DEPARTMENT OF THE TREASURY WASHINGTON, D.C. March 5, 2018 Sara Kaiser Creighton Elizabeth France John E. Bies American Oversight 1030 15th Street NW, Suite B255 Washington, DC 20005 foia@americanoversight.org VIA EMAIL Re: American Oversight v. U.S. Department of the Treasury, 17-cv-2078-RBW (D.D.C.): Treasury March 5 Production Counsel: This letter describes the March 5, 2018 production from the U.S. Department of the Treasury (Treasury) in the above-referenced Freedom of Information Act litigation. Pursuant to the Court’s February 2, 2018 Order, Treasury has reviewed and processed the first 60 documents it has collected in response to American Oversight’s Congressional Communications FOIA Request, 2017-08-121, and is producing 38 documents, comprising the non-exempt, responsive portions of the records within this collection. The documents are numbered UST 000275 – 000339; portions of these materials are withheld pursuant to Exemptions 5 and 6 of the FOIA. An additional 12 documents, totaling 30 pages, are being withheld in their entirety pursuant to Exemption 5, and 10 documents are non-responsive and/or duplicative of other materials within this collection and are therefore not being produced. If you have any questions concerning this production or a related matter, please contact Rebecca Kopplin, U.S. Department of Justice, at (202) 514-3953. Sincerely, Ryan Law Office of Privacy, Transparency, and Records U.S. Department of the Treasury AMERICAN Tuesda From: "Campbell, Chris (Finance)" To: "Miller, Eli" Date: Thu, 16 Feb 2017 17:23:41 -0500 I'm rearranging my schedule to be here on Tuesday. Let's meet in the afternoon on tax reform. When is best for you guys? Chris Campbell Staff Director U.S. Senate Finance Committee 219 Dirksen Senate Office Building Washington, DC 20510 W: b(6) F: I E: chris campbell@finance.senate.gov UST 000275 TREAS-17-0313-A-000001 TO BE RESCHEDULED - Discussion re: Tax Reform - Room 3408 - Dial-Inb(6) Where: When: Until: #- Toll Free b(6) Mon Mar 06 11:30:00 2017 (America/New_York) Mon Mar 06 12:00:00 2017 (America/New_York) Organiser: Required Attendees: "Miller, Eli" <"/o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recip ients/cn=millerel i"> "Miller, Eli" "Stewart, David" "McGahn, Shannon" ski@treasury.gov> b(6) • treasury.gov> ........ . .... Optional Attendee: ..... .. .... "Angus, Barbara" 3/2/17-amh Per David UST 000276 TREAS-17-0313-A-000002 Re: Received our call "Mahan, Roger" From : To: "Kowalski, Daniel" Thu, 02 Mar 2017 19:42:47 -0500 Date : Time sheets are important -- the agencies are bean counters about you being in the office at core hours. No timesheet no paycheck. b(5) Sent from my iPhone On Mar 2, 2017, at 7:30 PM, "Daniel.Kowalski@treasury.gov" wrote : Sort of getting settled in . Still need an ID and parking pass, need to get a timesheet in-whatever that means-so need to figure out what life in the bureaucracy is. b(5) From : Mahan, Roger [mailto:Roger.Mahan@mail.house.gov ] Sent : Thursday, March 02, 2017 7:22 PM To: Kowalski, Daniel Subject: Re: Received your call Thanks. b(5) Hows it going otherwise? Getting settled in? Sent from my iPhone on Mar 2, 2011, at 7:17 PM, "DanieLKowalski@treasury .gov " wrote: Have not heard from Ben yet, but I recognize the name. This is my work email. My desk phone Someday I'll send out one of those blast emai ls, but wanted you to have it is li'ild before then. If someone asks, you can give to them as wel l. UST 000277 TREAS-17-0313-A-000003 Accepted: Discussion re: Tax Reform · - Toll Free b(6) Where: Room 3408 - Dial-In b(6) When: Mon Mar 06 11 :30:00 2017 (America/New_ York) Until: Mon Mar 06 12:00:00 2017 (America/New_ York) Organiser: Required Attendee: Optional Attendee: UST 000278 TREAS-17-0313-A-000004 Re: Tax Polic From: "Kowalski, Daniel" <"/o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cf6b4ee371 0f422fbceecb0020766838-kowalski, To: "Callas, George" Date: Sat, 04 Mar 2017 20:07:21 -0500 dan"> OK. It will likely be after 3. I'll give you an exact time no later than Tuesday. From: Callas, George Date: March 4, 2017 at 7:54:14 PM EST To: Kowalski, Daniel Subject: Re: Tax Policy I'm free until 11 :30 and then after 3. From: " Daniel. Kowalski@treasury .gov " Date: Saturday, March 4, 2017 at 4:38 PM To: George Subject: Re: Tax Policy Absolutely. From: Callas, George Date: March 4, 2017 at 4:28:38 PM EST To: Kowalski, Daniel Subject: Re: Tax Policy I'm sure I can make something work. I'd also like to loop in Barbara Angus from ways and means. Is that ok with you? On Mar 4, 2017, at 12:56 PM, "Daniel.Kowalski@treasury.gov " < Daniel.Kowalski@treasury.gov > wrote: Thanks Austin. George, I'm trying to get a group together this week. I've talked to Prater, so you may here from him as well. Would Wednesday work? Give me a call when you can at the desk number below, or my cell b(6) From: Smythe, Austin Cc: Kowalski, Daniel Subject: RE: Tax Policy > Geore/Dan : Effort to connect you two . UST 000279 TREAS-17-0313-A-000005 From: Kowalski, Dan (Budget} [mailto:Dan Kowalski@budget .senate.gov ] Sent: Thursday, March 02, 2017 10:35 AM To: Smythe, Austin Hi Austin, I moved over to Treasury yesterday. I'm working the tax reform issue out of the Secretary's office. It's a good gig, and one where I think I can make a difference, bringing some Congressional experience over to this part of the Executive Branch . I've included my Treasury email on the cc line. My phone is b(6) the email up). (but I have to set Thanks, Dan Sent from my BlackBerry 10 smartphone on the Verizon Wireless 4G LTEnetwork. UST 000280 TREAS-17-0313-A-000006 RE: Pass-throu h workin From : "Prater, Mark (Finance)" To: "Kowalsk i, Daniel" Date : Mon, 06 Mar 2017 10:42:00 -0500 Hey Dan, I talked with Barbara on Friday after we met and yesterday. She was going to check in with David Stewart on the logistics. Barbara said they may be marking up ACA repeal Wednesday, so that will put their tax team out-of-pocket. We can go Wednesday, but would want it to work for W+M. Dems will keep them in markup for a long day Wednesday. From : Daniel.Kowalski@treasury.gov [mailto:Daniel .Kowalski@treasury.gov] Sent : Monday, March 06, 2017 10:35 AM To: Prater, Mark (Finance) Subject: Pass-through working group Through Austin Symthe, I got in touch with George Callas over the weekend about scheduling a meeting for Wednesday on _...._ He is available after 3 pm, and will loop in Barbara Angus . I told Georg e you may be ge~ with him as w ell. Wou ld 4 :00 Wednesday wo rk for you and your team? If so, I will work on getting a room at that time. Thanks Dan Desk phone: Gov't cell: , UST 000281 TREAS-17-0313-A-000007 House/Senate/Treasury Meeting Where: Capitol S-124 When: Fri Mar 1O 15:00:00 2017 (America/New_ York) Until: Fri Mar 10 16:00:00 2017 (America/New_ York) Organiser: "Beaver, Sam (Finance)" Required Attendees: "Beaver, Sam (Finance)" "Dunn, Brendan (McConnell)" "Kowalski, Daniel" barbara.angus@mail.house.gov "Prater, Mark (Finance)" george.callas@mail.house.gov "Acuna, Jennifer (Finance)" "Oman, Eric (Finance)" We will be meeting to discuss options for b(5) ffi3 UST 000282 TREAS-17-0313-A-000008 Re: Meet Thursda or Frida ? From: "Callas, George" To: "Beaver, Sam (Finance)" Cc: "Angus, Barbara" , "Dunn, Brendan (McConnell)" , "Kowalski, Daniel" , "Prater, Mark (Finance)" Date: Tue, 07 Mar 2017 15:06:23 -0500 Tie a bow around it. On Mar 7, 2017, at 1:50 PM, Beaver, Sam (Finance) wrote: Correct - you should have just received a calendar S124 invite a little while ago. Friday at 3pm in Sent from my Verizon, Samsung Galaxy smartphone -------- Original message -------From: "Angus, Barbara" < Barbara.Angus@mail.house .gov > Date: 3/7/17 1 :42 PM (GMT-05:00) To: "Dunn, Brendan (McConnell)" < Brendan Dunn@mcconnell.senate .gov >, Daniel. Kowalski@treasury.gov Cc: "Beaver, Sam (Finance)" , "Prater, Mark (Finance)" < Mark Prater@finance.senate.gov >, "Callas, George" < George.Callas@mail.house .gov > Subject: RE: Meet Thursday or Friday? Just to confirm. We're at 3pm Friday, right?! Barbara M. Angus Chief Tax Counsel Committee on Ways and Means b(6) From: Dunn, Brendan (McConnell} [mailto :Brendan Sent: March 7, 2017 1:14 PM To: Daniel.Kowalski@treasury.gov Dunn@mcconnell. senate.gov ] Cc: Beaver, Sam (Finance} ; Angus, Barbara ; Prater, Mark (Finance} Subject: Re: Meet Thursday or Friday? .gov >; Done Sent from my iPhone On Mar 7, 2017, at 1:06 PM, " Daniel.Kowalski@treasury.gov wrote: " Fine with me. UST 000283 TREAS-17-0313-A-000009 From: Beaver, Sam (Finance} [mailto:Sam Beaver@finance .senate.gov ] Sent: Tuesday, March 07, 2017 12:59 PM To: Angus, Barbara ; Dunn, Brendan (McConnell} ; Prater, Mark (Finance} Cc: Kowalski, Daniel ; Callas, George Subject: RE: Meet Thursday or Friday? 3pm works for Senate Finance. If that works for others, we can get S-124. From: Angus, Barbara [mailto:Barbara.Angus@mail.house.gov ] Sent: Tuesday, March 07, 2017 12:40 PM To: Beaver, Sam (Finance} ; Dunn, Brendan (McConnell} ; Prater, Mark (Finance} Cc: Daniel.Kowalski@treasury.gov ; Callas, George Would 3 work? -------- Original Message -------Subject: RE: Meet Thursday or Friday? From: "Beaver, Sam (Finance)" Date: Mar 7, 2017, 12:27 PM To: "Dunn, Brendan (McConnell)" ,"Prater, Mark (Finance)" SFC has weekly staff meeting but we could make 2pm work. From: Dunn, Brendan (McConnell} Sent: Tuesday, March 07, 2017 12:22 PM To: Prater, Mark (Finance} Cc: Daniel .Kawa lski@treasury.gov ; Barbara .Angus@ma ii .house.gov ; George.Callas@mail.house.gov ; Beaver, Sam (Finance} Subject: Re: Meet Thursday or Friday? 2? Sent from my iPhone On Mar 7, 2017, at 12:13 PM, Prater, Mark (Finance} SFCcan make that work. From: Dan iel.Kowa lski@treasury.gov [ma ilto :Daniel .Kawa lski@treasury .gov ] Sent: Tuesday, March 07, 2017 12:12 PM UST 000284 TREAS-17-0313-A-000010 To: Dunn, Brendan (McConnell} ; Barbara .Angus@mail.house.gov ; George.Callas@mail.house.gov ; Beaver, Sam (Finance} ; Prater, Mark (Finance} Subject: RE: Meet Thursday or Friday? Nothing like a Friday afternoon with me. meeting to talk about tax policy. 4 on Friday is fine I would suggest we have it over on the hill. I would bring a couple of people from OTA as well. From: Dunn, Brendan (McConnell} [mailto:Brendan Dunn@mcconnell.senate.gov Sent: Tuesday, March 07, 2017 12:04 PM To: Kowalski, Daniel ; Barbara.Angus@mail.house.gov ; George.Callas@mail.house.gov ; Beaver, Sam (Finance} ; Prater, Mark (Finance} Subject: RE: Meet Thursday or Friday? ] We were talking Thursday. Now I think we are talking Friday. Brendan M. Dunn Policy Advisor and Counsel Office of the Senate Majority Leader b(6) (desk) (mobile) nn@mcconnell.senate.gov From: Daniel .Kawa lski@treasury .gov [ma ilto :Daniel .Kawa lski@treasury.gov ] Sent: Tuesday, March 07, 2017 12:03 PM To: Barbara .Angus@mail.house.gov ; Dunn, Brendan (McConnell} ; George.Callas@mail.house.gov ; Beaver, Sam (Finance} ; Prater, Mark (Finance} Subject: RE: Meet Thursday or Friday? I thought we were talking about Thursday. From: Angus, Barbara [mailto:Barbara.Angus@mail.house.gov ] Sent: Tuesday, March 07, 2017 11:45 AM To: 'Dunn, Brendan (McConnell}' ; Beaver, Sam (Finance} ; Prater, Mark (Finance} ; Kowalski, Daniel Subject: RE: Meet Thursday or Friday? >; Callas, That works. We're talking Friday, right? Barbara M. Angus Chief Tax Counsel Committee on Ways and Means b(6) UST 000285 TREAS-17-0313-A-000011 From: Dunn, Brendan (McConnell) [mailto:Brendan Dun n@mcconnell .senate.gov ] Sent: March 7, 2017 11:26 AM To: Callas, George ; Beaver, Sam (Finance) ; Prater, Mark (Finance) ; Daniel.Kowalski@treasury .gov; Angus, Barbara Subject: RE: Meet Thursday or Friday? 2 pm does not work. Can we do later in the afternoon? 4 pm? Brendan M. Dunn Policy Advisor and Counsel Office of the Senate Majority Leader b(6) desk) mobile) Brendan Dunn@mcconnell.senate.gov From: Callas, George [mailto:George.Callas@mail.house.gov ] Sent: Tuesday, March 07, 2017 10:11 AM To: Beaver, Sam (Finance) ; Prater, Mark (Finance) ; Daniel .Kowalski@treasury.gov ; Dunn, Brendan (McConnell) ; Angus, Barbara Subject: RE: Meet Thursday or Friday? Adding Barbara. 2pm works well for me. From: Beaver, Sam (Finance) [mailto:Sam Beaver@finance.senate.gov Sent: Tuesday, March 07, 2017 10:08 AM To: Prater, Mark (Finance) ; Daniel.Kowalski@treasury.gov ; Callas, George ; Dunn, Brendan (McConnell) Subject: RE: Meet Thursday or Friday? ] Also looping Brendan Dunn. 2pm works for Senate Finance, I can also work with our clerks to secure S-124 in the Capitol if need be. -Sam From: Prater, Mark (Finance) Sent: Tuesday, March 07, 2017 10:01 AM To: Daniel .Kowalski@treasury .gov; George.Cal las@mail .house.gov Cc: Beaver, Sam (Finance) Subject: RE: Meet Thursday or Friday? Sam can help organize on our end. From: Prater, Mark (Finance) Sent: Tuesday, March 07, 2017 9:11 AM To: Daniel.Kowalski@treasury.gov ; George.Cal las@mail .house .gov Subject: RE: Meet Thursday or Friday? UST 000286 TREAS-17-0313-A-000012 Thanks, Dan. How about 2 p.m.? Sent from my Verizon , Samsung Galaxy smartphone -------- Original message -------From: Daniel.Kowalski@treasury.gov Date: 3/6/17 5:56 PM (GMT-05:00) To: "Prater, Mark (Finance)" , George.Callas@mail.house.gov Subject: Meet Thursday or Friday? .d· [ I understand that the Ways and Means Committee is going to be marking up the Obamacare reconciliation bill on Wednesday, so I don't think we will be able to start a conversation about issues surrounding b(5) on that day like we had discussed. Wou a possibility? Right now I'm open after 10:30 am, so it's an easy day for me to meet. Friday is a little more full, but later in the afternoon would work. Ihursday be I'm happy to host at Treasury, but attendees will need to get us the name on the ID, date of birth, social security number, and citizenship of each person who comes down here 24 hours in advance of the meeting. Let's try to set a time for this. What works for you? Dan UST 000287 TREAS-17-0313-A-000013 FW: House/Senate/Treasury Meeting Where: Capitol S-124 When: Fri Mar 1O 15:00:00 2017 (America/New_ York) Until: Fri Mar 10 16:00:00 2017 (America/New_ York) Organiser: "Beaver, Sam (Finance)" Required Attendees: "Beaver, Sam (Finance)" "West, Thomas" "Mackie, James Ill" "Lim, Katherine" "Vallabhaneni, Krishna" "Berk, Ari" "Borosh, Ossie" "Prisinzano, Richard" "Dunn, Brendan (McConnell)" "Kowalski, Daniel" barbara.angus@mail.house.gov "Prater, Mark (Finance)" george.callas@mail.house.gov "Acuna, Jennifer (Finance)" "Oman, Eric (Finance)" Optional Attendee: "Muzinich, Justin" -----Original Appointment----From: Beaver, Sam (Finance) [mailto:Sam_Beaver@finance.senate.gov] Sent: Tuesday, March 07, 2017 1:26 PM To: Beaver, Sam (Finance); Dunn, Brendan (McConnell); Kowalski, Daniel; Barbara.Angus@mail.house.gov; Prater, Mark (Finance); George.Callas@mail.house.gov; Acuna, Jennifer (Finance); Oman, Eric (Finance) Subject: House/Senate/Treasury Meeting When: Friday, March 10, 2017 3:00 PM-4:00 PM (UTC-05:00) Eastern Time (US & Canada). Where: Capitol S-124 - We will be meeting to discuss options for b(5) UST 000288 TREAS-17-0313-A-000014 FW: House/Senate/Treasury Meeting Where: Capitol S-124 When: Fri Mar 1O 15:00:00 2017 (America/New_ York) Until: Fri Mar 10 16:00:00 2017 (America/New_ York) Organiser: "Beaver, Sam (Finance)" Required Attendees: "Beaver, Sam (Finance)" "Carlson, Curtis" "Dunn, Brendan (McConnell)" "Kowalski, Daniel" barbara.angus@mail.house.gov "Prater, Mark (Finance)" george.callas@mail.house.gov "Acuna, Jennifer (Finance)" "Oman, Eric (Finance)" Curtis, I sent this to several people yesterday per a list put together by Jay Mackie, but missed your name. Sorry. -----Original Appointment----From: Beaver, Sam (Finance) [mailto:Sam_Beaver@finance.senate.gov] Sent: Tuesday, March 07, 2017 1:26 PM To: Beaver, Sam (Finance); Dunn, Brendan (McConnell); Kowalski, Daniel; Barbara.Angus@mail.house.gov; Prater, Mark (Finance); George.Callas@mail.house.gov; Acuna, Jennifer (Finance); Oman, Eric (Finance) Subject: House/Senate/Treasury Meeting When: Friday, March 10, 2017 3:00 PM-4:00 PM (UTC-05:00) Eastern Time (US & Canada). Where: Capitol S-124 - We will be meeting to discuss options for b(5) UST 000289 TREAS-17-0313-A-000015 RE: House/Senate/Treasur Meetin From: "Beaver, Sam (Finance)" To: "Kowalski, Daniel" Date: Wed, 08 Mar 2017 10:40:02 -0500 Received. Might be a little tight but assuming that only a small percentage of these folks will actively be participating we should still be able to fit the main participants (yourself, Prater, Barbara, George etc} at the conference table and have everyone else sit on the surrounding sofas . I'll send this over to the Senate Appointment desk staff. -Sam From: Daniel .Kowa lski@treasury.gov [ma i lto:Da n iel.Kowa lski@treasury.gov] Sent: Wednesday, March 08, 2017 10:17 AM To: Beaver, Sam (Finance} Subject: RE: House/Senate/Treasury Meeting Sorry it's such a large list. Jay Mackie wanted 8 folks from OTA to attend and felt their presence would be useful. West, Thomas (Thomas.West@treasury.gov } Mackie, James Ill (James.Mackie@treasury.gov } Lim, Katherine (Katherine.Lim@treasury.gov } Vallabhanen i, Krishna (Krishna.Vallabhanen i@treasury.gov } Berk, Ari (Ari.Berk@treasury.gov } Carlson, Curtis (Curtis.Carlson@treasury.gov } Borosh, Ossie (Ossie.Borosh@treasury.gov >} Prisi nza no, Richa rd (Richa rd .Prisi nza no@treasury.gov } Muzinich, Justin (Justin.Muzinich@treasury.gov } Kowalski, Daniel (Daniel.Kowalski@treasury .gov } From: Beaver, Sam (Finance} [mailto:Sam Beaver@finance.senate.gov Sent: Wednesday, March 08, 2017 9:51 AM To: Kowalski, Daniel Subject : RE: House/Senate/Treasury Meeting ] Dan - when you get a chance can you send me the full names of everyone from off the Hill that will be attending on your end? We'll need to make sure their names are with the Senate Appointments desk at the North Door so they can get visitor tags when they go through security. From: Daniel .Kowa lski@treasury.gov [ma i lto:Da n iel.Kowa lski@treasury .gov] Sent: Tuesday, March 07, 2017 1:56 PM To: Beaver, Sam (Finance} Subject: RE: House/Senate/Treasury Meeting Sam, this has the meeting as showing up for today. Can you resend? -----Original Appointment----From: Beaver, Sam (Finance} [mailto :Sam Beaver@finance.senate.gov ] Sent: Tuesday, March 07, 2017 1:26 PM To: Dunn, Brendan (McConnell}; Kowalski, Daniel Cc: Barbara.Angus@mail.house.gov ; Prater, Mark (Finance}; George.Callas@mail.house.gov Subject: House/Senate/Treasury Meeting UST 000290 TREAS-17-0313-A-000016 When: Tuesday, March 07, 2017 3:00 PM-4:00 PM (UTC-05:00} Eastern Time (US & Canada}. Where: S-124 From: Dunn, Brendan (McConnell} Sent: Tuesday, March 07, 2017 1:14 PM To: Daniel.Kowalski@treasury.gov Cc: Beaver, Sam (Finance} ; Barbara.Angus@mail.house.gov Prater, Mark (Finance} ; George.Callas@mail.house.gov Subject: Re: Meet Thursday or Friday? ; Done Sent from my iPhone On Mar 7, 2017, at 1:06 PM, " Daniel.Kowalski@treasury.gov " wrote: Fine with me. From: Beaver, Sam (Finance} [mailto:Sam Beaver@finance.senate.gov ] Sent: Tuesday, March 07, 2017 12:59 PM To: Angus, Barbara ; Dunn, Brendan (McConnell} ; Prater, Mark (Finance} Cc: Kowalski, Daniel ; Callas, George Subject: RE: Meet Thursday or Friday? 