Testing Tough Politics of Tax Overhaul

As House Ways and Means Chairman Dave Camp gets closer to introducing a major rewrite of the tax code, the question of how the legislation will play politically is looming larger than ever.

The conventional wisdom has long been that a large-scale tax overhaul that scraps the current tax code for one with fewer deductions, credits and exemptions would be too controversial for any party to tackle on its own.

Republicans Consider Tying Ambitious Tax Overhaul to Debt Limit Talks

House Republicans are discussing plans to bring an overhaul of the tax code into an upcoming fight with President Barack Obama over raising the debt ceiling, but they do not see a tax rewrite as a substitute for the big spending cuts they also hope to achieve.

Michigan Republican Rep. Dave Camp, likely serving his last term as chairman of the powerful Ways and Means Committee, has expressed reservations in the past about linking a tax overhaul to a large budget agreement. He believes his committee is more likely to produce solid legislation if it is given the time and space to craft a bill on its own terms rather than a measure to be used as a bargaining chip.

History Provides Value-Added Examples

Although value-added taxes often are linked with Europe in the American imagination, the VAT is pretty much a universal phenomenon beyond U.S. borders.

“If you look at a map of all the countries in the world that have a VAT, it’s astonishing,” said Ajay Mehrotra, a professor at Indiana University’s Maurer School. “There are very few countries that don’t have a VAT. The U.S. and Greenland kind of stand out.”

Door to a Consumption Tax Remains Closed, for Now

As the economy has slumped and budget deficits have skyrocketed, lawmakers from both parties have expressed new interest in stabilizing the national debt and restructuring the tax code to make it more conducive to economic growth. That’s led some to give serious consideration to policies that were once thought unthinkable.

There is, however, something that remains missing from debates in the legislative arena.

Group Urges States to Take Lead in Offshore Tax Crackdown

A consumer advocacy group is urging states to get ahead of Congress in cracking down on offshore tax avoidance that costs states an estimated $40 billion in annual revenue.

State governments can take several steps to collect revenue from wealthy individuals and corporations, even if those actions are not matched on the federal level, the United States Public Interest Research Group says in a report released Tuesday.

Washington's Tax Compromise May Raise Reconciliation Possibility

Of all the consequences of the compromise tax package that made it into law, one that’s been overlooked is that it may be easier for Democrats to raise taxes in the future, if they can win a majority in the House while maintaining control of the Senate and the White House.

Political pundits consider it unlikely one party can take both chambers anytime soon, but Democrats are closer to claiming such control and the law (PL 112-240) likely would give them a smoother legislative path to move tax legislation because of the way it changes the baseline for measuring the impact of changes in the tax code.

House Fiscal Alternative Amendment Would Revive GOP Spending Cuts

House Republican leaders put forward a measure they’ve pushed out before, a bill to replace the sequester with new spending reductions, as a way to offset part of the cost of the fiscal deal that the Senate sent to the House early Tuesday morning.

According to lawmakers and aides, House GOP leaders were looking for 218 votes to attach the earlier measure as an amendment to the Senate bill, perhaps as soon as Tuesday evening.

For Tax Measures, Deadlines Extend Beyond Midnight

Although fiscal cliff clocks in Washington were counting down on Monday toward midnight, the tax provisions hanging in the balance face a series of deadlines over the next few days.

That’s because although major tax measures, including the 2001 and 2003 rates (PL 107-16, PL 108-27), were due to expire with the turn of the calendar, Congress could come back after the deadline passes and retroactively adjust the tax rates.

Senate Leaders Press Effort at Eleventh-Hour Tax Compromise

Congressional negotiators raced Saturday to write a compromise fiscal package that would limit the effect of tax increases due to take effect Jan. 1 while pushing many important decisions about the federal budget into the new year.

After a full day in which staffers sent papers back and forth, Senate Minority Leader Mitch McConnell of Kentucky left the Capitol shortly before 7 p.m. Saturday, telling reporters the two sides continue to try and reach a deal to avert the fiscal cliff.

Reid, McConnell Launch New Effort To Avoid Fiscal Cliff

The Senate’s top two leaders are making a last-ditch effort to avoid the across-the-board tax increases scheduled to take effect Tuesday.

After a White House meeting Friday afternoon, Majority Leader Harry Reid and Minority Leader Mitch McConnell said they would try to negotiate a bipartisan agreement by Sunday. “I’m hopeful and optimistic,” McConnell, R-Ky., said on the Senate floor.

Treasury Department Taking Action to Avoid Hitting Debt Limit

The U.S. government is approaching the limit of its borrowing authority and will begin taking “extraordinary measures” to delay a vote by Congress on increasing the debt ceiling, Treasury Secretary Timothy F. Geithner said in a letter Wednesday to congressional leaders.

Under normal circumstances, the federal government would reach its statutory debt limit on Dec. 31, Geithner said. However, the Treasury Department can take certain steps authorized by law, such as suspending investments in a federal employee retirement fund, to extend its borrowing authority for a short-term period.

Congress, Obama Return to Washington With No Clear Path to Fiscal Cliff Deal

Amid growing public pessimism that a fiscal cliff compromise is possible and uncertainty in Washington about where it would even begin, Congress is preparing to make a last attempt to act before large automatic tax increases and automatic spending cuts take effect.

Lawmakers were trickling back to Washington on Wednesday with only unsettled ideas for addressing the looming fiscal crisis after taking a break for Christmas.

Norquist Backs Boehner Tax Plan in Split With Conservative Groups

Anti-tax advocate Grover Norquist gave his approval Wednesday to the House Republicans’ “plan B” approach to allow tax rates to go up on household income above $1 million, even as other conservative groups condemned the plan and urged GOP lawmakers to vote “no.”

The message from Norquist’s organization, Americans for Tax Reform, gives some measure of political cover to lawmakers who have signed on to what the group calls its “pledge” to stand against any measure it interprets as a tax increase. Echoing statements by Boehner aides, Norquist said the measure (H J Res 66), which is scheduled for a vote Thursday, would simply prevent a scheduled tax increase from taking hold on most Americans, even though tax cuts for those beyond $1 million would expire.

Tax Politics Turns Upside Down

A Rip Van Winkle character who went to sleep three years ago and just woke up in late 2012 might hear the things Republicans have been saying about taxes recently and think the world has turned upside down.

Republicans blasting Democrats for being in the pocket of Wall Street because they want to lower the corporate tax rate? Republicans proposing to raise revenue by eliminating tax preferences for individuals and businesses?

For Corporate Tax Overhaul, Big Risks, Big Rewards

If there were any question that a top-to-bottom rewrite of the tax system was on the agenda for 2013, it was removed late Tuesday, when news leaked that the White House had offered to accelerate an overhaul of the corporate tax system as part of a larger deficit reduction agreement.

The White House proposal completed a picture on corporate taxes that has been coming into focus over the past two years as business groups have argued for changes in the structure for corporate taxes while the issue has been overshadowed by the larger attention on individual tax rates.