US Senate Finance Committee Chairman Orrin Hatch (R-UT) and House Ways and Means Chairman Paul Ryan (R-WI) today sent a letter to Treasury Secretary Jack Lew asking Treasury stop work on a regulation project to implement OECD/G20 base erosion profit shifting (BEPS) guidance on country-by-country (CbC) reporting.
The taxwriting committee chairs said they are “very concerned” that Treasury added a project on CbC reporting to the IRS 2015–2016 priority guidance plan.
Hatch and Ryan said they are not convinced that Treasury has the legal authority to draft rules implementing CbC reporting and also question whether any benefits from CbC reporting regulations would be worth requiring companies to provide sensitive information to foreign governments.
The letter follows up on Ryan and Hatch’s June 9 letter, where the lawmakers asked Treasury prove in a legal memo that it has authority to write CbC regulations. In July, Hatch asked the US Government Accountability Office (GAO) to conduct an analysis of the impact of the BEPS plan on American interests.
“Rather than expend additional administrative resources on the CbC regulatory project, we encourage Treasury to focus in the near term on preparing and providing the legal memorandum and other documentation requested in our June 9 letter to you. In addition, we ask that Treasury officials consider the results of the GAO analysis of the BEPS project and recommendations before moving forward with any CbC-related guidance,” Hatch and Ryan wrote.
The lawmakers asked Treasury to submit the legal memo explaining its authority to write the tax regs by August 31.
In June, Treasury international tax counsel Danielle E. Rolfes told a tax conference that the government believes it has the authority to write tax regulations implementing the OECD-developed rules under existing statutory provisions.
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