3pm works for Senate Finance. If that works for others, we can get S-124. From: Angus, Barbara [mailto:Barbara.Angus@mail.house.gov ] Sent: Tuesday, March 07, 2017 12:40 PM To: Beaver, Sam (Finance} ; Dunn, Brendan (McConnell} ; Prater, Mark (Finance} Subject : RE: Meet Thursday or Friday? > Would 3 work? -------- Original Message -------Subject: RE: Meet Thursday or Friday? From: "Beaver , Sam (Finance)" Date: Mar 7, 2017, 12:27 PM To: "Dunn, Brendan (McConnell)" ,"Prater, Mark (Finance)" SFC has weekly staff meeting but we could make 2pm work. From: Dunn, Brendan (McConnell} Sent: Tuesday, March 07, 2017 12:22 PM To: Prater, Mark (Finance} Cc: Daniel .Kowalski@treasury.gov ; Barbara.Angus@mail.house.gov Beaver, Sam (Finance} Subject : Re: Meet Thursday or Friday? ; George.Callas@mail.house.gov ; UST 000291 TREAS-17-0313-A-000017 2? Sent from my iPhone On Mar 7, 2017, at 12:13 PM, Prater, Mark (Finance} wrote: SFCcan make that work. From: Daniel .Kawa lski@treasury.gov [ma i lto:Da n iel .Kawa lski@treasury.gov ] Sent: Tuesday, March 07, 2017 12:12 PM To: Dunn, Brendan (McConnell} ; Barbara.Angus@mail.house.gov ; George.Callas@mail.house.gov ; Beaver, Sam (Finance} ; Prater, Mark (Finance} meeting to talk about tax policy. 4 on Friday is fine with me. I would suggest we have it over on the hill. I would bring a couple of people from OTA as well. From: Dunn, Brendan (McConnell} [mailto:Brendan Dunn@mcconnell.senate.gov ] Sent: Tuesday, March 07, 2017 12:04 PM To: Kowalski, Daniel ; Barbara.Angus@mail.house.gov ; George.Callas@mail.house.gov ; Beaver, Sam (Finance} Subject: RE: Meet Thursday or Friday? >; Prater, We were talking Thursday. Now I think we are talking Friday. Brendan M. Dunn Policy Advisor and Counsel Office of the Senate Majority Leader b(6) (desk) (mobile) Brendan Dunn@mcconnell.senate.gov From: Daniel .Kawa lski@treasury.gov [ma i lto:Da n iel .Kawa lski@treasury.gov ] Sent: Tuesday, March 07, 2017 12:03 PM To: Barbara.Angus@mail.house.gov ; Dunn, Brendan (McConnell} ; George .Callas@mail.house.gov ; Beaver, Sam (Finance} ; Prater, Mark (Finance} Subject: RE: Meet Thursday or Friday? I thought we were talking about Thursday. From: Angus, Barbara [mailto:Barbara.Angus@mail.house.gov ] Sent: Tuesday, March 07, 2017 11:45 AM To: 'Dunn, Brendan (McConnell}' ; Callas, George ; Beaver, Sam (Finance} ; Prater, Mark (Finance} ; Kowalski, Daniel Subject: RE: Meet Thursday or Friday? That works. We're talking Friday, right? Barbara M. Angus UST 000292 TREAS-17-0313-A-000018 Chief Tax Counsel Committee on Ways and Means b(6) From: Dunn, Brendan (McConnell) [mailto:Brendan Dunn@mcconnell.senate.gov ] Sent: March 7, 2017 11:26 AM To: Callas, George ; Beaver, Sam (Finance) ; Prater, Mark (Finance) Subject: RE: Meet Thursday or Friday? 2 pm does not work. Can we do later in the afternoon? >; 4 pm? Brendan M. Dunn Policy Advisor and Counsel Office of the Senate Majority Leader b(6) (desk) (mobile) nn@mcconnell.senate.gov From: Callas, George [mailto:George.Callas@mail.house.gov ] Sent: Tuesday, March 07, 2017 10:11 AM To: Beaver, Sam (Finance) ; Prater, Mark (Finance) ; Daniel.Kowalski@treasury.gov ; Dunn, Brendan (McConnell) ; Angus, Barbara Subject: RE: Meet Thursday or Friday? Adding Barbara. 2pm works well for me. From: Beaver, Sam (Finance) [mailto:Sam Beaver@finance.senate.gov ] Sent: Tuesday, March 07, 2017 10:08 AM To: Prater, Mark (Finance) ; Daniel.Kowalski@treasury.gov George ; Dunn, Brendan (McConnell) Subject: RE: Meet Thursday or Friday? ; Callas, Also looping Brendan Dunn. 2pm works for Senate Finance, I can also work with our clerks to secure S124 in the Capitol if need be. -Sam From: Prater, Mark (Finance) Sent: Tuesday, March 07, 2017 10:01 AM To: Daniel .Kowalski@treasury .gov ; George.Callas@mail.house.gov Cc: Beaver, Sam (Finance) Subject: RE: Meet Thursday or Friday? Sam can help organize on our end. From: Prater, Mark (Finance) Sent: Tuesday, March 07, 2017 9:11 AM To: Daniel .Kowalski@treasury .gov ; George.Callas@mail.house.gov Subject: RE: Meet Thursday or Friday? Thanks, Dan. UST 000293 TREAS-17-0313-A-000019 How about 2 p.m.? Sent from my Verizon, Samsung Galaxy smartphone -------- Original message -------From: Daniel.Kowalski@treasury .gov Date: 3/6/17 5:56 PM (GMT-05:00) To: "Prater, Mark (Finance)" , George.Callas@mail.house.gov Subject: Meet Thursday or Friday? I understand that the Ways and Means Committee is going to be marking up the Obamacare reconciliation bill on Wednesday, so I don't think we will be able to start a conversation aboutlmo'IIII W o u Id T ti"u'rs"a"a'y b(5) be a possibility? Right now I'm open after 10:30 am, so it's an easy day for me to meet. Friday is a little more full, but later in the afternoon would work. I'm happy to host at Treasury, but attendees will need to get us the name on the ID, date of birth, social security number, and citizenship of each person who comes down here 24 hours in advance of the meeting. Let's try to set a time for this. What works for you? Dan UST 000294 TREAS-17-0313-A-000020 Re: Frida status meetin From : "Stegmaier, Jaso n (Finance)" To: b(6) Cc: Date: "Kowalski, Daniel" ~ treasury.gov> Wed, 08 Mar 2017 14:44 :04 -0500 1 40 works perfectly! What number should my team call? Sent from my iPhone On Mar 8, 2017, at 2:22 PM, b(6) , Hi Jason! Could we possibly make it at 1:40? The Secretary will just be wrapping up an event and getting in the car at 1:30. b(6) 1:30 Friday would work for me, and I believe would work for the Secretary. I've cc'd b(6) who runs the Secretary's schedule, to see if it works for him. We would also include Eli Miller on the call. From : Stegmaier, Jason (Finance) [mailto:Jason Stegmaier@finance .senate.gov ] Sent : Wednesday, March 08, 2017 1:56 PM To: Kowalsk i, Daniel Subject: RE: Friday status meeting Daniel, Would 1:30 p.m. work on your end this Friday for a call? Jason Stegmaier Office Manager U.S. Senate Finance Committee 219 Dirksen Senate Office Building Washin~ Work: - Fax: b(6) From : Campbell, Chris (Finance) Sent : Tuesday, March 7, 2017 6:30 PM To: 'Daniel .Kowalski@treasury.gov ' Cc: Stegmaier, Jason (Finance) UST 000295 TREAS-17-0313-A-000021 Subject: RE: Friday status meeting Oh perfect . Yeah I was confused sorry. I'll just see you at the tax staff meeting. On the call, let's just make it Mnuchin you and I. Should be short . b(5) b(5) Jason can arrange call. See you on Friday . Chris From : Daniel ,Kowa lski@treasury.gov [mai lto:Da n iel. Kowa lski@treasu ry,gov] Sent : Tuesday, March 7, 2017 6:23 PM To: Campbell, Chris (Finance) Cc: Stegmaier, Jason (Finance) Subject: RE: Friday status meeting I think there is a misunderstanding. Secretary wants his staff (Dan and Justin) to meet with your team while we are at Capitol for the pass-through meeting. Secretary would not be participating this week. Maybe we should do a brief conference call to touch gloves instead. I'm open from 11:00 till 2:00 on Friday . You, me, Muzinich, Prater and Khosla. From : Campbell, Chris (Finance) [mailto:Chris Campbell@finance.senate.gov ] Sent : Tuesday, March 07, 2017 5:32 PM To: Kowalsk i, Daniel Cc: Stegmaier, Jason (Finance) Subject: Re: Friday status meeting Great. I'll be up with the team. It looks like I might have to be on a plane for a work trip on Friday at 4:30. If possible, could we meet with the Secretary earlier absent other staff. I'd prob bring prater and Khosla. Will he want to see a rough outline? Jason is on for my schedule. Thanks, Chr is E: c ris camp e @finance.senate .gov on Mar 7, 2017, at 5:22 PM, "Danie LKowalski@treasury.gov " wrote : UST 000296 TREAS-17-0313-A-000022 I just saw the Secretary as he was leaving. He's going to be speaking at the Financial Services Roundtable through lunch, and then his crack tax team is going to be meeting with your team on the hill. So he suggested that we just get together at the staff level this week and meet with you while we are there . Would you be available after the b(5) meeting on Friday, at 4:30 pm? (The ~ eeting is scheduled from 3 to 4, but I'll bet it ends closer to 4:30 .) It would Justin and me from our team. I think it would be good to hear about the big picture as you propose. Dan From : Campbel l, Chris (Finance) (majlto :Chrjs Campbell@fioance .senate .gov] Sent : Tuesday, March 07, 2017 3:59 PM To: Kowalski, Daniel Subject: RE: Friday status meet ing b(5) Chris From : Daniel .Kowalski@treasury.gov [ mailto :Daniel.Kowa lski@treasu ry.gov] Sent : Tuesday, March 7, 2017 3:31 PM To: Campbell, Chris (Finance) Subject: Friday status meeting Hi Chris. Two questions for you. Thanks. Dan Kowalski Desk: b(6) Cell: UST 000297 TREAS-17-0313-A-000023 RE: uestion From : "Angus, Barbara" T o: "Kowalski, Daniel" Date : Tue, 14 Mar 2017 09:47 :18 -0400 Terrific . I'm looking forward to it. Thanks. Barbara M. Angus Chief Tax Counsel Committee on Ways and Means b(6) From : Daniel.Kowalski@treasury.gov [mailto:Daniel. Kowalski@treasury.gov] Sent: March 14, 2017 9:45 AM To: Angus, Barbara Subject: RE: qu ick question Please bring whoever you need. The room is large enough for 20 at the table. From : Angus, Barbara [mailto :Barbara .Angus@mail.house.gov ] Sent: Tuesday, March 14, 2017 9:42 AM To: Kowalski, Daniel Subject: quick question Hi Dan, Just wanted to follow up on your note. At our Friday meeting, I brou ~ members of the W& M tax team who are very involved in our work onl:IS----_ John Sandel l and Victoria Glover. I'd like to bring them to the Thursday meeting if s room - if that works for you, I'll gather all our clearance info and send it in this morning. Thanks very much, Barbara Barbara M. Angus Chief Tax Counse l Committee on Way s and Means U.S. House of Representa tives b(6) UST 000298 TREAS-17-0313-A-000024 RE: A enda for Tomorrow's Pass-throu h meetin From : "Prater, Mark (Finance)" To: "Kowalski, Danie l" , barbara.angus@mail.house.gov Cc: 'Wes t, Thomas " , "Mackie, James Ill'' , "Muzinich, Justin" Date : Attachments : Thu, 16 Mar 201711:17:21 -0400 115-0088a.pdf (650.61 kB) Hey guys, See you shortly . Here's some JCT data I requested on Thought we could discuss in ligh o b(5) From : Prater, M ark (Finance) Sent: Wednesday, March 15, 2017 2:44 PM To: 'Dan iel .Kowalski@treasury.gov' ; Barbara.Angus@mail.house.gov Cc: Thomas.West@treasury.gov; James.Mackie@treasury.gov; Justin.Muz inich@treasury.gov Subject: RE: Agenda for Tomorrow's Pass-through meeting Thanks, Dan. That works for us. From: Daniel .Kowalski@treasury.gov [mailto:Daniel .Kowalski@treasury.gov ] Sent : Wednesday, March 15, 2017 2:31 PM To: Prater, Mark (Finance) ; Barbara.Angus@mail.house.gov Cc: Thomas .West@treasury .gov; James.Mack ie@treasury.gov : Justin .Muzinich@treasury .gov Subject: Agenda for Tomorrow's Pass-through meeting Last time we met, we heard uite a bit from Barbara about but we ran out of time. b(5) ick u the conversation tomorrow where we left off, by asking Mark or his designee to More formally, the agenda would be : b(5) How does this seem to you? UST 000299 TREAS-17-0313-A-000025 SFC tax reform From: "Wrase, Jeff (Finance)" To: "Kowalski, Daniel" Cc: "Campbell , Chris (Finance)" Date: Attachments: Wed, 22 Mar 2017 12:44:31 -0400 3-22-17-Memo to Secretary Mnuchin .docx (18.22 kB) Dan, Chris (cc' d) w ill soon be sending pape r your way, with the Secretary included, outlining this week or early next . I am attaching a draft of what Chris will likely soon be sending later this afternoon or early tomorrow, in case you'd like to offer any comment s or concerns. Very close hold on the attached please (for your eyes only at this point). Best, Jeff Jeffrey Wrase Chief Econ omist Senate Finance Committee •• j eff wrase @finance.senate.gov UST 000300 TREAS-17-0313-A-000026 RE: Call with Secretar on Tax From : b(6) , treasury .gov> To: "Prater, Mark (Finance)" , "Kowa lski, Daniel" , "Beaver, Sam (Finance)" Date : Fri, 24 Mar 20 17 11 :49:04 -0400 Dialing in now. Thank you! b(6) From : Prater, M ark (Finance) [mailto :Mark _ Prater@finance .senate.gov] Sent : Friday, March 24, 2017 11:48 AM To: . • treasury.gov> ; Kowalski, Daniel ; Beaver, Sam (Finance) Subject: RE: Call with Secretary on Tax Thanks. Jeff and I are on the call. From : b(6) reasur . ov mailto: Sent : Friday, March 24, 2017 11:43 AM b(6) To: Danie l.Kowalski@treasury.gov ; Beaver, Sam (Finance) Cc: Prater, M ark (Finance) Subject: RE: Call with Secretary on Tax We are a few minutes delayed. We will dial in shortly. Thanks! b(6) From : Kowalski, Daniel Sent : Thursday, March 23, 2017 12:46 PM (Finance) b(6) treasur . ov> , (Finance) Subject: RE: Call with Secretary on Tax This is for tomorrow, correct? I inadvertently left off Friday in the email. From : Beaver, Sam (Finance) [mai lto:Sam Beaver@finance .senate.gov ] Sent : Thursday, M arch 23, 2017 12:45 PM To: Kowalsk i, Daniel ; b(6) ffi .@treasury .gov> Cc: Prater, Mark (Finance) Subject: RE: Call with Secretary on Tax How does 1:45pm or 2pm work? From : Daniel .Kawa lski@treasury.gov [mai lto:Da n iel .Kowa lski@treasury.gov ] Sent : Thursday, M arch 23, 2017 12:24 PM To: • • treasu r . av; Beaver, Sam (Finance) Cc: rater, ar inance) Subject: Call with Secretary on Tax UST 000301 TREAS-17-0313-A-000027 Mark and I spoke yesterday about fitting in a 15 minute call with Secretary Mnuchin to check-in with each other on tax reform. The Secretary agreed this was a good idea, and would like to find time for the call. Can you work together to find a time when that might occur? Staff for the Secretary would be Eli, Justin and me. Thanks. UST 000302 TREAS-17-0313-A-000028 RE: over to From : "Mahan, Roger" To: "Kowal ski, Daniel" Date : Fri, 24 Mar 2017 16:39:34 -0400 From: Daniel .Kowalski@treasury.gov [ mailto :Daniel.Kowalski@treasury.gov] Sent: Friday, March 24, 2017 4 :36 PM To: Mahan, Roger Subject: RE: over to you guys now b(5) From : Mahan, Roger [mailto:Roger.Mahan@mail.house.gov Sent : Friday , March 24, 2017 4 :33 PM To: Kowalsk i, Daniel Subject: RE: over to you guys now ) From: Daniel.Kowalski@treasury.gov [ mailto: Daniel.Kowalski@treasury.gov] Sent: Friday, March 24, 2017 4 :28 PM To: Mahan, Roger Subject: RE: over to you guys now From: M ahan, Roger [mailto:Roger.Mahan@mail.house.gov Sent : Friday, March 24, 2017 4 :26 PM To: Kowals ki, Daniel Subject: RE: over to you guys now ) From: Daniel.Kowalski@treasury.gov [ mailto:Daniel.Kowalski@treasury.gov] Sent: Friday, March 24, 2017 4:25 PM To: Mahan, Roger Subject: RE: over to you guys now b(5) b(5) From : Mahan, Roger [mailto :Roger.Mahan@mail .house .gov] Sent : Friday, March 24, 2017 4 :23 PM To: Kowalski, Daniel Subject: over to you guys now UST 000303 TREAS-17-0313-A-000029 b(5) No budget resolution now for FY 2018 b(5) b(5) UST 000304 RE: meetin From : b(6) , treasury.gov> To : "Beaver, Sam (Finance)" , "Kowalsk i, Daniel" Cc: ''Wrase , Jeff (Finance)" , "Stegma ier, Jason (Finance)" Date : Mon, 27 Mar 2017 12:13:43 -0400 Hi Team, I will need this information ASAP (name as it appears on ID, date of birth, social security number and citizenship) Below are directions to the building: Treasury Department 1500 Pennsylvan ia Ave NW Washington DC 20220 If you were to stand in front of the White House, we are on the left hand side across from PNC and Bank of America. Come do w n the stairs to the first Secret Service Post Th en upstairs to the bu ilding security and after you pass through security, you are already on the 2 nd floor, then come up to the 3 rd floor and around to room 3120 to meet with Daniel. Thank you, - b(6) From : Beaver, Sam (Finance) [mai lto:Sam_Beaver@finance.senate.gov] Sent : Monday, March 27, 2017 11:58 AM To: Kowalski, Daniel ; @treasury.gov> Cc: Wrase, Jeff (Finance) ; Stegmaier, Jason (Finance) Subject: RE: meeting Great. We'll lock it in and have security details sent over shortly. -Sam From : Daniel .Kawa lski@treasury .gov [mai lto :Daniel .Kowa lski@treasury .gov] Sent : Monday, March 27, 2017 11:54 AM To: Beaver, Sam (Finance) ; Cc: Wrase, Jeff (Finance) ; Stegmaier, UST 000305 TREAS-17-0313-A-000031 Subject: RE: meeting That works for Justin, Jay and me, so let's do it. 3120 Main Treasury, 4:00 pm Tuesday. Thanks. From: Beaver, Sam (Finance} [mailto:Sam Beaver@finance.senate.gov ] Sent: Monday, March 27, 2017 11:49 AM To: Kowalski, Daniel ; Gild @treasury.gov > Cc: Wrase, Jeff (Finance} ; Stegmaier, Jason (Finance} Subject: RE: meeting Dan/iVIIIII 11am is tough for Finance. Any chance you could do 4pm tomorrow? Best, Sam From: Wrase, Jeff (Finance} Sent: Monday, March 27, 2017 11:45 AM To: Beaver, Sam (Finance} From: Daniel .Kowa lski@treasury.gov [ma i lto:Da n iel .Kowa lski@treasury.gov ] Sent: Monday, March 27, 2017 8:51 AM To: Wrase, Jeff (Finance} Cc: treasur . ov Subject: RE: meeting This time sending to the right person ... From: Kowalski, Daniel Sent: Monday, March 27, 2017 8:49 AM To: Kowalski, Daniel Cc:~ <-ltt(3 @treasury.gov > Sub~ Good morning. Would you be able Tuesday at 11:00 am here at Treasury? We can use the ASTP's office (currently unoccupied} 3120 Main Treasury If that works, I'll send out an meeting invite. I've also cc'd _ that. , who can make sure you are cleared into the building. You know the drill on Thanks. From: Kowalski, Daniel Sent: Friday, March 24, 2017 5:50 PM UST 000306 TREAS-17-0313-A-000032 To: 'Wrase, Jeff (Finance}' Thanks for following up. Tax reform has suddenly gone on the fast track. Probably can't happen Monday, but I would hope for Tuesday or Wednesday. Will be in touch. From: Wrase, Jeff (Finance} [mailto:Jeff Wrase@finance.senate.gov Sent: Friday, March 24, 2017 5:18 PM To: Kowalski, Daniel Subject: meeting ] Dan, let me know when you get a chance if there is an hour block of time where you, Justin, Prater, Chris Campbell, and I could meet on tax reform issues we discussed on the phone today. We are happy to go to Treasury, and will make whatever time works for you also work for us. Best, Jeff Jeffrey Wrase Chief Economi st Senate Finance Committee b(6) jeff wrase @finance .senate .gov UST 000307 TREAS-17-0313-A-000033 RE: Continuation of ass-throug_h_d_i_ s_ c_ u_ ss_i_o_n______ From: "Kowalski, Daniel" <"/o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cf6b4ee371 0f422fbceecb0020766838-kowalski, To: "Angus, Barbara" , Cc: "Muzinich, Justin" , "Mackie, James Ill" , "West, Thomas" Date: Thu, 06 Apr 2017 18:41 :21 -0400 _ dan"> mark_prater@finance.senate.gov Super. I'll set up a room tomorrow. From: Angus, Barbara [mailto:Barbara.Angus@mail.house.gov] Sent: Thursday, April 06, 2017 6:38 PM To: Kowalski, Daniel ; Mark_Prater@Finance.senate.gov Cc: Muzinich, Justin ; Mackie, James Ill ; West, Thomas Subject: RE: Continuation of pass-through discussion That would be marvelous! Barbara M. Angus Chief Tax Counsel Committee on Ways and Means b(6) From: Daniel .Kowa lski@treasury.gov [ma ilto :Daniel .Kowa lski@treasury.gov ] Sent: April 6, 2017 6:31 PM To: Angus, Barbara ; Mark Prater@Finance.senate.gov Cc: Justin .M uzi n ich@treasury.gov ; James.Mackie@treasury.gov ; Thomas. West@treasury.gov Subject: RE: Continuation of pass-through discussion Looks like 1:30 to 3:00 is open. How about 1:30? From: Angus, Barbara [mailto :Barbara.Angus@mail.house.gov ] Sent: Thursday, April 06, 2017 6:27 PM To: Kowalski, Daniel ; Mark Prater@Finance.senate.gov Cc: Muzinich, Justin ; Mackie, James Ill ; West, Thomas We've got a meeting scheduled for 10 to noon - would it be possible to do the meeting a little later in the day? Thanks very much. Barbara M. Angus Chief Tax Counsel Committee on Ways and Means b(6) From: Daniel.Kowalski@treasury.gov [mailto:Daniel.Kowalski@treasury.gov Sent: April 6, 2017 5:03 PM To: Mark Prater@Finance.senate.gov ; Angus, Barbara ] Cc: Justin .Muzinich@treasury.gov ; James.Mackie@treasury.gov ; Thomas .West@treasury .gov UST 000308 TREAS-17-0313-A-000034 Subject: Continuation of b(5) discussion Would the House and Senate be able to come here to Treasury next Thursday, April 13, at 10:30 or 11:00 to continue talking about b(5) We agreed that the agenda would be, • b(5) If that time works, I'll set up a meeting room. Dan UST 000309 TREAS-17-0313-A-000035 RE: Workin on b(5) etc. From : "Prater, Mark (Finance)" To: "Kowalski, Daniel" , barbara.angus@mail.house.gov Cc: "Mackie, James Ill" . "Muzinich, Justin" , "West, Thomas" Date : Tue, 11 Apr 2017 18:36:06 -0400 That works for SFC. From : Daniel .Kowa lski@treasury.gov [mai lto:Da n iel .Kowa lski@treasury.gov] Sent : Tuesday, April 11, 2017 5:28 PM To: Prater, Mark (Finance) ; Barbara .Angus@mail.house .gov Cc: James.Mackie@treasury .gov; Justin.Muzi nich@treasury .gov; Thomas.West@treasury .gov Subject: RE: Working group on b(5) etc. Can we schedule a first meeting for next Wednesday, April 19, at 2 pm or later here at Treasury? Our core group, cc'd here, here appears to be free at that time. I'd suggest we start by discussing • If we can agree on a time, I'll find a room here for us. Dan From : Prater, Mark (Finance) [mailto:Mark Sent : Friday, April 07, 2017 12:09 PM Prater@finance.senate.gov ] To: Angus, Barbara ; Kowalski, Daniel Subject: RE: Working group on • etc. Ditto. Let's crank up those talks. Sent from my Verizon, Samsung Galaxy smartphone -------- Original message -------From: "Angus, Barbara" Date: 4/7/ 17 11:48 AM (GMT-05:00) To: Daniel.Kowalski@treasmy.gov , "Prater, Mark (Finance)" Subject: Re: Working group on b(5) etc. Dan, that's a terrific idea. Thanks very much! -------- Original Message -------- UST 0003 10 TREAS-17-0313-A-000036 Subject: Working group on b(5) etc. From: Daniel.Kowalski@treasury.gov Date: Apr 7, 2017, 11:35 AM To: "Angus, Barbara" ,Mark _Prater@Finance.senate.gov Would you be interested in forming another regular gathering to talk about b(5) b(5) b(5) If you agree, I would set something up, starting perhaps during the second week of your recess. Dan UST 000311 TREAS-17-0313-A-000037 Discussion of b(5) Where: Room 3120 Main Treasury (Tax Policy AS Office) When: Wed Apr 19 14:00:00 2017 (America/New_ York) Until: Wed Apr 1915:30:00 2017 (America/New _York) Organiser: "Kowalski, Daniel" <"/o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cf6b4ee3710f422fbceecb0020766838kowa lski, dan"> Required Attendees: "Muzinich, Justin" "West, Thomas" "Mackie, James Ill" barbara.angus@mail .house.gov Mark Prater Opt ional Attendees: "Sam Beaver (Sam_Beaver@finance.senate.gov)" , -. - ~ nee.senate.gov> b(6) ... .. Attachments: ~orking group on1:Iti>a, etc ..msg (947.2 kBli RE_ Working group on Mi3 etc ..ms 947.2 kB .:,. , • • • • • - , • • • 1 • 1 b( 5) b(5) I booked the room for 90 minutes, but we need not use all of that time . Please invite appropr iate people from your staff. All participants need to send lnl3 (@@ @treasury .gov) name , SSN, DOB, and citizenship the day before the meeting so that they can be cleared into the building. Thanks. << ... >> << >> UST 000312 TREAS-17-0313-A-000038 Canceled: Discussion of b(5) Where: Room 3120 Main Treasury (Tax Policy AS Office) When: Wed Apr 19 14:00:00 2017 (America/New_ York) Until: Wed Apr 1915:30:00 2017 (America/New _York) Organiser: "Kowalski, Daniel" <"/o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recip ients/cn=cf6b4ee371 0f422fbceecb0020766838-kowalski , dan"> Required Attendees: "Kowalski, Daniel" "Muzinich, Justin" "West, Thomas" "Mackie , James Ill" barbara.angus@mail.house.gov ~ J .,, • • ,,. II .. • I .,, i"i) ance.senate.gov> b(6) , treasury .gov> Opt ional Attendees: "Sam Beaver (Sam_Beaver@finance .senate .gov)" •. • treasury .gov> ' ya , Ic inance "Rutledge, Preston (Finance)" "Wrase, Jeff (Finance)" "Khos la, Jay (Finance)" Dan UST 000313 TREAS-17-0313-A-000039 RE: Meetin with Hatch From : To: Cc: "Khosla, Ja Finance)" , "Marquis, Ashley" Date : Mon, 17 Apr 2017 19:14:33 -0400 The mornings are tough for Gary, but please let me know when you are thinking ! Kaitlyn From : Prater, M ark (Finance) [mailto:Mark _ Prater@finance.senate.gov] Sent : Monday, April 17, 2017 3:58 PM To: Eli.Mi ller@treasury.gov; Knight, Shahira iffl3W Hatch) , • Hatch.Senate.gov> ; Campbell, Chris (Finance) Cc: Khosla, Jay (Finance) · Ashley >; - Hey Folks, Thanks for helping Team SFCwith this . Heads up .. we would also like to tentatively schedule a bipartisan SFCmembers meeting for May 10th . I defer to Ruth on the exact time, but preferably in morning. From : Eli.Miller@treasury.gov [mailto:E li.Miller@treasury.gov] Sent : Wednesday, April 05, 2017 11:50 AM ; • • Hatch .Senate.gov>; Campbe ll, Chris (Finance) Cc: Khosla, Jay (Finance) ; treasury.gov; ; Prater, Mark (Finance) ; To Subject : RE: Meeting with Hatch Adding itllll to r t he sched ule. hatch .senate. ~ ov>, Cam pbe ll, Ch ris (Financ e) Prater@finance .senate.gov > dding Kaitlyn and Ashley for Gary Cohn's schedule. Thanks. UST 0003 14 TREAS-17-0313-A-000040 (Hatch) mailto b(6) hatch.senate. ov Sent: Wednesday, April 5, 2017 10:13 AM To: Knight, Shahira >; Campbell, Chris (Finance) Cc: Eli Miller ; Prater, Mark (Finance) ; Khosla, Jay (Finance) Subject: RE: Meeting with Hatch From: b(6) Shahira and Eli, please let me know what works for you. b(6) Senator Orrin Hatch I SH-104 I b(6) @hatch.senate.gov From: Knight, Shahira Sent: Wednesday, April 05, 2017 6:27 AM To: Campbell, Chris (Finance) Cc: Eli Miller ; Prater, Mark (Finance) ; b(6) iilli @Hatch.Senate .gov> Subject: Re: Meeting with Hatch Prater@fi n a nee.senate.gov >; (Hatch) Agreed. We were planning to reach out. I will coordinate on our end. On Apr 5, 2017, at 5:21 AM, Campbell, Chris (Finance) wrote: Think it might be good to get the Secretary, Gary Cohn and Hatch together to go over where we are on tax reform the week we get back from recess (2 weeks from this week). rm adding -Hatch' s scheduler and our team to this email. Look forward to seeing you all then! Chris Chris Campbell Staff Director U.S. Senate Finance Committee 219 Dirksen Senate Office Building Wa hin D 2 510 W: F: E: chris campbell@finance.senate.gov UST 000315 TREAS-17-0313-A-000041 RE: Tax From: Ian next week? "Kowalski, Daniel" <"/o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cf6b4ee3710f422fbceecb0020766838-kowalski, To: "Gorman , Tori (Corker)" Date : Fri, 21 Apr 2017 15:28:20 -0400 dan"> I am not current aware of what the President is referring to. From: Gorman, Tori (Corker) [mailto :Tori _Gorman@corker .senate.gov] Sent: Friday, April 21, 2017 3:23 PM To: Kowalski, Daniel Subject: Tax plan next week? Dan, b(5) b(5) Tori Begin forwarded message: From: POLITICO Pro Date: April 21, 2017 at 2:41 :00 PM EDT To: Subject: Trump: White House will release tax reform plan next week Reply-To: POLITICO subscriptions By Nolan D. McCaskill 04/21/2017 02:29 PM EDT President Donald Trump today sa id he will release his administration 's tax reform plan next UST 0003 16 TREAS-17-0313-A-000042 week. The president told The Associated Press that individuals and businesses will receive "massive tax cuts" under his tax reform plan. Trump provided no details, according to AP, but predicted the cuts would be "bigger I believe than any tax cut ever." He added that the plan will be unveiled "Wednesday or shortly thereafter." After a two-week Easter recess, lawmakers will return to Washington next week facing a deadline to fund the government and a possible floor vote on legislation to repeal and replace Obamacare. Trump has long promised massive tax cuts but said this week it would be easier to accomplish if Republicans passed legislation to repeal and replace Obamacare first. Speaking in Wisconsin this week, Trump had signaled that a tax reform plan would be coming "very soon." "Our tax reform and tax plan is coming along very well," he said Tuesday. "It's going to be out very soon. We're working on health care and we're going to get that done, too." Was this Pro content helpful? Tell us what you think in one click. [i] 00 ~ 00 00 Yes, very Somewhat Neutral Not really Not at all You received this POLITICO Pro content because your customized settings include: Transition 2017: all tags; Keyword Alerts: obamacare; tags: Tax: Individual, Tax: Tax Cut, Tax: Tax Reform; tags: Health Care: ACA, Health Care: Cadillac Tax, Health Care: Budget; tags: Transportation: Infrastructure. To change your alert settings, please go to https://www.politicopro.com/settings This email was sent by: POLITICO, LLC 1000 Wilson Blvd. Arlington. VA, 22209, USA UST 000317 TREAS-17-0313-A-000043 RE: Trump: White House will release tax reform plan next week From: "Prater, Mark (Finance)" To: "Muzinich, Justin" , Date: Fri, 21 Apr 2017 16:24:05 -0400 "Kowalski, Daniel" Okie dokes. Thanks for getting back to me. From: Justin .Muzin ich@treasury.gov [ma ilto:Justi n .Muzin ich@treasury.gov] Sent: Friday, April 21, 2017 4:12 PM To: Daniel.Kowalski@treasury.gov; Prater, Mark (Finance} Subject: Re: Trump: White House will release tax reform plan next week Sorry Mark, not right now. Let's chat early next week. From: Prater, Mark (Finance) Date: April 21, 2017 at 4:08:29 PM EDT To: Kowalski, Daniel , Muzinich, Justin Subject: Trump: White House will release tax reform plan next week Hey Dan and Justin, b(5) Best number for me is b(6) Let me now. Thanks. From: POLITICO Pro Date: April 21, 2017 at 2:44:59 PM EDT To: Subject: Trump: White House will release tax reform plan next week Reply-To: POLITICO subscriptions By Nolan D. McCaskill 04/21/2017 02:29 PM EDT President Donald Trump today said he will release his administration's tax reform plan next week. The president told The Associated Press that individuals and businesses will receive "massive tax cuts" under his tax reform plan. Trump provided no details , according to AP, but predicted the cuts would be "bigger I believe than any tax cut ever." He added that the plan will be unveiled ''Wednesday or shortly thereafter." After a two-week Easter recess, lawmakers will return to Washington next week facing a deadline to fund the government and a possible floor vote on legislation to repeal and replace Obamacare. UST 000318 TREAS-17-0313-A-000044 Trump has long promised massive tax cuts but said this week it would be easier to accomplish if Republicans passed legislation to repeal and replace Obamacare first. Speaking in Wisconsin this week, Trump had signaled that a tax reform plan would be coming "very soon." "Our tax reform and tax plan is coming along very well," he said Tuesday. "It's going to be out very soon. We're working on health care and we're going to get that done, too." Was this Pro content helpful? Tell us what you think in one click. Yes . ver y Somewhat Neutral Not reall y Not at all You received this POLITICO Pro content because your customized settings include: Tax: all tags; Health Care: all tags; Trade: all tags. To change your alert settings, please go to https ://www.politicopro.com/settings This email was sent by: POLITICO, LLC 1000 Wilson Blvd . Arlington, VA, 22209, USA UST 000319 TREAS-17-0313-A-000045 Re: Tax Reform Workin From: "Burks, Jonathan" To: "Muzinich, Justin" Cc: "Stewart, David" Date: Wed, 26 Apr 2017 11: 14:25 -0400 finance.senate.gov, , "Callas, George" OK. I'll ask George to convene the first meeting for this week. Jonathan Burks Chief of Staff Office of the Speaker of the House On Apr 26, 2017, at 11:07 AM, "Justin.Muzinich@treasury.gov " wrote: Thanks Jonathan for taking the initiative on this. We thought it was a productive meeting too. The Administration team will be me, Shahira Knight, Dan Kowalski, and Andy Koenig (WH Leg Affairs). Along the lines of the below email, we have started to put together a list of issues. It may make sense to catalogue these in our first meeting. We are looking forward to working together. Justin Muzinich Counselor to the Secretary f the Treasury ,- b(6) ....... I From: Stewart, David [mailto:David.Stewart@mail.house.gov ] Sent: Wednesday, April 26, 2017 10 :51 AM To: Campbell, Chris (Finance) ; Soderstrom, Sharon (McConnell) Cc: Burks, Jonathan ; Marc Short >; Muzinich, Justin Subject: Re: Tax Reform Working Group And for Ways and Means, Barbara Angus will represent Chairman Brady with others as needed. From : Chris Campbell Date: Wednesday, April 26, 2017 at 10 :44 AM To: Sharon Soderstrom Cc: Jonathan Burks , " Marc Short >, "Justin .Muzinich@treasury.gov " Subject: Re: Tax Reform Working Group >, For us, prater will be lead with backup from the team . Thanks. Chris Campbell UST 000320 TREAS-17-0313-A-000046 Staff Director U.S. Senate Finance Committee 219 Dirksen Senate Office Building Washington, DC 20510 w b(6) F: E: chris campbel l@finance.senate.gov On Apr 26, 2017, at 8:33 AM, Soderstrom, Sharon (McConnell) wrote: Thanks Jon. Brendan Dunn will represent the Leader. Hazen I am sure will also be involved on our side. From : Burks, Jonathan [mai lto:Jonathan.Burks@mail.house.gov ] Sent : Wednesday, Ap r il 26, 2017 8:17 AM To: Soderstrom, Sharon McConne ll ; Marc Short ; 'Justin .Muzinich@treasury.gov ' ; Stewart, David ; Campbell, Chr is (Finance) Subject: Tax Reform Working Group Good morning colleagues : I thought that was a productive meeting last evening. I think the next step is to For our part, George Callas will represent the Speaker. Jonathan Burks Chief of Staff ~ ea ker ---- Jonathan .Bu rks@ma i I.house .gov UST 000321 TREAS-17-0313-A-000047 RE: Tax Reform Workin From : "Knight , Shahira To : "Callas, George" , "Prater, Mark (Finance)" , "Angus, Barbara" , "Dunn, Brendan (McConnell)" , "Muzinich, Justin" "Kowalski Daniel" , "Koenig, Andrew Cc: "Jordon, Ben" Date : Wed, 26 Apr 20 17 15:44:40 -0400 And now I can't do 4:30 either. If you want to meet tomorrow, please don't schedule around me. Thanks. From : Callas, George [mailto:George.Ca llas@mail.house.gov] Sent : Wednesday, April 26, 2017 3:41 PM To: Prater, Mark (Finance) ; Angus, Barbara ; Dunn, Brendan (McConnell) ; Justin . Mu zi n ich@treasury.gov ; Daniel.Kowalski@treasury.gov; Knight, Shahira Andrew Cc: Jordon, Ben Subject: RE: Tax Reform Working Group Koenig, Makes sense to me. Copying Ben Jordon, who I believe has reserved a room for tomorrow, to provide details to everyone. From : Prater, M ar k (Finance) [mailto:Mark_Prater@finance.senate.gov) Sent: Wednesday, Ap ril 26, 2017 3:39 PM To: Callas, George ; Angus, Barbara ; Dunn, Brendan (McConnell) ; Justin. Mu zi n ich@treasury.gov; Daniel. Kowalski@treasury.gov; Knight, Shahira Subject: RE: Tax Reform Working Group Hey George, Glad to get the ball rolling. Suggest we alternate. We'll get S-124. Also, if convenient for Treasury, I'd suggest we rotate three venues . Do you guys want to start with hosting on the House side? From : Callas, George [mailto:George.Callas@mail.house.gov ] Sent : Wednesday, April 26, 2017 1:57 PM To: Angus, Barbara ; Prater, M ark (Finance) ; Dunn, Brendan (M cConnel l) ; Justin.Muzin ich@treasury.gov ; night,Shahi ra >· I Subject: Tax Reform Working Group Hi everyone, Collectively, we represent my understanding of the membership of the staff work ing group. If anyone believes this list is over - or under-inclusive, please let me know . Our mandate is to meet this week, leaving Thursda y or Friday. I think the later side of the day makes more sense, so I'm going to suggest UST 000322 TREAS-17-0313-A-000048 4-6 tomorrow. Starting next week, I think it makes sense to tr (and probably at least twice a week). • to meet at the same times ever week So I suggest Mondays and Thursdays 4-6. If this is a deal-breaking problem for anyone, please let me know and we wil l try to figure out an alternative. b(5) b(5) Of course, every decision we make is provisional, in that Members, Senators, and the President ultimately make these decisions . ~don't have phone numbers yet, my desk phone is • • and my mobile is ---I look forward to working with all of you in the coming weeks and months on what hopefully will be historic tax reform legislation. George George A. Callas Senior Tax Counsel Office of the Speaker UST 000323 TREAS-17-0313-A-000049 RE: Tax Reform Workin From : >, "Dunn , Brendan T o: Date : Atta chment s: Tax working group agenda 04 .27.17.pdf (193.47 kB) Attached is a draft agenda for tomorrow. Please keep confidential. Note that I don't intend for us to go through this line item by line item necessarily, but I wanted to include this list of provisions so everyone can be thinking about them over the next 24 hours and beyond. • Also, let's push back tomorrow's official start time to 4:30 given a handful of conflicts. But starting next week, if we can lock down a general start time of 4pm that would be great. From : Knight, Shahira Sent : Wednesday, April 26, 2017 3:59 PM To: Callas, George ; Dunn, Brendan (McConnell) ; 'Daniel .Kowalski@treasury .gov ' ; Prater, Mark (Finance) ; Angus, Barbara ; Justin.Muzinich@treasury.gov; Koenig, Andrew D. Subject: RE: Tax Reform Working Group From : Callas, George fmailto:George.Callas@mail.house.gov ] Sent : Wednesday, April 26, 2017 3:53 PM To : Dunn, Brendan (McConnell) ; Knight, Shahira E. >; 'Daniel .Kowalski@treasury.gov' ; Prater, M ark (Finance) ; Angus, Barbara ; Justin.Muzinich@treasury.gov ; Koenig, Andrew D. Subject: RE: Tax Reform Working Group From : Dunn, Brendan (McConnell) f mailto:Brendan Dunn@mcconnell.senate.gov ] Sent : Wednesday, A ril 26, 2017 3:52 PM To: 'Knight, Shahira >; 'Daniel.Kowalski@treasury.gov' ; Prater, Mark (Finance) ; Callas, UST 000324 TREAS-17-0313-A-000050 George ; Angus, Barbara ; Prater, Mark (Finance) ; George.Callas@mail.house.gov : Barbara.Angus@mail.house.gov Dunn, Brendan (McConnell) ; Justin.Muzinich@treasury.gov Koenig, Andrew Subject : RE: Tax Reform Working Group : : Fine with me . Just keep me on the calendar invite and I'll come by after my 4 PM ends . Thanks From : Daniel .Kowa lski@treasury.gov [mai lto:Da n iel .Kowa lski@treasury.gov ] Se nt : Wednesday, April 26, 2017 3:46 PM To: Knight, Shahira >; Mark Prater@finance.senate.gov George.Callas@mail .house.gov ; Barbara.Angus@mail.house.gov ; Brendan Dunn@mcconnell.senate.gov ; Justin.Muzinich@treasury.gov ; Koenig, Andrew ; Subject : RE: Tax Reform Working Group b(5) 6:00 for the first meeting tomorrow? So how about 4:30 to From : Knight, Shahira Sent: Wednesday, April 26, 2017 3:41 PM To: 'Prate r, Mark (Finance)' ; Callas, George ; Angus, Bar bara ; Dunn, Brendan (McConnell) ; Muzinich, Justin ; Kowalski, Daniel ; Koenig, Andrew D. Subject: RE: Tax Reform Working Group Just talked to Justin. We are trying to get our heads back above water after this rollout, so tomorrow is tough. We can make it at 4:30 tomorrow, but we would also be okay with starting the meetings on Monday unless you think there is a lot we can get done tomorrow. >; Koenig, Hey George, Glad to get the ball rolling. Suggest we alternate. We'll get S-124. Also, if convenient for Treasury, UST 000325 TREAS-17-0313-A-000051 I'd suggest we rotate three venues . Do you guys want to start with hosting on the House side? From : Callas, George fmailto:George.Ca llas@mail.house.gov ] Sent: Wednesday, April 26, 2017 1:57 PM To: Angus, Barbara ; Prater, M ark (Finance) ; Dunn , Brendan (McConnel l) ; Justin. Muzin ich@treasury.gov ; Daniel.Kowalski@treasury.gov ; Knight, Shahira >·I Subject: Tax Reform Working Group Hi everyone, Collectively, we represent my understanding of the membership of the staff working group. If anyone believes this list is over - or under-inclusive, please let me know . Our mandate is to meet this week, leaving Thursday or Friday. I think the later side of the day makes more sense, so I'm going to suggest 4-6 tomorrow. Starting next week, I think it makes sense to try to meet at the same times every week (and probably at least twice a week). • • So I suggest Mondays and Thursdays 4-6. If this is a deal - breaking problem for anyone, please let me know and we wil l try to figure out an alternative. b(5) b5 ---course, every decision we make is provisional, ultimately make these dec isions . ---in that Members, Senators, and the President I For those who don't have phone numbers yet, my desk phone is b(6) and my mobile is ~ I look forward to working with all of you in the coming weeks and months on what ~ e historic tax reform legislation. George George A. Callas Senior Tax Counsel Office of the Speaker UST 000326 TREAS-17-0313-A-000052 RE: Tax Reform Workin From : "Muzinich, Justin" <"/o=ustreasury/ou=exchange admin istrat ive group (fydibohf23spdlt)/cn=recipients/cn=3 d2afce60d7e464fbd30ff8dbedefecb-muzinich, jus "> To: Date : >, "Callas, George" Wed, 26 Apr 2017 18:37:48 -0400 4:30 would also work better for me tmrw, but I am happy to join late as well. Ordinarily the proposed M, Th 4-6pm slots work well. Thanks for organizing this, George. From : Knight, Shahira Sent : Wednesday, April 26, 2017 3:59 PM To: 'Callas, George' ; Dunn, Brendan (McConnell) ; Kowalski, Daniel ; Prater, Mark (Finance) ; Angus, Barbara ; Muzinich, Justin ; Koenig, Andrew b(5) From : Callas, George (mailto:George .Callas@mail.house .gov] Sent : Wednesday, April 26, 2017 3:53 PM To: Dunn, Brendan (McConnell) ; Knight, Shahira E. >; 'Daniel .Kowa lski@treasury.gov' ; Prater, Mark (Finance) ; Angus, Barbara ; Justin.Muzinich@treasury.gov ; Koenig, Andrew D. Subject: RE: Tax Reform Working Group Agreed. b(5) b(5) From : Dunn, Brendan (McConnell) [mailto :Brendan Dunn@mcconnell .senate.gov ] Sent : Wednesday, A ril 26, 2017 3:52 PM To: 'Knight, Shahira >; 'Daniel.Kowalski@treasury.gov' ; Prater, Mark (Finance) ; Callas, George ; Angus, Barbara ; Justin .Muzinich@treasury .gov : Koenig, And rew Subject: RE: Tax Reform Wor king Group Perfect Brendan M. Dunn Policy Advisor and Counsel Office of the Senate Majority Leader From : Knight, Shahira UST 000327 TREAS-17-0313-A-000053 Sent : Wednesday, April 26, 2017 3:49 PM To: 'Daniel.Kowalski@treasury .gov' ; Prater, Mark (Finance) ; George.Callas@mail.house.gov : Barbara.Angus@mail.house.gov : Dunn, Brendan (McConnell) ; Justin.Muzinich@treasury.gov ; Koenig, Andrew Subject: RE: Tax Reform Working Group Fine with me. Just keep me on the calendar invite and I'll come by after my 4 PM ends. Thanks From : Daniel .Kowa lski@treasury.gov [mai lto:Da n iel .Kowa lski@treasury.gov ] Sent: Wednesday, April 26, 2017 3:46 PM To: Knight, Shahira >; Mark Prater@fioance ,senate ,goy; George.Callas@mail .house .gov : Barbara ,Angus@mail.house.gov : Brendan Dunn@mcconnell.senate.gov ; Justin .Muzinich@treasury .gov; Koenig, Andrew D. EOP/WHO Subject: RE: Tax Reform Working Group b(5) So how about 4:30 to 6:00 for the first meeting tomorrow? From : Knight, Shahira Sent : Wednesday, April 26, 2017 3:41 PM To: 'Prater, Mark (Finance)' ; Callas, George ; Angus , Barbara ; Dunn, Brendan (McConnell) ; Muzinich, Justin ; Kowalski, Daniel ; Koenig, Andrew D. Subject: RE: Tax Reform Working Group Just talked to Justin. We are trying to get our heads back above water after this rollout, so tomorrow is tough. We can make it at 4:30 tomorrow, but we would also be okay with starting the meetings on Monday unless you think there is a lot we can get done tomorrow. >; Koenig, Hey George, Glad to get the ball rolling. Suggest we alternate. We'll get S-124. Also, if convenient for Treasury, I'd suggest we rotate three venues. Do you guys want to start with hosting on the House side? From : Callas, George (mailto:George.Callas@mail.house.gov ] Sent : Wednesday, April 26, 2017 1:57 PM To: Angus, Barbara ; Prater, Mark (Finance) ; Dunn, Brendan (McConnel l) ; Justin. Muzin ich@treasury.gov ; -night,Shahira >·I Subject: Tax Reform Working Group UST 000328 TREAS-17-0313-A-000054 Hi everyone, Collectively, we represent my understanding of the membership of the staff working group. If anyone believes this list is over- or under-inclusive, please let me know. Our mandate is to meet this week, leaving Thursday or Friday. I think the later side of the day makes more sense, so I'm going to suggest 4-6 tomorrow. Starting next week, I think it makes sense to try to meet at the same times every week (and probably at least twice a week). b(5) b(5) b(5) Of course, every decision we make is provisional, ultimately make these decisions. in that Members, Senators, and the President For those who don't have phone numbers yet, my desk phone is b(6) and my mobile is ~ I look forward to working with all of you in the coming weeks and months on what ~e historic tax reform legislation. George George A. Callas Senior Tax Counsel Office of the Speaker UST 000329 TREAS-17-0313-A-000055 Where : 3120 Main Treasury When: Thu May 1816 :00:00 2017 (America/New_York) Until: Thu May 18 18:00:00 2017 (America/New_York) Required Attendees: "Kowalski , Daniel" Mark Prater Shahira Knight v> George Callas "Justin Muzinich (Justin.Muzinich@treasury .gov)" <"/o=ustreasury/ou=exchange administrative group (fydibohf23spdlt}/cn =recipients/cn =3d2afce60d7e464fbd30ff8dbedefecb-muzinich, jus"> barbara.angus@ma il.house. ov "Koeni Andrew Optional Attendees: "Monie, Alex (Finance)" "Rutledge , Preston (Finance)" "Coughlan, Tony (Finance)" Please get your clearance information (name as it appears on ID to include se~ ~citizenship , Country of birth, city and state of residence) to or ~ s soon as possible. Also, please forward to others who may want to attend. UST 000330 TREAS-17-0313-A-000056 Where : 3120 Main Treasury When: Thu Jun 01 16:00:00 2017 (America/New _York) Until: Thu Jun 01 18:00:00 2017 (America/New _York) • Required Attendees: I ... .• - •• • Based on Friday evening's , •• •• • - •• • -• •• • - •• •. • • ••• • • •• • •• •- •• . • . . •• email, this meeting will be mo ved to Thur sday at 3120 Main Trea sury . I've reserved 3120 M~in Tre~sury for Tuesd~y•s meeting. If you are on the original invitation, we have your WAVES information from last time you were here to clear you in for Tuesday . If the invitation has been forwarded to you , please send your name as on id, date of birth , social secur ity e t irth and city of residence to ,@treasury .gov as soon as you can. number, cit izensh t e I You can also call b(6) if you prefer to not send this information over emai l. :mm Tha nks. UST 000331 TREAS-17-0313-A-000057 RE: our tax Ian "Mahan, Roger" From : To: "Kowal ski, Daniel" Date : Thu , 27 Apr 20 17 13:49:25 -0400 b(S) From: Daniel.Kowalski@treasury.gov [ mailto :Daniel.Kowalski@treasury.gov] Sent: Thu rsday, April 27, 2017 12:17 PM To: Mahan, Roger Subject: RE: your tax plan b(S) From : Mahan, Roger [ma ilt o :Roger.Mahan @ma il.house .gov] Sent : Thursday, April 27, 2017 12:08 PM To : Kowalski, Daniel Subject: your tax plan Import ance: High b(S) KOM has to do an event with local government folks at 2:00 - b(S) UST 000332 TREAS-17-0313-A-000058 Tax Reform Workin - week 2 and be ond "Callas, George" From: To: "Angus, Barbara" , mark_prater@finance.senate.gov, "Dunn, Brendan (McConnell)" , "Muzinich, Justin" "Kowalski Daniel" , "Kni ht Shahira >, Date: Attachments: Fri, 28 Apr 2017 14:56:59 -0400 Tentative Work Plan for Tax Reform Working Group .docx (18.52 kB); Tax working group agenda 05.02.17.docx (19.23 kB) Hey everyone, Good first meeting yesterday . •attached two documents (which, as always, are to be kept confidential): First, a tentative, draft work plan for the staff-level meetings. Second, an agenda for next Tuesday's meeting . b(5) b(5) I welcome everyone's feedbac k. George George A. Callas Senior Tax Counsel Office of the Speaker UST 000333 TREAS-17-0313-A-000059 Re: Tax Reform Workin - week 2 and be ond From : "Muzinich, Justin" <"/o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=3d2afce60d7e464fbd30ff8dbedefecb-muzinich, jus"> To: "Callas, George" Date : Mon, 01 May 20 17 16:32:10 -0400 Thanks George. together. Best Justin b(5) I'm looking forward to getting this over the line a II From : Callas, George Date: May 1, 2017 at 10:16:38 AM EDT To : Muzinich, Just in Subje ct : Re: Tox Reform Working Group week 2 .:ind beyond • - - 1 , - • 11 - b(5) 1 b( 5) b(5) On Apr 28, 20 17, at 7:46 PM , "Justin.Muzinich@treasury.gov" wrote: Thanks George for putting this together . It is very helpful to have that longer term calendar. From : Callas, George Date: April 28, 2017 at 2:57:24 PM EDT To: M uzinich, Justin , Angus, Barbara , Dunn, Brendan (McConnell) ate. gov>, Knight, Shah i ra >, mark prater@f inance .senate.gov , Kowalski, Daniel , Meyer, Joyce >, > Subject: Tax Reform Working Group - week 2 and beyond Hey everyone, First, a tentative, draft work plan for the staff -level meetings. UST 000334 TREAS-17-0313-A-000060 b(5) es gge t 0 0 0 • y Second, an agenda for next Tuesday's meeting. It looks very similar to yesterday's agenda.b(5) I welcome everyone's feedback. George George A. Callas Senior Tax Counsel Office of the Speaker UST 000335 TREAS-17-0313-A-000061 Tomorrow's a enda and revised work Ian From : "Callas, George" To: "Angus, Barbara" , mark_prater@finance.senate.gov, "Dunn Brendan McConnell " , "Knight , Shahira "Muzinich , Jus tin" 1 I" , >, "S ,.. on er Am oemg, n rew m oerng, • Date: Wed, 03 May 2017 15:49:07 -0400 Attachments: Tentative Work Plan for Tax Reform Working Group .docx (18.66 kB); Tax working group agenda 05.04.17.docx (19.58 kB) ~""·,.,•~· ._,,,· ..,. ___ .:J ,• .. • • • • • • :1&e•:&eJ1,.'-&IJ...,,.,euJIU·--=-•..aa•.-,.,•--=·--""·""'•,.... ...•~--~•...,..,•-b(5) b(5) George George A . Callas Senior Tax Counsel Office of the Speaker UST 000336 TREAS-17-0313-A-000062 revised work Ian . .. •.. "Ca llas , George" From: To: I • : -. ... • - •• • .• - ,: . • Date: Attac hments: I . • ... • • • ••• •• ' Te ntative Wo rk Plan for Tax Refo rm Wo rking Group.docx (19. 12 kB) b(5) Have a great weekend everyone, George George A. Callas Senior Tax Counsel Office of the Speaker UST 000337 TREAS-17-0313-A-000063 Tax Reform Working Group Where: H-236 When: Tue May 0916:00:00 2017 (America/New _York) Until: Tue May 0918:00:00 2017 (America/New _York) Organiser: "Jordon, Ben" Required Attendees: "Jordon , Ben" "Angus, Barbara" mark_prater@finance.senate.gov brendan_dunn@mcconnell .senate.gov "Muzinich, Justin" "Kowalski Daniel" UST 000338 TREAS-17-0313-A-000064 Meeting Forward Notification: Tax Reform Working Group When: Mon May 08 14:30:00 2017 (America/New_ York) Until: Mon May 08 15:00:00 2017 (America/New_ York) Organiser: "Kowalski, Daniel" <"/o=ustreasury/ou=exchange administrative group (fyd ibohf23spd lt)/cn = recipients/en= cf6b4ee371 Of422fbceecb0020766838-kowalski, dan"> Required Attendee: "Jordon, Ben" Your meeting was forwarded Kowalski. Daniel has forwarded your meeting request to additional people. Meeting Tax Reform Working Group Meeting Time Tuesday, May 09, 2017 4:00 PM - Tuesday, May 09, 2017 6:00 PM Recipients b(6) All times listed are in the following time zone: (UTC-05:00) Eastern Time (US & Canada) UST 000339 TREAS-17-0313-A-000065 DEPARTMENT OF THE TREASURY WASHINGTON, D.C. April 5, 2018 Sara Kaiser Creighton Elizabeth France John E. Bies American Oversight 1030 15th Street NW, Suite B255 Washington, DC 20005 foia@americanoversight.org VIA UPS Re: American Oversight v. U.S. Department of the Treasury, 17-cv-2078-RBW (D.D.C.): Treasury April 5 Production Counsel: This letter describes the April 5, 2018 production from the U.S. Department of the Treasury (Treasury) in the above-referenced Freedom of Information Act litigation. Pursuant to the Court's February 2, 2018 Order, Treasury has reviewed and processed 60 documents collected in response to American Oversight's Congressional Communications FOIA Request, 2017-08-121. On a CD sent today via UPS, Treasury is producing 41 documents, comprising the non-exempt, responsive portions of the records within this collection. The documents are numbered UST 000340 - 000410; portions of these materials are withheld pursuant to Exemptions 5 and 6 of the FOIA. An additional 14 documents, totaling 22 pages, are being withheld in their entirety pursuant to Exemption 5, and five documents are non-responsive and/or duplicative of other materials within this collection and are therefore not being produced. Treasury is continuing to review records that are potentially responsive to this request and will respond to you again on or before May 7, 2018. If you have any questions concerning this production or a related matter, please contact Rebecca Kopplin, U.S. Department of Justice, at (202) 514-3953. Sincerely, Ryan Law Office of Privacy, Transparency, and Records US. Department of the Treasury One From : "Orr, Caleb (Rubio)" To: "Kowalski, Daniel" Date : Mon , 08 May 2017 15:34:45 -0400 Attachments: 170503 One-pager for WH meet ing on CTC.pdf (90.02 kB) Caleb Orr Legislative Assistant Senator Marco Rubio 202-224-3041 UST 000340 TREAS-17-0313-B-000001 RE: Childcare From : "Orr, Caleb (Rubio)" To: "Kowalski, Daniel" Date: Mon, 08 May 2017 16:54:52 -0400 Dan, thanks very much for taking the time for today's call. I appreciated you talking with me while you were at Budget and look forward to working with you on tax reform. I just wanted to add a note from the conclusion lvanka's op -ed in the WSJfrom the day the Trump campaign rolled out the child care plan (emphasis mine) : " ...every parent should have the freedom to make the best decisions for his or her family. My father is prepared to chart a new course that promotes strong families and celebrates their individual needs; one that honors, respects and empowers both working and stay-at-home mothers and caregivers. Together, we will take a stand and enable the American family and the modern workforce to thrive." h l tps ://www .ws j .com/a rlicl es/th e-lru rnp-p Ia n-wi II-he Ip-work ing-mo Lhe rs-14 73803187 b(5) Best, Caleb From: Daniel.Kowalski@treasury.gov [ mailto :Daniel.Kowalski@treasury.gov] Sent: Monday, May 08, 2017 2:17 PM To: Orr, Caleb (Rubio) Subject: RE: Childcare So my schedule was just changed, and tomorrow is no longer viable for me. Are you still available today? If so, can we talk at 3:30 today? Sorry for the change. From: Orr, Caleb (Rubio) [mailto:Caleb Orr@rubio .senate .gov] Sent: Monday, May 08, 2017 12:27 PM To: Kowalski, Daniel Subject: RE: Childcare Great, talk soon Dan. From: Daniel.Kowalski@treasury.gov [mailto:Daniel.Kowalski@treasury.gov] Sent: Monday, May 08, 2017 12:25 PM To: Orr, Caleb (Rubio) Subject: RE: Childcare Yes, that's my direct. Talk to you tomorrow. Dan From: Orr, Caleb (Rubio) (mailto:Caleb Orr@rubio .senate .gov] Sent: Monday, May 08, 2017 12:21 PM To: Kowalski, Daniel UST 000341 TREAS-17-0313-B-000002 Subject: RE: Childcare That works. Can I reach you at the number in your email signature? From: Daniel.Kowalski@treasury .gov [mailto:Daniel.Kowalski@treasury .gov] Sent: Monday, May 08, 2017 12:17 PM To: Orr, Caleb (Rubio) Subject: RE: Childcare Can we talk by phone tomorrow at 10:30? From: Orr, Caleb (Rubio} [mailto:Caleb Orr@rubio.senate .gov] Sent : Monday, May 08, 2017 12:10 PM To: Kowalsk i, Daniel Subject: RE: Childcare Dan, it's good to hear from you - I had seen your move to Treasury in the news, congratulations. Yes, and it would be great to talk with you about it . My open slots this week are: Monday, May 8, 3-4:30pm Tuesday, May 9, 10-llam Thursday, May 10 9:30-Noon Friday afternoon Let me know if any of these would work for you . Caleb Orr Legislative Assistant Senator Marco Rubio 202-224-3041 From: Daniel.Kowalski@treasury.gov [mailto:Daniel.Kowalski@treasury.gov ] Sent: Monday, May 08, 2017 11:49 AM To: Orr, Caleb(Rubio) Subject: Childcare Caleb, we met during the transition while I was sti ll at the Senate. I am now working at Treasury, and was wondering Let me know if you are still the correct point of contact, and we can perhaps set up a time for a call. Dan Kowalski Counselor to the Secretary Department of Treasury b(6) UST 000342 TREAS-17-0313-B-000003 RE: Tax Reform Workin "Callas , George" From : To: "Angus, Barbara" , mark_prater@finance.senate.gov, brendan_dunn@mcconnell. senate .gov, "Muz inich, Justin" <"ustin .muzinich treasu . ov> "Kowalski Daniel" , O" Date : Tue , 09 May 2017 10:45:20 -0400 Attachments : Tax working group agenda 05.09.17.docx (19.45 kB) Agenda for today attached. I hope you all appreciate how hard I work to squeeze these agendas onto a single page ... -----Or iginal Appo intment----From : Jordon , Ben Sent: Monday, May 08, 2017 1:43 PM To: Jordon, Ben; Angus , Barbara ; 'Mark_Prater @finance.senate.gov?; 'Brendan Dunn mcconnell. senate . ov'? 'Justin.Muzinich treasu . ov'? 'Daniel.Kowalsk i ,. ' en Subject: Tax Reform Work ing Group When : Tuesday, May 09, 2017 4:00 PM-6 :00 PM (UTC-05:00) Eastern Time (US & Canada). Where: H-236 UST 000343 TREAS-17-0313-B-000004 RE: SFC bi- artisan members meetin on tax reform From : "Bailey, Bradley" <"/o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn= 7eb678b02d9b41 c0af365038a082c58e-ba iley, bradI"> "Prater, Mark (Finance)" To: Cc: @hatch.senate.gov> Date : Thu, 11 May 201714:40:42 -0400 Mark, Thank you very much . Part of our scheduling team is out until Monday but I hope to have at least a tentative response on which option might be best today or tomorrow. Brad From : Prater, Mark (Finance) [mailto :Mark_Prater@finance.senate.gov] Sent: Thursday, May 11, 2017 2:26 PM To: Cc: . . Hatch.Senate.gov> Subject: RE:SFCbi-partisan members meeting on tax reform Brad, We've got a bit more concrete set of options for you guys. House folk are planning on exiting the afternoon of the 25th . So, W+M could do afternoon of the 24th and then we'd do a.m. of 25th or W+M could do a.m. on the 25th and SFCwould do the p.m. on the 25th . UST 000344 TREAS-17-0313-B-000005 Re: Tax Reform Workin "Callas, George" From : To: "Angus, Barbara" , mark_prater@finance.senate.gov, brendan_dunn@mcconnell.senate .gov, "Muzinich, Justin" <"ustin.muzinich treasu . ov> "Kowalski Daniel" , O" Date : Attachments : Thu , 11 May 2017 14:57:14 -0400 Tax working group agenda 05.11.17.docx (19.42 kB) Agenda for today. I will bring hard copies of what I believe the staff rec looks like so we can all get on the same page as to what exact ly we 've agreed to. 'Kn ight, Shah ira E. EOP WHO " Subject: RE: Tax Reform Wo rki ng Group Agenda for today attached . I hope you all appreciate how hard I work to squeeze these agendas onto a single page ... Jordon , Ben Tax working group agenda 05.09.17.docx UST 000345 TREAS-17-0313-B-000006 Re: Child Tax Credit From : To: Date: "Baig, Wendy (Lee)" "Kowalski, Daniel" Thu , 11 May 2017 16:53:33 -0400 Perfect. We can meet in the Steering office, Russell 164. See you tomorrow. Wendy Wendy Baig Executive Director Senate Steering Committee From: "Danie l.Kowalski@treasury .gov" Date: Thursday, May 11, 2017 4:20 PM To: Wendy Baig Subject: Re: Child Tax Credit Yes. Let me know where to meet you. From: Baig, Wendy (Lee} Date : May 11, 2017 at 3 :49:59 PM EDT To: Kowalski, Daniel Cc: Brown, Clint (Lee} , Woodruff, Christy (Lee} , Connolly, Michael (Lee) Subject: Re:Child Tax Credit Hi Dan. I'm sure things are quite exciting over at Treasury. Tomorrow works for us. Does 11:30 am work for you? Wendy Wendy Baig Executive Director Senate Steering Committee From : "Daniel.Kowal ski@treasury .gov " Date : Thursday , May 11, 2017 12:12 PM To: Wendy Baig Cc: "Connolly, Michael (Lee)" , "Woodruff, Christy (Lee)" , "Brown, Clint (Lee)" Subject: RE: Child Tax Credit Hi Wendy. I'm doing very well . It's an exciting time to be at Treasury. b(5) I know it's short notice, but do you want to get a meeting together for tomorrow? Treasury Secretary is in Ita ly, so it's a pretty light day for me. UST 000346 I can come to you. TREAS-17-0313-B-000007 Dan From : Baig, Wendy (Lee} [mailto:Wendy Baig@lee.senate .gov ] Sent : Thursday, May 11, 2017 11:56 A M To: Kowalsk i, Daniel Cc: Connol ly, M ichael (Lee) j Woodruff, Christy (Lee} ; Brow n, Clint (Lee) Subject: Chi ld Tax Credit Hi Dan, I hope you're doing well. b(5) Thanks, Wendy Wendy Baig Executive Director Senate Steering Committee UST 000347 TREAS-17-0313-B-000008 ,.... C__ T....;; C_& ~ ~aY-rolltax liabilit "Orr , Caleb (Rubio)" From : To : "Kowalski, Daniel" Fri, 12 May 2017 14:53:11 -0400 Date : Attachment s: Rubio Lee Letter to Finance and WM 1.18.17.pdf (349.28 kB); Lee- Rubio CTC.pdf (1.35 MB) Hey Dan, Just wanted to clarify that the one -pager from Senator Rubia's meeting with lvanka I sent you is about the comparative advantages of the Chi ld Tax Credit, broadly , for solving the problems that President Trump and lvanka Trump identified during his presidentia l campaign and in office . we'd like to go. If you have any questions, please let me know . Caleb Orr Legislative Assistant Senator Marco Rubio 202-224-3041 UST 000348 TREAS-17-0313-B-000009 tlnitcd~rates~cnatr WASHINGTON. DC 20510 January 18, 2017 The Honorable Orrin Hatch Chairman Senate Committee on Finance 219 Dirksen Senate Office Building Washington, D.C. 20510 The Honorab le Ron Wyden Ranking Member Senate Committee on Finan ce 219 Dirksen Senate Office Building Washington, D.C. 20510 The Honorable Kevin Brady Chairman House Committee on Ways and Means 1102 Longworth House Office Building Washington, D.C. 20515 The Honorab le Richard Neal Ranking Mem ber House Committee on Ways and Means 1139E Longworth House Office Building Washington, D.C. 20515 Dear Chairman Hatch, Chairman Brady, Ranking Mem ber Wyden, and Ranking Member Nea l: We write in support of completing tax reform during the 115th Congress, and we appreciate the diligent work your committees are doing to ensure we modernize the tax code, encourage economic growth, and empower American workers and families. We have long advocated for reducing the burden of double taxation and freeing privatesector investment from tax penalties through full expensing, and we are glad to see House Republicans share these priorities . Of course, tax reform should not only reduce the burdens that businesses face, but also do the same for working families. Families are the building blocks of our country, the fundamental units of society, and vital to passing down our values from generation to generation. Strong families are also incubators of economic opportunity, financial security, and generate the social capital upon which our free enterprise economy and constitutional republic depend. With this in mind, it is concerning that our tax code today treats parents unfairly. The payroll taxes that help pay for federal retirement benefi ts fall on American parents who simultaneously bear the financial cost of raising their children, the next generation of workers whose paychecks will be taxed to fund federal retirement benefits. This function of the tax code creates an implicit "pa rent tax penalty" - in effect, a tax bias against parents. President-elect Trump recognizes this problem, saying that "very little meaningful policy work has been done" to help parents afford the costs of raising children. In 2016, we proposed correcting this inequity with a larger child tax credit, applicable to both income and payroll taxes. Other policy options might produce similar resu lts, but we believe the solution should benefit as many parents as possible, and especially that it not privilege wealthier families, or discriminate against moms and dads who choose to stay at home to care for their children full UST 000349 TREAS-17-0313-B-000010 time. This is why we believe comprehensive tax reform worthy of the name must elim inate the current "parent penalty >> and include specific tax relief for working parents. Tax relief for working families has been a bipartisan effort in the past, and we hope that will continue to be the case this year. As your committees draft legislation to reform the tax code , we urge you to carefully cons ider the merits of our proposal and ensu re tax fairness for working families is not left out. Sincerely, Marco Rubio U.S. Senator UST 000350 ?t;~f{ -~ Mi Lee U .S. Senator TREAS-17-0313-B-000011 Economic Growth and Family Fairness TaxPlan Child Tax Credit Consolidation and Enhancement Current Law : There are several credits that exist under current law that help mitigate the cost ofraisi ng children. These include the Child Tax Credit, the Dependent Care Credit, and the Adoption Tax Credit, among others. The current Child Tax Credit is defined by a formula, limited to $1,000 in value. xxxi Our Changes: This plan maintains current law for most child -related tax provisions while creating a new child tax credit. This tax credit is limited to a maximum of $2,500 per qualifying chi ld. The new credit is partially refundable, limited to the sum of total income and payroll tax liabilities, including employer -side payroll tax liability. There is no phase-out as exists under the ex isting child tax cred it. The new ch ild tax credit will be charged after all other tax credits. Why We Make The se Changes: Under current law, Social Security and Medicare , the old-age entitlement programs, are funded on a pay-as-you-go basis , not accord ing to long-term payments into the system. As parents simultaneously pay payroll taxes while also paying to raise the next generation that wi ll pay payro ll taxes. parents pay more into the oJd-age entitlement systems. This creates a situation known as the '?Parent Tax Penalty" where parents pay more, but are not compensated for these payments. Our approach to refundability on the new Child Tax Cred it is taken because payroll taxes fund the entitlement system, and this plan is specifically aimed at eliminating the inequity of tax treatment for those financing the entitlement system in the future via investment in children. -- , ?. Creating Family Fairness in the Tax Code UST 000351 \... ..,;;;. . ~ - TREAS-17-0313-B-000012 19 RE: SFC bi- artisan members meetin on tax reform From : "Prater, Mark (Finance)" To : "Curry, Cat E. EOP/W HO" >, "Bailey, Bradley" Cc : >, o reasury .gov>, ' . Date : ov> , "Koenig, Andrew D. EOP/WHO" treasury.gov>' treasury .gov> ?,ma Fri, 12 May 2017 15:42:41 -0400 Thanks, Cat. Leader McConnell is hosting the 3:30 p.m. meeting with the principals of the tax reform working group, including Speaker Ryan, Chairman Brady, and Chairman Hatch. I defer to lltT:lllbut it looks like Chairman Hatch has availability in the 9 a.m. - 11 a.m. window on Wednesday morning for the SFCbi-part members meeting. From : Curry, Cat E. EOP/WHO [mailto Se nt : Friday, May 12, 2017 3:22 PM To: Prater, Mark (Finance) ; Brad ley.Bailey@treasury.gov Hatch .Senate.gov>; Koenig, Andrew D. EOP/WHO ' treasury.gov; o o treasury .gov; b(6) - @treasury .gov Subject: RE: SFCbi-partisan members meet ing on tax reform Hi all, We have the tax principals' meeting on the calendar for 3:30 pm on Wednesday. Please confirm that's what you ' re holding for Chairman Hatch. Thursday will not work as I believe either Secretary Mnuchin is traveling. We may have availability earlier in the day on Wednesday, but that's still being ironed out. Prater@finance .senate.gov ] Thanks, Brad. From : Bradley .Bailey@treasury .gov [mailto:Bradley .Bailey@ t reasury .gov] Sent : Friday, May 12, 2017 2:48 PM To: Prater, Mark (Finance) Hatch .Senate . ov>; Cc: lfttri J ? I :@treasury.gov: ~ lltrt:t:inloooa@1re.a.s.1!.CY.i8ml: . 0 je ct: RE: SFCbi-partisan members meet ing on tax reform Thanks Mark. Looping In folks from both teams to figure out if either slot is possible. From : Prater, Mark (Finance) [mailto :Mark Prater@finance .senate.gov ] UST 000352 TREAS-17-0313-B-000013 Sent : Friday, May 12, 2017 12:15 PM To: Bailey, Bradley Cc: lfiiri j @Hatch .Senate .gov> Subje ct: RE: SFCbi-partisan members meeting on tax reform Brad, On the bi-part SFC members meeting, after talking with Ruth, it looks like we could do the meeting, if it works for Mr. Cohn and the Secretary, in two slots: At 3:30 p.m. - 4:30 p.m. on Wednesday, May 17th , right after the tax reform principals' meeting; or Thursday afternoon, from 1:30 p.m. on. 1. 2. Brad, Chris Campbell has talked with W+M and they would probably want a hearing that day (think we were talking about the 25 th ) as well. You may want to confirm with D Stew. So, maybe have the Secretary go to one committee in the a.m. and the other in the p.m. Ruth can work through the logistics with you guys' scheduler. Thanks. Thanks, Brad. Can you give me a shout at 202-812-0118? Thanks. : o ... ..... . . . :o I I :o o ! o l oI .. o .. . . !o o . o.. . ... :o .!o . !o o b6 .. ' o !o ~ .I ! o . .o !o .o Thanks Mark. Adding others from our team as wel l to coordinate next week. We will plan for the week after Memorial Day for the budget hearing. UST 000353 TREAS-17-0313-B-000014 Thank you, Mark. Andy, is a bipartisan SFCmeeting possible next week? CC'ing Jonny Slemrod on budget hearing t iming . Sent from my iPhone On May 10, 2017, at 3:40 PM, Prater, Mark (Finance} wrote: Amy and Brad, Chairman Hatch would like to invite Secretary Mnuchin and NEC Director Cohn to meet with all the members of the Finance Committee next week. Ranking Member Wyden has agreed to do the meeting. The purpose of the meeting wou ld be a frank discussion of the opportunities and challenges for bipartisan agreement on tax reform in the Finance Committee. Chairman Hatch would like to conduct this meeting prior to the release of the Administration's budget. In addition, committee Democrats have requested the customary set of hear i ngs for relevant cabinet members after the budget is released . If the budget is released on May 22 nd, then we would target the first week after the Memorial Day Recess for hearings with Treasury, HHS,and USTR. b(6) is Chairman Hatch's scheduler and is cc'd on this e-mail. Let me know if you'd like to discuss further . You can reach me at 202-224-5493 or 202-812-0118. Thanks . UST 000354 TREAS-17-0313-B-000015 From : To: Date : "Kowalski, Daniel" <"/o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients /cn=cf6b4ee37 1Of422fbceecb0020766838-kowalski, dan"> "Orr, Caleb (Rubio)" Fri, 12 May 2017 19:23:02 -0400 Thank you . 1113 b(5) I 2 Dan From: Orr, Caleb (Rubio) [mailto:Caleb _Orr@rubio.senate.gov] Sent : Friday, May 12, 2017 2:53 PM To: Kowalski, Daniel Subject: CTC & payroll tax liability Hey Dan, Just wanted to clarify that the one-pager from Senator Rubia's meeting with lvanka I sent you is about the comparative advantages of the Child Tax Credit, broadly, for solving the problems that President Trump and lvanka Trump identified during his presidentia l campaign and in office . I've attached some Rubio & Lee documents to show the direction we'd like to go. If you have any questions, please let me know. Caleb Orr Legislative Assistant Senator Marco Rubio 202-224-3041 UST 000355 TREAS-17-0313-B-000016 Re: Tax Reform Workin From : "Muzinich , Justin" <"/o=ustreasury/ou=exchange admin istrat ive group (fydibohf23spdlt )/cn=recipients /cn=3d2afce60d7 e464fbd30ff8dbedefecb-muzinich, jus "> To: mark_prater@finance.senate.gov , ' n us Shahira E. EOP/WHO " brendan_dunn@mcconnell .senate .gov Date : Fri, 12 May 2017 21 :46:42 -0400 A quick update on tim ing. o From: Callas, George Date: May 11, 2017 at 2:57:44 PM EDT To: Muzinich, Justin , ' Mork Pratcr@financc.scn;:itc , . ov ' >, Kowalski, Agenda for today. I will bring hard copies of what I believe the staff rec looks like so we can all get on the same page as to what exactly we 've agreed to. From: George Date: Tuesday, May 9, 2017 at 10:45 AM To: "Angus , Barb ara", " ma rk prate r@fi nance.senate .gov ", Brendan Dunn, " 'Just in.M uzinich treasur . ov "', "' Dan iel.Kowa lski t reasur . ov "', "Kn ight, Shahira E. EOP/WHO" Subject: RE:Tax Reform Working Group Agenda for today attached. I hope you all appreciate how hard I work to squeeze these agendas onto a single page ... Jordon, Ben Tax working group agenda 05.09.17.docx UST 000356 TREAS-17-0313-B-000017 Tax Working Group Where: 3120 Main Treasury When: Thu May 1816 :00:00 2017 (America/New_York) Until: Thu May 1818 :00:00 2017 (America/New _York) Organiser: "Kowalski, Daniel" <"/o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cf6b4ee371 Of422fbceecb0020766838-kowalski, dan"> Required Attendees: "Kowalski, Daniel" Mark Prater Shahira Knight > George Callas "Muzinich, Justin" barbara.angus@mail.house.gov "Koeni Andrew D. EOP/WHO Optional Attendee: Also, please forward to others who may want to attend. UST 000357 TREAS-17-0313-B-000018 RE: SFC bi- artisan members meetin on tax reform From : "Prater, Mark (Finance)" To: Cc: "Bailey, Bradley" b(6) o hatch.senate.gov> Date : Mon, 15 May 2017 10:14:06-0400 Thanks, Brad. From: Bradley.Bailey@treasury.gov [mailto:Bradley.Bailey@treasury Sent: Monday, May 15, 2017 10:03 AM To: Prater, Mark (Finance) Cc:. o Hatch .Senate .gov> Subject: RE: SFC i-partisan mem ers meeting on tax reform .gov] Apologies for the delay on our end. Most of our team responsible for this was either at the G-7 or out when this came in . It's in process today . Prater@finance.senate .gov] ov> Hey Brad, Checking up on this. We indicated flexibility to accommodate W+M . From: Prater, Mark (Finance) Sent: Thursday, May 11, 2017 1:53 PM To: 'Bradley .Bailey@treasury.gov' @Hatch .Senate .gov> Cc: [htij Subject: FW: SFCbi-partisan members meeting on tax reform Brad, Chris Campbell has talked with W+M and they would probably want a hearing that day (think we were talking about the 25th ) as well. You may want to confirm with D Stew. So, maybe have the Secretary go to one committee in the a.m. and the other in the p.m. Ruth can work through the logistics with you guys' scheduler. Thanks. Hatch .Senate . ov>; Khosla, Thanks, Brad . UST 000358 TREAS-17-0313-B-000019 Can you give me a shout at 202-812-0118? Thanks. . . o . ... . o . . o. I I =? o o . oo . ... =? finance .senate. ov> . o .. o .. !o o .!o !o .. .o !o .o Thanks Mark. Adding others from our team as wel l to coordinate next week. We will plan for the week after Memorial Day for the budget hearing. Koenig, Andrew D. EOP/WHO < , Knight, Shahira E. EOP WHO Bailey, Brad ley , , o iiibJ @Hatch.Senate.gov >,Campbell, Chris (Finance) Subject: Re: SFCbi-partisan members meeting on tax reform Thank you, Mark. Andy, is a bipartisan SFCmeeting possible next week? CC'ing Jonny Siem rod on budget hearing t iming. Sent from my iPhone On May 10, 2017, at 3 :40 PM, Prater, Mark (Finance) wrote : Amy and Brad, Chairman Hatch would like to invite Secretary Mnuchin and NEC Director Cohn to meet with all the members of the Finance Committee next week. Ranking Member Wyden has agreed to do the meeting. The purpose of the meeting wou ld be a frank discussion of the opportunities and challenges for bipartisan agreement on tax reform in the Finance Committee. Chairman Hatch would like to conduct this meeting prior to the release of the Administration's budget . In addition, committee Democrats have requested the customary set of hearings for relevant cabinet members after the budget is released. If the budget is released on May 22nd, then we would target the first week after the Memorial Day Recessfor hearings with Treasury , HHS,and USTR. b(6) is Chairman Hatch's scheduler and is cc'd on this e-mail. UST 000359 TREAS-17-0313-B-000020 Let me know if you'd like to discuss further. You can reach me at 202-224-5493 or 202-812-0118. Thanks. UST 000360 TREAS-17-0313-B-000021 RE: calendar From : To : "Dunn, Brendan (McConnell)" Cc : "Kowalski, Daniel" Date : Mon , 15 May 20 17 10:52:48-0 400 Atta chme nts: Proposed Tax Reform Calendar 05 12 17.x lsx ( 11.21 kB) "Muzinich, Justin" Brendan M. Dunn Policy Advisor and Counsel Office of the Senate Majority Leader From: Justin. Muzin ich@treasury.gov [mailto:Justin. Muzin ich@treasury.gov] Sent : Monday, May 15, 2017 9:49 AM To: Dunn, Brendan (McConnell} Cc: Daniel.Kowalski@treasury.gov Subject: RE: calendar thank s From : Dunn, Brendan (M cConnell) [mailto:Brendan Dunn@mcconnel l.senate .gov] Sent : Monday, May 15, 2017 9:49 AM To: Muzinich, Justin Cc: Kowalski, Danie l Subje ct: Re: calend ar Will have before your meeting today Sent from my iPhone On May 15, 2017, at 9:40 AM, "Justin.Muzinich@treasury .gov " wrote: b(5) b(5) UST 000361 TREAS-17-0313-B-000022 RE: calendar From: "Muzinich, Justin" To: "Dunn, Brendan (McConnell)" Cc: "Kowalski Daniel" , "Knight, Shahira E. EOP/WHO" > Date: Mon, 15 May 201711:33:17-0400 Attachments: Proposed Tax Reform Calendar 051217.xlsx (11.21 kB) b(5) __ _ _________ _ b(5) From: Dunn, Brendan (McConnell) [mailto:Brendan _ Dunn@mcconnell.senate.gov] Sent: Monday, May 15, 2017 10:53 AM To: Muzinich , Justin Cc: Kowalski, Daniel Subject: RE: calendar Brendan M. Dunn Policy Advisor and Counsel Office of the Senate Majority Leader From: Justin. Muzin ich@treasury .gov [mailto :Justin. Muzin ich@treasury .gov] Sent: Monday, May 15, 2017 9:49 AM To: Dunn, Brendan (McConnell) Cc: Daniel.Kowalski@treasury.gov Subject: RE: calendar thanks From : Dunn, Brendan (McConnell) [mailto:Brendan Dunn@mcconnell.senate .gov) Sent : Monday, May 15, 2017 9:49 AM To: Muzinich, Justin Cc: Kowalski, Daniel Subject: Re: calendar Will have before your meeting today Sent from my iPhone On May 15, 2017, at 9:40 AM, "Justin.Muzinich@treasury.gov " wrote: Hi Brendan - b(5) b(5) UST 000362 TREAS-17-0313-B-000023 Tax Working Group Where: 3120 Main Treasury When: Thu May 1816 :00:00 2017 (America/New_York) Until: Thu May 1818 :00:00 2017 (America/New _York) Organiser: "Kowalski, Daniel" <"/o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cf6b4ee371 Of422fbceecb0020766838-kowalski, dan"> Required Attendees: Mark Prater Shahira Knight > George Callas "Justin Muzinich (Justin.Muzinich@treasury.gov)" <"/o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=3d2afce60d7e464fbd30ff8dbedefecb-muzinich, jus"> barbara .angus@mail .house.gov "Koen i Andrew D. EOP/WH Optional Attendee: Please get your clearance information (name as it appears on ID to include midd le name, date of birth , social @treasury .gov security number , citizenship , Country of birth, city and state of residence) tojfiiri as soon as possible. or J o Also, please forward to others who may want to attend. UST 000363 TREAS-17-0313-B-000024 RE: Next Tax Workin From : meetin "Ca llas, Geo rge" To : Da te : Mon , 15 May 20 17 15 :00:35 -0400 Atta chments : Te ntative Wo rk Plan for Tax Refo rm Wo rking Group .docx (19. 32 kB) From : Daniel .Kowa lski@treasury .gov [mai lto :Daniel .Kowa lski@treasury .gov] Se nt : Monday, May 15, 2017 1:55 PM To: Angus, Barbara; Mark _ Prater@finance .senate. Brendan _ Dunn@mcconne ll.senate.gov ; Ju st~ as u ry. gov Cc: ~ @treasury.gov Subject: RE: Next Tax Working Group meeting I just checked, and the room is available for us on Thursday, so let's make the switch . For those who submitted their info, Pam will switch it to Thursday. Others, you still need to submit clearance info, but you have a little more time . Dan From : Angus, Barbara [mailto:Barbara.Angus@mail.house.gov ] Sent : Monday, May 15, 2017 1:50 PM To: 'Prater, Mark (Finance)' ; Callas, Geor e ; 'Knight, Shahira E. EOP/WHO' Kowalski, Danie l ; Dunn, Brendan (McConnell) ; Koenig, Andrew D. EOP/WHO Muzinich, Justin Cc:j;fi;i @treasury .gov> Subject : RE: Next Tax Working Group meeting >?I If we could make a switch in venue work for tomorrow, that would be a huge help for Mark and me. Thanks very much for considering! Barbara M. Angus Chief Tax Counsel Committee on Ways and Means 202.225.5522 From : Prater, Mark (Finance) [mailto :Mark Prater@finance.senate.gov ] Sent: May 15, 2017 1:23 PM To: Callas Geor e ; 'Knight, Shahira E. EOP/WHO' ; 'Daniel.Kowalski@treasury.gov' TREAS-17-0313-B-000025 ; Dunn, Brendan (McConnell) ; Angus, Barbara ; Koenig, Andrew D. EOP/WHO Jus ? . uzi ich Cc: treasu . ov Subject: RE: Next Tax Working Group meeting Barbara and I were chatting and she pointed out that our two bosses are scheduled to meet tomorrow at 5:30 p.m. Is it possible to switch the venues for the Tuesday and Thursday meetings with S-124 for Tuesday and Treasury for Thursday? If not, we can leave as is, but Barbara and I would need to leave far enough in advance of the 5:30 p.m. meeting to be on time. let us know. Thanks. From : Callas, George [mailto:George .Callas@mail.house.gov ] Sent: Monday, May 15, 2017 11:14 AM To: 'Knight, Shahira E. EOP/WHO' >; 'Daniel.Kowalski@treasury.gov' ; Prater, Mark (Finance) ; Dunn, Brendan (McConne ll) ; Angus, Barbara ; Koenig, Andrew D. EOP/WHO Justin.Muzinich@t reasury .gov Cc: Jfff;i @treasury .gov Subject: RE: Next Tax Working Group meeting This makes sense to me, and my mind was already trending in that same direction . From : Knight, Shahira E. EOP/WHO mailto Se nt: Monday, May 15, 2017 10:01 AM To: 'Danie l.Kowalski@treasury.gov'; Mark Prater@Finance .senate.gov ; Callas, George; Brendan Dunn@mcconnel l.senate .gov; Angus, Barbara; Koenig, Andrew D. EOP/WHO; Justin.Muzinich@treasury .gov @treasu ry.goy Cc: j;tt:i Subject : RE: Next Tax Working Group meeting All, Justin and I just spoke. I can't make it to the meeting tomorrow because I have a principals meeting at the White House at 5 PM. However, Justin and I agree that tomorrow's meeting is best spent on two issues: Thanks, Shahira UST 000365 TREAS-17-0313-B-000026 It's Treasury's turn to host. We'll meet tomorrow from 4 to 6 in room 3120 Main Treasury. Please get your clearance information (name as it appears on ID to include middle name, date ~security number, ~untry of birth, city and state of residence} to ~copied here, or at lil.'9---as soon as possible. Also, please forward to others who may want to attend. Thanks, Dan UST 000366 TREAS-17-0313-B-000027 clarification on b(5) I From: "Morgan, Richard (Toomey)" To: "Kowalsk i, Daniel" Cc: "Herndon , Randy (Toomey) " Date : Mon, 15 May 2017 17:30:06 -0400 Dan, When you have a chance, o o Rick Morgan Policy Advisor for Budget and Tax Issues U.S. Senator Pat Toomey Russell Senate Office Building 248 Washington, DC 20510 Office: 202-224-4254 Email: Richard_Morgan@toomey.senate.gov UST 000367 TREAS-17-0313-B-000028 Revised calendar From: "Kowalski, Daniel" To: Date : "Brendan Dunn (Brendan_Dunn@mcconnell.senate.gov)" , George Callas "Muzinich Justin" , Shahira Knight > Mon, 15 May 2017 17:41:01 -0400 Attachments: Proposed Tax Reform Calendar 051517.xlsx (11.01 kB) I've attached a more developed version of the calendar we've all seen earlier today. b(S) b(S) Let me know what you think. UST 000368 TREAS-17-0313-B-000029 RE: Next Tax Workin meetin To: Cc: Date : b(6) , Mon, 15 May 2017 17:52:13 -0400 From : Prater, Mark (Finance) [mailto:Mark _ Prater@finance.senate.gov] Sent : Monday, May 15, 2017 3:21 PM To: Kowalsk i, Daniel ; ~~~M t&?Muz\nich@treasury.gov> ov>; Barbara.Angus@ma il.house .gov; ; Dunn, Brendan (McConnell) Muzinich, Justin @treasury.gov> Subject: RE: Next Tax Working Group meeting Thanks, Dan. From: Daniel.Kowalsk i@t reasury.gov [mailto:Daniel .Kowalski@treasury .gov] Sent : Monday, May 15, 2017 1:55 PM To: Barbara .An us mail.house . ov ? Prater George .Callas@mail .house .gov; ; Justin .Muzin ich@treasury .gov Cc: l@treasury .gov Subject: RE: Next Tax Working Group meeting Mm I just checked, and the room is available for us on Thursday, so let's make the switch. For those who submitted their info, Pam will switch it to Thursday. Others, you still need to submit clearance info, but you have a little more time. Dan From : Angus, Barbara [mailto :Barbara.Angus@mail.house.gov ] Sent : Monday, May 15, 2017 1:50 PM To: 'Prater, Mark (Finance)' ; Callas, George ; 'Knight, Shahira E. EOP/WHO' Kowalski, Daniel ; Dunn, Brendan McConnell ; Koenig, Andrew D. EOP/WHO >; Muzinich, Justin Cc: treasu . ov> Subject: RE: Next Tax Working Group meeting If we could make a switch in venue work for tomorrow, that would be a huge help for Mark and me. Thanks very much for considering! Barbara M. Angus Chief Tax Counsel Committee on Ways and Means 202.225.5522 UST 000369 TREAS-17-0313-B-000030 From: Prater, Mark (Finance} [mailto:Mark Prater@finance.senate.gov ] Sent: May 15, 2017 1:23 PM To: Callas Geor e ; 'Knight, Shahira E. EOP/WHO' ; 'Daniel.Kowalski@treasury.gov' ; Dunn, Brendan (McConnell} ; Angus, Barbara ; Koenig, Andrew D. EOP/WHO Justin .Muzinich treasu . ov Barbara and I were chatting and she pointed out that our two bosses are scheduled to meet tomorrow at 5:30 p.m . Is it possible to switch the venues for the Tuesday and Thursday meetings with S-124 for Tuesday and Treasury for Thursday? If not, we can leave as is, but Barbara and I would need to leave far enough in advance of the 5:30 p.m. meeting to be on time. let us know . Thanks. From: Callas,George[ mai lto :Georee .Callas@mail.house .eov] Sent: Monday, May 15, 2017 11:14 AM To: 'Knight, Shahira E. EOP/WHO' 'Daniel.Kowalski@treasury.gov' ; Prater, Mark (Finance) ; Dunn, Brendan (McConne ll) ; Angus, Barbara ; Koenig, Andrew D. EOP/WHO Justin .M uzi nich@t reasury.gov Cc: Jilt,;;l ? l l @treasury.gov Subject: RE: Next Tax Working Group meeting This makes sense to me, and my mind was already trending in that same direction. From : Knight, Shahira E. EOP/WHO mailto Sent: Monday, May 15, 2017 10:01 AM To: 'Danie l.Kowalski@treas ury .gov'; Mark Prater@Finance .senate .gov ; Callas, George; Brendan Dunn@mcconnel l.senate.gov ; Angus, Barbara; Koenig, Andrew D. EOP/WHO; Justin.Muzinich@treasury.gov Cc: treasu . ov Sul>Ject: : ext ax Working Group meeting All, Justin and I just spoke. I can't make it to the meeting tomorrow because I have a principals meeting at the White House at 5 PM. However, Justin and I agree that tomorrow's meeting is best spent on two issues: b(5) b(5) Thanks, Shahira From : Daniel.Kowalski@treasury.gov [mailto :Daniel .Kowalski@treasury .gov] Sent: Monday, May 15, 2017 9:49 AM To: Mark Prater@Finance .senate .gov; Knight, Shahira E. EOP/WHO UST 000370 TREAS-17-0313-B-000031 ; George .Callas@mai l.house.gov ; ate. ov; Barbara .Angus@mai l.house .gov; Koenig, Andrew D. Justin .Muzi n ich@treasury .gov It's Treasury's turn to host. We'l l meet tomorrow from 4 to 6 in room 3120 Main Treasury. Please get your clearance information (name as it appears on ID to include middle name, date o I o I o o security number, citizenship, Country of birth, city and state of residence) to b(6) as soon as possible. copied here, or atli(;J Also, please forward to others who may want to attend. Thanks , Dan UST 000371 TREAS-17-0313-B-000032 RE: Tax Reform Workin From: To: "Muzinich, Justin" Date : Mon, 15 May 2017 18:01:13-0400 Attachments: Leadership Mtg Options_2017 _05_ 1S_No Numbers.xlsx (14.57 kB) "Callas, George" , "Angus, Barbara" , mark_prater@finance.senate.gov, brendan_dunn@mcconnell.senate. ov "Kowalski Daniel" 'Knight, Shahira E. DO NOT FORWARD From: Callas, George [mailto:George.Callas@mail.house.gov] Sent: Thursday, May 11, 2017 2:57 PM To: Angus, Barbara ; 'Mark_Prater@finance.senate.gov' ; 'Brendan _Dun n@mcconnell .senate.gov ' ; Muzi nich, Justin ; >; Knight, Shahira E. EOP/WHO Subject: Re: Tax Reform Working Group Agenda for today. I will bring hard copies of what I believe the staff rec looks like so we can all get on the same page as to what exactly we've agreed to. ", "Knight, Shahira E. EOP WHO" Subject: RE: Tax Reform Working Group Agenda for today attached. I hope you all appreciate how hard I work to squeeze these agendas onto a single page ... -----Original Appointment----From: Jordon, Ben UST 000372 TREAS-17-0313-B-000033 Sent: Monday, May 08, 2017 1:43 PM To: Jordon, Ben; Angus, Barbara; 'Mark 'Brendan ov'; 'Justin.Muzinich ov'; #2 Jordon. Ben Su ject: Tax Re orm Wor ing Group When: Tuesday, May 09, 2017 4:00 PM (UTC-05200) Eastern Time (US Canada). Where: H-236 Tax working group agenda 05.09.17.docx UST 000373 TREAS-17-O313-B-000034 How to make America's corporate tax system the most competitive in the world Many economists have shown that the burden of the corporate tax is borne by employees and consumers in the form of lower wages and higher prices. Instead of making employees and consumers pay the corporate tax , why not institute a true "Warren Buffet" tax and shift the burden to the owners? Eighty-one percent of American businesses are Subchapter S or limited liability corporations - they operate as "pass through" entities for tax purposes. Their business income is attributed directly to the owners where it is taxed at the individual level. We should tax domestic C-corporation income at the ownership level as well. There would be a number of issues to resolve , but with modem accounting techniques and computing power , it is certainly possible to attribute C-corp income to their shareholders. Once income (which I suggest should be defined as operational cash flow) is attributed , businesses would make a back-up withholding payment equal to 25% for owner taxes - similar to what they currently do for payroll taxes. That would cover the vast majority of taxes owed by shareholders. To the extent that an individual's tax rates differ from the withheld rate , those individual taxpayers would claim a refund or pay the remaining tax due. The required business tax withholding payment is, in effect , a forced dividend that eliminates the economically harmful double taxation of dividends and disincentives to repatriating overseas income. Because corporate income already will have been fully attributed to owners , additional dividend payments to shareholders could be distributed without incurring additional tax. This would dramatically increase the incentive for corporations to stop hoarding cash , to pay more dividends , and thereby to promote more efficient allocation of capital and greater economic growth. There are many details to be developed, but here are the basic elements of the plan: o o o o o o o o o o Redefine all domestic business taxable income (whether from a C-corp , an S-corp or an LLC) to allow 100% expensing of capital investments. In effect , we would be taxing net operating cash flow . Worldwide cash flow will be included in taxable cash flow. Companies would continue to claim a foreign tax credit for taxes remitted to foreign governments ; this credit would be passed through to shareholders proportionally. Corporations would establish a method to attribute taxable cash flow to shareholders. I would suggest using a # shareholders' days metric -- the number of shares owned divided by portion of the year they are owned . Taxable cash flow would be attributed to each owner holding shares. C-corps would make a back-up withholding tax payment on behalf of the owners to the IRS equal to 25% of taxable cash flow on a quarterly basis. C-corp owners would receive an annual form, similar to a K-1 , showing attributable cash flow and the 25% back-up withholding tax payment made on their behalf C-corp owners would include attributable cash flow in their individual taxable income -- and would be able to claim the full back-up withholding as a credit against their tax liability. Tax exempt shareholders , pension plans , and foreign shareholders would not be allowed to claim back-up withholding as a tax credit. Because taxable cash flow would be fully attributed and taxes would be paid by owners , no additional tax would be due on dividends paid to shareholders. RON -,, Dividend payments made would not be deducted from taxable cash flow. JOHNSON U.S. SENATE UST 000374 TREAS-17-0313-B-000035 RE: Tax Reform Workin From: "Prater, Mark (Finance)" To: "Muzinich, Justin" , george.callas@mail.house.gov Cc: Date : Thanks , Shahira, George , and Justin. I'll chip in a few comments , from our team's perspective after George's CAPS below. Tried to italicize with some success. I hate Android phones! Sent from my Verizon, Samsung Galaxy smartphone -------- Original message-------From: Justln.Muzlnlch@treasury .gov Date: 5/15/17 10:34 PM GMT-05:00) To: , George .Callas@mail.house .gov Cc: ra er , ar mance a _Prater finance .senate . ov> "Dunn Brendan (McConnell)" Daniel.Kowalski treasury.gov , Barbara.Angus@mail.house .gov, Subject: Re: Tax Reform Working roup T hanks all. We wi ll try incorporate before mtg Tues. From: Callas, George Date: May 15, 2017 at 10:05:37 PM EDT To: Knight, Shahira E. EOP/WHO >, Muz inich, Justin Cc: Swonger, Amy H. EOP/WHO ngus, Barbara , Meyer, Joyce Y. EOP WHO >, Brendan _ Dunn@mcconnell .senate.gov , Ma rk_Prater@fi nance. senate. gov , Kowa lski, Daniel , Koenig, Andrew D. EOP/WHO Subject : Re : Tax Reform Working Group My reactions to some, but not all, of these are in CAPS below. From: "Knight, Shahira E. EOP/WHO" Date: Monday, May 15, 2017 at 8:25 PM To: "Justin.Muz inich@treasury .gov" Cc:George, "Angus, Barbara", " mark prate r@finance.senate .gov", Brendan Dunn, " Daniel.Kowals ki@treasury.gov ", "Meyer, Joyce Y. EOP/WHO", "Swonger, Amy H. EOP/WHO", "Koenig, Andrew D. EOP/WHO" Subject: Re: Tax Reform Working Group Thanks Justin, I would offer the following thoughts for consideration since I won't be there tomorrow . b(S) UST 000375 TREAS-17-0313-B-000036 All suggestions, but waned to share my initial though ts. Thank s. On May 15, 2017 , at 6:01 PM, "Justin.Muzinich@treasury.gov" wrote: DO NOT FORWARD b(5) Thanks Justin From: Callas, George [mailto:George .Callas@ma il.house .gov) Sent: Thursday, May 11, 2017 2:57 PM To: Angus, Barbara ; 'Mark Prater@finance .senate .gov ' ; 'Brendan Du nn@mccon nel I.senate.gov ' UST 000376 TREAS-17-0313-B-000037 >?I Knight, Shahira E. EOP/WHO > Subject: Re: Tax Reform Working Group Agenda for today . I wi ll bring hard copies of what I believe the staff rec looks like so we can all get on the same page as to what exactly we've agreed to. From : George Date: Tuesday, M ay 9, 2017 at 10:45 AM To: "Angus, Barbara", " mark prater@finance.senate.gov '', Brendan Dunn, " 'Justin.Muz inich tre sur . ov "', Ill ", fl t I II o "Knight, Shahir a E. EOP/W HO" 1111 Subject: RE:Tax Reform Wo rking Group Agenda for today attached. I hope you all appreciate how hard I work to squeeze these agendas onto a single page ... -----Origina l Appointment ----From: Jordon, Ben Sent: Monday, May 08, 2017 1:43 PM To : Jordon, Ben; Angus, Barbara ; 'Mark Prater@finance.senate .gov '; 'Brendan Dunn@mcconnell.senate.gov '; 'Justin .Muzinich@tre asury .gov '; 'Daniel.Kowalski@treasury.gov '; '; '; Jordon, Ben Subject : Tax Reform Working Group Wh en : Tuesday, May 09, 2017 4:00 PM-6:00 PM (UTC-05:00) Eastern Time (US & Canada). Wh ere : H-236 Tax working group agenda 05.09.17.docx UST 000377 TREAS-17-0313-B-000038 RE: Revised calendar From: To : Da te : Atta chments : Proposed Tax Refo rm Calenda r 051617.xlsx (11.11 kB) ; Staff Work Plan for Tax Reform 21070516 .docx (19.14 kB) This calendar should have everyone's changes to date. I have also modified George's latest work plan to fit with this calendar. This has us meeting at the staff level on Monday and Tuesday of next week to talk about b(5) I've included Andrew to find out if a Big Six meeting next week is logistically possible. Barbara and Mark, this got started without you, but want your feedback as well. From : Callas, George [mailto:George.Ca llas@mail.house.gov] Sent : Tuesday, May 16, 2017 10:45 AM To: Kowalski, Daniel ; Brendan _ Dunn@mcconnell.senate .gov; Muzinich, Justin ; Subject: RE: Revised calendar Working in actual recesses, I have the following tweaks: From : Daniel.Kowalsk i@treasury.gov fmailto:Daniel.Kowa lski@treasury.gov ] Sent : Monday, May 15, 2017 5:41 PM _ _senate .gov; Callas, George; Justin.Muzinich@t reasury .gov; Subject: Revised calendar I've attached a more developed version of the calendar we've all seen earlier today . UST 000378 TREAS-17-0313-B-000039 Let me know what you think. UST 000379 RE: Tax Reform Workin From : "Koenig, Andrew D. EOP/WHO" To: "Callas, George" , "Angus, Barbara" , mark_prater@finance.senate .gov, brendan_dunn@mcconnell.senate.gov, "Muzinich, Justin" "Kowalski Daniel" , "Meyer, Joyce Y. EOP/WHO" "Swonger, Amy H. EOP/WHO" a ira E. EOP/WHO" Date : Wed, 17 May 2017 09:46:14 -0400 Attachments : Pricipals Tax Reform Meeting Agenda 5-17-2017 .docx (13.14 kB) > All, Following the successful discussion yesterday, I was able to pull together an incredibly in-depth agenda for today's principals meeting. It has all of two items. Please feel free to edit as you see fit and let me know if we are missing anything. George, since this is in your office can you print copies when we have edits? Thanks! Tax Reform Meeting Agenda May 17, 2017 b(5) From: Callas, George [mailto:George.Ca llas@mail.house.gov] Sent : Thursday, May 11, 2017 2:57 PM To: Angus, Barbara ; 'Mark _ Prater@finance.senate .gov' ; 'Brendan_Du n n@mcco n nell.senate.gov' ; 'Justin .Mu zinich@treasury.gov' ; 'Daniel .Kowalski@treasury .gov' ; Meyer, Joyce Y. EOP/WHO ; Swonger, Amy H. EOP/WHO P/WHO Knight, Shahira E. EOP/WHO Subject: Re: Tax Reform Working Group Agenda for today. I will bring hard copies of what I believe the staff rec looks like so we can all get on the same page as to what exactly we've agreed to. From: George Date: Tuesday, May 9, 2017 at 10:45 AM To: "Angus, Barbara", " mar k prate r@fi nance.senate .gov", Brendan Dunn, '"Justin.Muzin ich treasur . ov"', "' Daniel.Kowa lski t reasur . ov'", ", "Knight, Shahira E. EOP WHO" Subject: RE:Tax Re orm Working Group Agenda for today attached. I hope you all appreciate how hard I work to squeeze these agendas onto a single page ... UST 000380 TREAS-17-0313-B-000041 o .. I. . .o .. o ooo o oo : . o o oo : . I I o o : t o . : o . . .: . : . ? Jordon, Ben Subject : Tax Re orm Working Group Wh en: Tuesday , May 09, 2017 4 :00 PM-6 :00 PM (UTC-05:00) Eastern Time (US & Canada). Wh ere: H-236 Tax working group agenda 05.09.17.docx UST 000381 TREAS-17-0313-B-000042 Sen. Johnson Tax Reform From : "Alber, A lexis (Ron Johnson)" To: "Muzinich, Justin" Date : Atta chme nts: Wed , 17 May 20 17 10:2 8:14 -0400 RHJ Business Tax Summary- posted 4.24.17.docx (27.83 kB) Hi Justin, It was nice to see you again today. Attached please f ind a one page summary of Sen. Johnson's proposa l. Please don't hesitate to reach out to me regarding any tax - related issues. Thanks, Alexis J. Alber Legislative Counsel Senator Ron Johnson (WI) 328 Hart Senate Office Building Washington, DC 20510 UST 000382 TREAS-17-0313-B-000043 Re: Tax Reform Workin From: "Knight , Shahira E. EOP/WHO" To: "Callas, George" Cc: "Koenig, Andrew D. EOP/WHO" , "Angus, Barbara" , mar _pra er nance.sena e.gov, brendan_dunn@mcconnel l.senate.gov , "Muzinich, Justin" , "Kowalski Daniel" , "Meyer, Joyce Y. EOP/WHO" >, "Swonger, Amy H. EOP/WHO" Date : Wed, 17 May 2017 10:56:25 -0400 b(5) On May 17, 2017, at 10:39 AM, Callas, George wrote: b(5) On May 17, 2017 , at 10:25 AM , Koenig, Andrew D. EOP/WHO wrote: b(5) I From: Knight, Shahira E. EOP/WHO Sent: Wednesday, May 17, 2017 10 :15 AM To: Koenig, Andrew D. EOP/WHO Cc: Callas, George ; Angus, Barbara ; Mark Prater@finance .senate.gov ; Brendan Dun n@mcconne l I.senate.gov ; Just in. Muzi n ich@treasury .gov; Daniel .Kowalski@treasury .gov; Meyer, Joyce Y. EOP/WHO ; Swonger, Amy H. EOP/WHO Subject: Re: Tax Reform Working Group b(5) 17 2017 at 9:46 AM Koenig, Andrew D. EOP/WHO wrote: All, Following the successful discussion yesterday, I was able to pull together an incredibly in-depth agenda for today's principals meeting. It has all of two items. Please feel free to edit as you see fit and let me know if we are missing anything. George, since this is in your office can you print copies when we have edits? Thanks! Tax Reform Meeting Agenda UST 000383 TREAS-17-0313-B-000044 May 17, 2017 b(5) From : Callas, George [mail to: Geor ge.Cal!as@mail.house .gov ] Sent: Thursday, May 11, 2017 2:57 PM To: Angus, Barbara ; 'Mark Prater@f inance .senate.gov ' ; 'Brendan Dunn@mcconnell.senate.gov ' ; 'Justin .Muzinich@treasury.gov ' ; 'Daniel .Kowa lski@treasury .gov' ; Meyer, Joyce Y. EOP/WHO Swonger , Amy H. EOP/WHO Koenig, Andrew D. EOP/WHO >; Knight, Shahira E. EOP/WHO Subject: Re: Tax Reform Working Group Agenda for today . I will bring hard copies of what I believe the staff rec looks like so we can all get on the same page as to what exactly we've agreed to . "', "Knight, Shah ira E. EOP WHO" Subject: RE: Tax Refor m Working Group Agenda for today attached. I hope you all appreciate how hard I work to squeeze these agendas onto a single page ... Tax working group agenda 05.09.17.docx UST 000384 TREAS-17-0313-B-000045 RE: Tax Reform Workin From : "Callas , George" To: Cc: , mark_prater@finance.senate.gov, ren an_dunn@mcconnell.senate.gov, Date : b(5) From: Justin. Muzi n ich@treasury.gov [mailto:Justi n. Muzi n ich@treasury.gov] Sent : Wednesda Ma 17 2017 10:47 AM To: ; Mark_Prater@finance.senate.gov; as, George; Daniel.Kowalski@treasury.gov Cc Sorry ... b(5) From: Muzinich, Justin Date: May 17, 2017 at 10:45:58 AM EDT To: Knight, Shahira E. EOP/WHO Koenig, Andrew D. EOP/WHO Cc:Swonger, Amy H. EOP WHO >, Callas, George , Mark Prater@finance.senate .gov , Kowalsk i, Daniel , Brenda n Dunn@ mcconnell.senate .gov , Angus, ouse.gov >, Meyer, Joyce Y. EOP/W HO 1 Subject: Re: Tax Reform Working Group b(5) From: Knight, Shahira E. EOP/WHO Date: May 17, 2017 at 10:25:40 AM To : Koenig, Andrew D. EOP/WHO Cc: Kowalski, Dan iel , Brendan Dunn@mcconnell.senate.gov , Meyer, Joyce Y. EOP/WHO >, Swonger, Amy H. EOP/WHO >, Angus, Barbara , Callas, George , Muzinich, Justin , Ma rk Prater@fioance .senate .gov Subject: Re: Tax Reform Working Group UST 000385 TREAS-17-0313-B-000046 b(5) All, Following the successful discussion yesterday, I was able to pull together an incredibly in-depth agenda for today's principals meeting. It has all of two items. Please feel free to edit as you see fit and let me know if we are missing anything. George, since this is in your office can you print copies when we have edits? Thanks! Tax Reform M eeting Agenda May 17, 2017 b(5) From: Callas, George (ma ilto:George.Callas@mail.house .gov] Se nt: Thursday, May 11, 2017 2:57 PM To: Angus, Barbara ; 'Mark Prater@ fi nance.senate.gov ' ; 'Brendan Dunn@mcconne ll.senate .gov ' ; 'Justin.Muz inich@t reasury.gov ' ; 'Daniel.Kowa lski@treasury.gov ' ; M eyer, Joyce Y. EOP/WHO Swonger, Amy H. EOP/WHO > Subject : Re: Tax Reform Working Group Agenda for today. I will bring hard copies of what I believe the staff rec looks like so we can all get on the same page as to what exactly we've agreed to. "', "Knight , Shahir a E. EOP W HO" Subject : RE:Tax Reform Work ing Grou p Agenda for today attached. I hope you all appreciate how hard I work to squeeze these agendas onto a single page ... -----Origina l Appointment-- --From: Jordon, Ben Sent: Monday, May 08, 2017 1:43 PM To: Jordon, Ben; Angus, Barbara; 'Mark Prater@finance .senate .gov '; 'Brendan Dunn@mcconnell.senate.gov '; 'Justin.Muzin ich@t reasury .gov '; UST 000386 TREAS-17-0313-B-000047 '?, '; Jordon, Ben Subject: Tax Reform Working Group When : Tuesday , May 09, 2017 4:00 PM-6:00 PM (UTC-05:00) Eastern Time (US & Canada) . Where: H-236 Tax working group agenda 05.09.17.docx UST 000387 TREAS-17-0313-B-000048 RE : Tax Reform Workin From: "Callas, George" To: "Prater, Mark (Finance)" , .o ... o o o ... o o Cc: . .. . . Date: Attac hm en ts: o o . oo . o oo ' . I : I I .. o I I o o ... ... Io II Big Six Agenda 05.17.17.pptx (44.98 kB) From: Prater, Mark (Finance) [mailto:Mark_Prater@finance.senate.gov] Sent: Wednesday, May 17, 2017 11:14 AM To: Justin.Muzinich@treasury .gov; Cc: (McConnell ; Callas, George; Daniel.Kowalski@treasury .gov Subject: RE:Tax Reform Working Group Agree. Sent from my Verizon, Samsung Galaxy smartphone -------- Original message -------From: Justin .Muzinich@trea sury .gov Date: 5/ 17/ 17 10:58 AM GMT-05:00 To: Cc , Prater , Mark (Finance)" < ar rat r man .s nat v>, a ara. ma1. s . v, "Dunn, Brendan (McConnell)" , George .Calla s@mail.house.go v , Daniel.Kowalski@treasury .gov Subject: Re: Tax Reform Working Group Sorry ... b(5) From : Muzin ich, Just in Dat e: May 17, 2017 at 10:45:58 AM EDT To: Knight, Shahira E. EOP/WHO EOP/WHO UST 000388 Koenig, Andrew D. TREAS-17-0313-B-000049 Cc:Swonger, Amy H. EOP/WHO >, Callas, George , Mar Prater@ inance.senate.gov , Kowalski, Daniel , Brendan Dunn@mcconnell.senate.gov , Angus, Barbara , Meyer, Joyce Y. EOP/WHO > Subject: Re: Tax Re orm Working Group b(5) From: Knight, Shahira E. EOP/WHO Date: May 17, 2017 at 10:25:40 AM To: Koenig, Andrew 0. EOP/WHO Cc: Kowalski, Daniel , Brendan Dunn@mcconnell .senate.gov , Meyer, Joyce Y. EOP/WHO >, Swonger, Amy H. EOP/WHO >, Angus, Barbara , Callas, George , Muzinich, Justin , Mark Prater@fioance.senate .gov Subject: Re: Tax Reform Working Group b(5) Koenig, Andrew D. EOP/WHO > wrote: All, Following the successful discussion yesterday , I was able to pull together an incredibly in-depth agenda for today's principals meeting. It has all of two items. Please feel free to edit as you see fit and let me know if we are missing anything . George, since this is in your office can you print copies when we have edits? Thanks! Tax Reform Meeting Agenda May 17, 2017 b(5) From: Callas, George (ma ilto:George .Callas@mail.house.gov ) Sent: Thursday, May 11, 2017 2:57 PM To: Angus, Barbara ; 'Mark Prater@finance.senate.gov ; 'Brendan Dunn@mcconnell.senate.gov ' ; 'Just in .Muz inich@treasury .gov ' ; 'Dan iel.Kowa lski@treasury.gov ' ; Meyer , Joyce Y. EOP/WHO UST 000389 ' TREAS-17-0313-B-000050 > Subject : Re: Tax Reform Working Group Agenda for today . I wi ll bring hard copies of what I believe the staff rec looks like so we can all get on the same page as to what exactly we've agreed to. " Knight , Shahira E. EOP/W HO" Subject: RE: Tax Refor m Wo rkin g Group 1 ', Agenda for today attached. I hope you all appreciate how hard I work to squeeze these agendas onto a single page ... -----Origina l Appointment ----From: Jordon, Ben Sent: Monday, May 08, 2017 1:43 PM To: Jordon, Ben; Angus, Barbara; 'Mark Prater@finance.senate .gov '; 'Brendan Dunn@mcconnell.senate.gov '; 'Justin .Muzinich@treasury .gov '; 'Daniel .Kowalski@treasury.gov '; '; Jordon, Ben Subje ct: Tax Reform Working Group Wh en: Tuesday, May 09, 2017 4:00 PM-6:00 PM (UTC-05:00) Eastern Time (US & Canada). Wh ere: H-236 Tax working group agenda 05.09.17.docx UST 000390 TREAS-17-0313-B-000051 Re: Tax Reform Workin From: "Knight, Shahira E. EOP/WHO" To: Cc: "Callas, George" "Prater, Mark (Finance)" , "Muzinich, Justin" <'ustin.muzinich treasu . ov> "Koenig, Andrew D. EOP/WHO" 'Swonger, Amy H. EOP/WHO" eyer, Joyce Y. EOP/WHO" " ngus, ar ara < ar ara.angus@mail.house.gov>, "Dunn, Bren an c onne , "Kowalski, Daniel" Date : Wed, 17 May 20 17 11 :36:06 -0400 I have some edits. In a meeting but will send when I get back. On May 17, 2017 , at 11 :23 AM, Callas, George wrote: o I . I I ...o ~~ . , o Prater@finance.senate.gov ] :o .. o o . . o ,. o :o ... I o . I .. I o o o Agree. Sent from my Verizon,Samsung Galaxy smartphone -------- Original message -------From Justin.Muzinich@treasury.gov Date : 5/ 17/ 17 10:58 AM GMT-05:0 To: I Cc: , rater, Mark (Finance)" , = o "Dunn, Brendan o ! ! o ~? (McC onnell) " , George. Callas@mai l.house.gov , Daniel.Kowalski@treas ury.gov Subj ect: Re: Tax Reform Working Group Sorry ... b(5) UST 000391 TREAS-17-0313-B-000052 From: Muzinich, Justin Date: May 17, 2017 at 10:45:58 AM EDT To: Knight, Shahira E. EOP/WHO Koenig, Andrew D. EOP/WHO Cc:Swonger, Amy H. EOP WHO >, Callas, George , Mark Prater@finance .senate .gov , Kowalski, Daniel , Brendan Dunn@mcconnell.senate .gov , Angus, - o use.gov>, Meyer, Joyce Y. EOP/WH0 Subject: Re: Tax Re orm Working Group b(5) From: Knight, Shahira E. EOP/WHO Date: May 17, 2017 at 10:25:40 AM EDT To: Koenig, Andrew D. EOP/WHO Cc: Kowalski, Dan iel , o@mcconneH .senate. gov , Meyer, Joyce Y. EOP/WHO >, Swonger, Amy H. EOP/WHO >, Angus, Barbara , Callas, George , Muzinich, Justin , Mark Prater@finance.senate .gov Subject: Re: Tax Reform Working Group b(5) Koenig, Andrew D. EOP/WHO wrote: All, Following the successfuldiscussion yesterday, I was able to pull together an incredibly in-depth agenda for today's principals meeting. It has all of two items. Pleasefeel free to edit as you see fit and let me know if we are missing anything. George, since this is in your office can you print copies when we have edits? Thanks! Tax Reform Meeting Agenda May 17, 2017 b(5) From: Callas, George (mailto :George.CaIlas@maiI.ho use.gov] Sent: Thursday, May 11, 2017 2:57 PM UST 000392 TREAS-17-0313-B-000053 To: Angus, Barbara ; 'Mark Prater@finance.senate.gov ' ; 'Brendan Dunn@mcconnell.senate.gov ' ; 'Justin .Muzinich@treasu ry.gov ' ; 'Daniel .Kowa lski@treasury.gov ' ; M eyer, Joyce Y. EOP/WHO Swonger, Amy H. EOP/WHO >; Koenig, Andrew D. EOP WHO Knight, Shahira E. EOP WHO Subject: Re: Tax Reform Work ing Group Agenda for today . I will bring hard copies of what I believe the staff rec looks like so we can all get on the same page as to what exactly we've agreed to. o o I - oo o . o ... oo I o . I I o -~? oo .- -: o . .o -~?o oo ' Knight, Sha h ira E. EOP/W HO" I I ing Group Agenda for today attached. I hope you all appreciate how hard I work to squeeze these agendas onto a single page ... I o o o ooo . o oo : . o .: . o oo o o o ,: o ... oo I : . ~ . :o l o s . :o : . Jordon, Ben Subject: Tax Reform Working Group When: Tuesday, May 09, 2017 4:00 PM-6:00 PM (UTC-05:00) Eastern Time (US & Canada). Where : H-236 Tax working group agenda 05.09 .17.docx UST 000393 TREAS-17-0313-B-000054 Re: Tax Reform Workin From : "Callas, George" To: "Kowalski, Daniel" Date: Wed, 17 May 201711:38:14-0400 I've been asked to put a little more on paper by the host of the meeting . On May 17, 2017 , at 11 :36 AM, "Daniel.Kowalski@treasury .gov" wrote: b(5) From : Callas, George Date: May 17, 2017 at 11:27:27 AM EDT To: Muzinich, Justin , Prater, Mark (Finance)' , >, ngus, Barbara , Kowalski, Daniel Subject: RE: Tax Reform Working Group Prat er@finance .senat e.gov] I (McConnell); Callas, George; Dan ie l. Kowalski@treasury Subject: RE: Tax Reform Working Group .gov Agree. Sent from my Verizon, Samsung Galaxy smartphone --------Original message -------From: Jus tin.Muzinich@treasury.go v Date : 5/ 17/ 17 10:58 AM GMT-05:00 To Cc <~""'"""=="' -"'-=""""'~ ~===="'-4;~ UST 000394 "'==""--"<-= , "Prater , Mark (Finance)" ,,,_==~""'-'-"'""'""""'""'.....,,,,,.o"--'v, "Dunn, Brendan ......... TREAS-17-0313-B-000055 (McConnell)", George.Callas@mail.house.gov, Daniel.Kowalski@treasury.gov Subject: Re: Tax Reform WorkingGroup Sorry ... b(5) From: Muzinich, Justin Date: May 17, 2017 at 10:45:58 AM EDT To: Knight, Shahira E. EOP/WHO >, Koenig, Andrew D. EOP/WHO Cc:Swonger, Amy H. EOP WHO allas, George , Mark Prater@finance .senate .gov , Kowalski, Daniel , Brendan Dunn@mcconnell.senate ~ .gov < Bre ndan Dunn@mcconne ll.sen ate .gov >, Angus, ; hou se.gov>, Meyer, Joyce Y. EOP/WHO Subject: Re: Tax Re orm Working Group b(5) From: Knight, Shahira E. EOP/WHO Date: May 17, 2017 at 10:25:40 AM To: Koenig, Andrew D. EOP/WHO Cc: Kowalski, Daniel , Brenda n Dunn@mc connell. senate .gov , Meyer, Joyce Y. EOP/WHO >, Swonger, Amy H. EOP/WHO Angus, Barbara , Callas, George , Muzinich, Justin , Mark Prater@finance .senate .gov Subject: Re: Tax Reform Working Group b(5) Koenig, Andrew D. EOP/WHO > wrote: All, Following the successful discussion yesterday, I was able to pull together an incredibly in-depth agenda for today's principals meeting. It has all of two items. Please feel free to edit as you see fit and let me know if we are missing anything. George, since this is in your office can you print copies when we have edits? Thanks! Tax Reform Meeting Agenda UST 000395 TREAS-17-0313-B-000056 May 17, 2017 b(5) From : Callas, George fmailto:George.Ca llas@mail.house .gov] Sent : Thursday, May 11, 2017 2:57 PM To: Angus, Barbara ; 'Mark Prater@finance .senate .gov' ; 'Brendan Du nn@mccon nel I.senate .gov ' ; 'Justin .Muzinich@treasury.gov ' ; 'Daniel .Kowalski@treasury.gov ' ; M eyer, Joyce Y. EOP/WHO >?J Swonger, Amy H. EOP/WHO ; Koenig, Andrew D. EOP/WHO Knight, Shahira E. EOP/WHO Subject: Re: Tax Reform Work ing Group Agenda for today. I will bring hard copies of what I believe the staff rec looks like so we can all get on the same page as to what exactly we've agreed to. From: George Date: Tuesday, M ay 9, 2017 at 10:45 AM To: "An gus, Bar bara", " m ark prat er@fi nance.senate .gov", Brendan Dun n, '"Justin .Muzinic h treasu r . ov" ', II I '", " Knight, Shah ira E. EOP/W HO" Subject : RE: Tax Re orm Wo rki ng Group Agenda for today attached. I hope you all appreciate how hard I work to squeeze these agendas onto a single page ... Tax working group agenda 05.09.17.docx UST 000396 TREAS-17-0313-B-000057 RE: Sen. Johnson Tax Reform From : "Alber, Alexis (Ron Johnson)" To : "Muzinich, Justin" Date : We d, 17 May 2017 11:58:53 -0400 Thank you.Email - @ronjohnson .senate.gov Alexis J. Alber Legislative Counsel Senator Ron Johnson (WI) 328 Hart Senate Office Building Washington, DC 20510 From : Justin. Muzin ich@treasury.gov [mailto:Justin. Muzin ich@treasury.gov] Sent : Wednesday, May 17, 2017 11:25 AM To: Alber, Alexis (Ron Johnson) Subject : Re: Sen. Johnson Tax Reform Thanks Alexis. Could u send me the senators ema il as w ell. Best. Justin From : Alber, Alex is (Ron Johnson) Date: May 17, 2017 at 11:02:44 AM EDT To: M uzinich, Justin Subject : Sen. Joh nson Tax Refor m Hi Justin, It was nice to see you again today. Attached please f ind a one page summary of Sen. Johnson's proposa l. Please don't hesitate to reach out to me regarding any tax-related issues. Thanks, Alexis J. Alber Legislative Counsel Senator Ron Johnson (WI) 328 Hart Senate Office Building Washington, DC 20510 UST 000397 TREAS-17-0313-B-000058 RE: Tax Reform Workin From : "Knight, Shahira E. EOP/WHO" To: "Callas, George" Cc: Date : b(5) From: Callas, George [mailto:George.Ca llas@mail.house.gov] Sent: Wednesday, May 17, 2017 12:49 PM To: Knight, Shahira E. EOP/WHO Cc: Justin.Muzinich@treasury.gov; o Meyer, Joyce Y. EOP/WHO b(5) From: Knight, Shahira E. EOP/WHO [mailto Sent : Wednesday, May 17, 2017 12:36 PM To: Callas, George Cc: Justin.Muzinich@treasury.gov; Koenig, Andrew D. EOP/WHO; Meyer, Joyce Y. EOP/WHO; Swonger, Amy H. EOP/WHO; Daniel.Kowalski@treasury.gov; Brendan_Dunn@mcconnell.senate.gov; Angus, Barbara; Mark_Prater@finance.senate.gov Subject: Re: Tax Reform Working Group b(5) On May 17, 20 17, at 12:33 PM, Callas, George wrote: b(5) I From: Justin .M uzinich@treas u ry.gov [mail to :Justin .M uzi nich@treas u ry.gov] Sent: Wednesday, May 17, 2017 12:31 PM To: Callas, George; Cc: ; Daniel .Kowalski@t reasury.gov ; Brendan Dunn@mcconnell.senate.gov ; Angus, Barbara; Mark Prater@finance.senate.gov Subject: Re: Tax Reform Working Group UST 000398 TREAS-17-0313-B-000059 b(5) I From: Knight, Shahira E. EOP/WHO Date: May 17, 2017 at 11:38:17 AM EDT To: Callas, George Cc: Muzin ich, Justin , Prater, Mark (Finance) , Dunn , Brendan (McConnell} , Swonger, Amy H. EOP/WHO >, Kowalski, Danie l , >, Koenig, Andrew D. EOP/WHO Angus, Barbara Subject: Re: Tax Reform Working Group b(5) On May 17, 2017, at 11:23 AM, Callas, George wrote: b(5) o b(5) Cc: ; ; Angus, Barbara; Dunn, Brendan (McConnell); Callas, George; Daniel.Kowa lski@t reasury .gov Subject : RE: Tax Reform Working Group Agree. Sent from my Verizon, Samsung Galaxy smartphone --------Original message -------From: Justin.Muzinich@treasuzy.gov Date: 5/17/ l 7 10:58 AM GMT-05:00 To: Cc: , rater, Mark (Finance) , Bar ara.An s mail.house. ov, "Dunn, Brendan (McConnell)", George.Callas@mail.house.gov, Daniel.Kowalski@treasur:y.gov Subject: Re: Tax Reform Working Group Sorry ... UST 000399 TREAS-17-0313-B-000060 b(5) From: Muzinich, Justin Date: May 17, 2017 at 10:45:58 AM EDT To: Knight, Shahira E. EOP/WHO Koenig, Andrew D. EOP/WHO Cc:Swonger, Amy H. EOP WHO >, Callas, George , Mark Prater@finance.senate.gov , Kowalski, Daniel , Brendan Dunn@mcconnell.senate.gov , Angus, Barbara >v >, Meyer, Joyce Y. EOP/WHO Subject: Re: Tax Reform Working Group b(5) From: Knight, Shahira E. EOP/WHO Date: May 17, 2017 at 10:25:40 AM To: Koenig, Andrew D. EOP/WHO Cc: Kowalski, Daniel , Brendan Dunn@mcconnell.senate .gov , Meyer, Joyce Y. EOP/WHO >, Swonger, Amy H. EOP/WHO >, Angus, Barbara , Callas, George , Muzinich, Justin , Mark Prater@finance.senate.gov Subject: Re: Tax Reform Working Group b(S) 17 2017 at 9:46 AM Koenig, Andrew D. EOP/WHO wrote: All, Following the successful discussion yesterday, I was able to pull together an incredibly in-depth agenda for today's principals meeting. It has all of two items. Please feel free to edit as you see fit and let me know if we are missing anything. George, since this is in your office can you print copies when we have edits? Thanks! Tax Reform Meeting Agenda May 17, 2017 b(5) UST 000400 TREAS-17-0313-B-000061 b(5) From : Callas, George [mailto:George .Callas@mail.house.gov ] Se nt : Thursday, May 11, 2017 2:57 PM To : Angus, Barbara ; 'Mark Prater@finance.senate .gov ' ; 'Brendan Du nn@mccon nel I.senate .gov ' ; 'Justin .Muzi n ich@treasury.gov ' ; 'Danie l.Kowalsk i@treasury .gov' ; Meyer, Joyce Y. EOP/WHO >; Swonger, Amy H. EOP/WHO ; oenig, Andrew D. EOP/WHO Knight, Shahira E. EOP/WHO Subject : Re: Tax Reform W orking Group Agenda for today. I will bring hard copies of what I believe the staff rec looks like so we can all get on the same page as to what exactly we've agreed to. o o o I oo .. o o ' o I I ' oo o oo I - !o .- I I oo o o Agenda for today attached. I hope you all appreciate how hard I work to squeeze these agendas onto a single page ... .o .o. I . o o o o o oo o I Io I ~ . o ': :. ~? o- I :. _I I oo o II .'. o I I o .. . . . o I o : .: I ~~ I o : , ?- . :o ; Jordon, Ben Subj ect : Tax Reform Working Group When : Tuesday, May 09, 2017 4:00 PM-6:00 PM (UTC-05:00) Eastern Time (US & Canada). Whe re: H-236 Tax working group agenda 05.09.17.docx UST 000401 TREAS-17-0313-B-000062 RE: Tax Reform Workin From : "Callas, George" To: "Koenig, Andrew D. EOP/WHO" 'Angus, Barbara" , mar _pra er mance.sena e.gov, brendan_dunn@mcconnell.senate.gov, "Muzinich, Justin" "Kowalski Daniel" , "Meyer , Joyce Y. EOP/WHO" >, "Swonger, Amy H. EOP/WHO" a ira E. EOP/WHO" Date : Wed , 17 May 2017 13:41 :29-0400 Attachments : Big Six Agenda 05.17 .17.pptx (50.07 kB) From: Koenig, Andrew D. EOP/WHO [mailto Sent : Wednesday, May 17, 2017 9:46 AM To: Callas, George; Angus, Barbara; 'Mark_ Prater@finance .senate.gov'; 'Brenda n_Du n n@mcconnell .sen ate.gov'; 'Justin .Muzin ich@treasury.gov'; 'Daniel.Kowalsk i@treasury.gov'; Meyer, Joyce Y. EOP/WHO; Swonge r, Amy H. EOP/WHO; Knight, Shahira E. EOP/WHO Subject: RE: Tax Reform Working Group All, Following the successful discussion yesterday , I was able to pull together an incredibly in-depth agenda for today's principals meeting. It has all of two items. Please feel free to edit as you see fit and let me know if we are missing anything. George, since this is in your office can you print copies when we have edits? Thanks! Tax Reform Meeting Agenda May 17, 201 7 b(5) From : Callas, George (mailto :George .Callas@ma il. house.gov ] Sent: Th ursday, May 11, 2017 2:57 PM To: Angus, Barbara ; 'Mark_Prater@finance .senate .gov' ; 'Brendan_Dunn@mcconnell .senate .gov' ; 'Justin.Muzinich@treasury.gov' ; 'Daniel .Kowalsk i@t reasury.gov' ; M eyer, Joyce Y. EOP/WHO ; Swonger, Amy H. EOP/WHO WHO UST 000402 TREAS-17-0313-B-000063 Agenda for today. I will br ing hard copies of what I believe the staff rec looks like so we can all get on the same page as to what exactly we've agreed to. ' Knight, Shahir a E. EOP W HO" Subject : RE: Tax Reform Wo rki ng Grou p Agenda for today attached. a single page ... I hope you all appreciate how hard I work to squeeze these agendas onto Jordon, Ben Subject: Tax Reform Working Group When : Tuesday, M ay 09, 2017 4:00 PM-6:00 PM (UTC-05 :00) Eastern Time (US & Canada). Wh ere: H-236 Tax working group agenda 05.09.17.docx UST 000403 TREAS-17-0313-B-000064 RE: Tax Reform Meetin ICYMI From: "Kowalski, Daniel" <"/o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cf6b4ee371 0f422fbceecb0020766838-kowalski, dan"> To: "Mahan, Roger" Date: Wed, 17 May 2017 13:54:49 -0400 b(S) From: Mahan, Roger [mailto:Roger.Mahan@mail.house.gov] Sent: Wednesday, May 17, 2017 1:45 PM To: Kowalski, Daniel Subject: FW: Tax Reform Meeting ICYMI b(5) From: Meyer, Katie Sent: Wednesday, May 17, 2017 1:45 PM To: Dunham, Will; Mahan, Roger Subject: Tax Reform Meeting ICYMI TAX REFORM IS ALIVE? -- A SOURCE tells us that Treasury Secretary Steven Mnuchin, chief economic adviser Gaiy Cohn, Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, Senate Finance Committee chair Orrin Hatch and House Ways and Means chair Kevin Brady are meeting today in the speaker's office today at 3:3op.m UST 000404 TREAS-17-0313-B-000065 RE: Tax Reform Workin From: "Callas, George" To: "Koenig, Andrew D. EOP/WHO" "Angus, Barbara" , mar _pra er mance.sena e.gov, brendan_dunn@mcconnell.senate.gov, "Muzinich, Justin" , "Kowalski Daniel" , "Meyer, Joyce Y. EOP/WHO" >, "Swen er Am H. EOP/WHO" nig t , ti Date : Wed, 17 May 2017 16:48:33 -0400 From: Callas, George Sent: Wednesday, May 17, 2017 1:41 PM To: 'Koenig, Andrew D. EOP/WHO'; Angus, Barbara; 'Mark _Prate r@finance.senate .gov'; 'Brenda n_Dun n@mcconnell .senate.gov' ; 'Justin. Mu zin ich@treasury.gov'; 'Daniel.Kowalski@treasury.gov '; Meyer, Joyce Y. EOP/WHO; Swonger, Amy H. EOP/WHO; Knight, Shahira E. EOP/WHO Subject: RE: Tax Reform Working Group Revised slides attached .b(5) From: Koenig, Andrew D. EOP/WHO mailto Sent: Wednesday, May 17, 2017 9:46 AM To: Callas, George; Angus, Barbara; 'Mark _Prater@finance.sena te.gov '; 'Brendan_Du n n@mcconnel I.senate.gov'; 'Justin .Mu zin ich@treasury.gov'; 'Daniel.Kowalski@treasury.gov'; Meyer, Joyce Y. EOP/WHO; Swonger, Amy H. EOP/WHO; Knight, Shahira E. EOP/WHO Subject: RE: Tax Reform Working Group All, Following the successful discussion yesterday , I was able to pull together an incredibly in-depth agenda for today's principa ls meeting . It has all of two items. Please feel free to edit as you see fit and let me know if we are miss ing anything. George , since this is in your office can you print copies when we have edits? Thanks! Tax Reform Meeting Agenda May 17, 201 7 UST 000405 TREAS-17-0313-B-000066 b(5) From : Callas, George [mailto :George .Callas@ma il. house .gov ] Sent : Thursday, May 11, 2017 2:57 PM To: Angus, Barbara ; 'M ark_ Prater@finance.senate.gov' ; 'Brenda n_Dunn@mcconnell.senate.gov ' ; 'Justin.Muzinich@treasury.gov' ; 'Daniel .Kawa lski@treasury .gov' ; Meyer, Joyce Y. EOP/WHO >; Swonger, Am H. EOP/WHO /WHO Knight, Shahira E. EOP WHO Subject: Re: Tax Reform Working Group Agenda for today. I will br ing hard copies of what I believe the staff rec looks like so we can all get on the same page as to what exactly we've agreed to . From: George Date: Tuesday, May 9, 2017 at 10:45 AM To: "Angus, Barbara", " mark prater@finance .senate .gov ", Brendan Dunn, " 'Justin.Muzin ich treasu r . ov "', "'Daniel.Kowalski treasur . ov "', Agenda for today attached. I hope you all appreciate how hard I work to squeeze these agendas onto a single page ... o o ooo o oo : . o oo o oo : . o o .. o o t: .. oo t o ~ . ordon, Ben Subject: Tax Reform Working Group When : Tuesday, May 09, 2017 4:00 PM-6:00 PM (UTC-05:00) Eastern Time (US & Canada). Where: H-236 Tax working group agenda 05.09.17 .docx UST 000406 TREAS-17-0313-B-000067 A enda for 5/18/2017 From : "Callas, George" To: "Angus, Barbara" , mark_prater@finance.senate.gov, brendan_dunn@mcconnell.senate.gov, "Muzinich, Justin" , "Kowalski Daniel" , "Knight, Shahira E. EOP/WHO" "Koenig, Andrew D. EOP/WHO" OP/WHO" Date : Thu, 18 May 2017 10:33:58 -0400 Attachments: Tax working group agenda 05.18.17.docx (19.22 kB) Good morning, everyone . b(5) Formal agenda attached. George George A . Callas Senior Tax Counsel Office of the Speaker UST 000407 TREAS-17-0313-B-000068 RE: A enda for 5/18/2017 From: "Knight , Shahira E. EOP/WHO" To: "Callas , George" , "Angus, Barbara" , mark_prater@finan ce.senate .gov, brendan_dunn@mcconnell.senate.gov, "Muzinich , Justin" , "Kowalski Daniel" , "Koenig , Andrew D. EOP/WHO" 'Me er Jo ce Y. EOP/WHO" >, Date : George, From : Callas, George [mailto:George.Callas@mail.house.gov] Sent : Thursday, May 18, 2017 10:34 AM To: Angus, Barbara ; mark_prater@finance.senate.gov; 'Brendan_Dun n@mcconnel I.senate.gov' ; 'Justin. Muzin ich@treasury.gov' ; 'Daniel.Kowa lski@treasury .gov' ; Knight, Shahira E. EOP/WHO Koenig, Andrew D. EOP/WHO < ; Swonger, Amy H. EOP WHO Subject: Agenda for 5 18 2017 Good morning, everyone . George George A. Callas Senior Tax Counsel Office of the Speaker UST 000408 TREAS-17-0313-B-000069 RE: A enda for 5/18/2017 From : "Ca llas, George" To : "Angu s, Barbara" , mark_prater@finance.senate .gov, brendan _dunn@mcconnell.senate.gov, "Muz inich, Just in" , "Kowalski Daniel" , "Knight, Sha hira E. EOP/WH O" > "Koenig , Andrew D. EOP/WHO" "Me er Jo ce Y . EOP/WHO" Date : From : Callas, George Sent: Thur sday, May 18, 2017 10:34 AM To: Angus, Barbara; mark_prater@finance .senate.gov; 'Brendan_Dunn@mcconne ll.senate.gov'; 'Justin.Muzinich@treasury.gov'; 'Danie l.Kowalski@treasury.gov'; 'Knight, Shahira E. EOP/WHO'; 'Koenig, Andrew D. EOP/WHO'; 'M eyer, Joyce Y. EOP/WHO'; 'Swonger, Amy H. EOP/WHO' Subject: Agenda for 5/18/2017 Good morning, everyone . George George A. Callas Senior Tax Counsel Office of the Speaker UST 000409 TREAS-17-0313-B-000070 A enda for 5/25/2017 "Callas, George" From : To: "Angus, Barbara" , mark_prater@finance.senate.gov, brendan_dunn@mcconnell.senate.gov, "Muzinich, Justin" , "Kowalski Daniel" , "Knight, Shahira E. EOP/WHO" "Koenig, Andrew D. EOP/WHO" OP/WHO" Date: Thu, 25 May 201711:37:51 -0400 Attachments: Tax working group agenda 05.25.17.docx (19.1 kB) Attached . UST 000410 TREAS-17-0313-B-000071 DEPARTMENT OF THE TREASURY WASHINGTON, D.C. May 7, 2018 Sara Kaiser Creighton Elizabeth France John E. Bies American Oversight 1030 15th Street NW, Suite B255 Washington, DC 20005 foia@americanoversight.org VIA UPS Re: American Oversight v. U.S. Department of the Treasury, 17-cv-2078-RBW (D.D.C.): Treasury May 7 Production Counsel: This letter describes the May 7, 2018 production from the U.S. Department of the Treasury (Treasury) in the above-referenced Freedom of Information Act litigation. Pursuant to the Court's February 2, 2018 Order, Treasury has reviewed and processed 61 documents collected in response to American Oversight's Congressional Communications FOIA Request, 2017-08-121. On a CD sent today via UPS, Treasury is producing 39 documents totaling 175 pages, comprising the non-exempt, responsive portions of the records within this collection. The documents are numbered UST 000411 - 000585; portions of these materials are withheld pursuant to Exemptions 5 and 6 of the FOIA. An additional 14 documents, totaling 40 pages, are being withheld in their entirety pursuant to Exemption 5, and eight documents are nonresponsive and/or duplicative of other materials within this collection and are therefore not being produced. Treasury is continuing to review records that are potentially responsive to this request and will respond to you again on or before June 5, 2018. If you have any questions concerning this production or a related matter, please contact Rebecca Kopplin, U.S. Department of Justice, at (202) 514-3953. Sincerely, Ryan Law Office of Privacy, Transparency, and Records US. Department of the Treasury Tax Working Group Where: 3120 Main Treasury When: Thu Jun 01 16:00:00 2017 (America/New_York) Until: Thu Jun 01 18:00:00 2017 (America/New_York) Organiser: "Kowalski , Daniel" <"/o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cf6b4ee3710f422fbceecb0020766838-kowalski, dan"> Required Attendees: Based on Friday evening's email, this meeting will be moved to Thursday at 3120 Main Treasury . I've reserved 3120 Main Treasury for Tuesday's meeting. If you are on the original invitation , we have your WAVES information from last time you were here to clear you in for Tuesday. Thanks. UST 000411 TREAS-17-0313-C-000001 Treasur : b(S) Tax Issue From: "Bailey, Bradley" <"/o=ustreasury/ou=exchange administrative group (fyd ibohf23spdlt)/cn=recipients/cn =7eb678b02d9b41 c0af365038a082c58e-bailey, brad I"> To: Cc: veronica.wong@mail.house.gov, tyler.grimm@mail.house.gov Date: Fri, 26 May 2017 15:50:19 -0400 "Kowalski, Daniel" Hi Veronica and Tyler: Your boss raised an idea at a tax reform listening session earlier this week with Secretary Mnuchin. We wanted to follow up to see if we could learn more about it. Best, Brad Brad Bailey Deputy Assistant Secretary for Tax and Budget Office of Legislative Affairs U.S. Department of the Treasury Brad ley.ba iley@treasury .gov C: b(6) 0: UST 000412 TREAS-17-0313-C-000002 Would 3 m on Wednesda From: work for the W den Team? "Bailey, Bradley" <"/o=ustreasury/ou=exchange adm inistrat ive group (fydibohf23spdlt)/cn=recipients/cn=7 eb678b02d9b41 c0af365038a082c58e-bai ley, brad I"> To: "Conchuratt, Sam (Finance)" Date: Tue, 30 May 2017 08 :57:42 -0400 If not, happy to propose other times. From: Stegmaier, Jason (Finance) [mailto:Jason _Stegmaier@fi nance.senate.gov] Sent: Friday, May 26, 2017 3:59 PM To : o o @t reasury.gov>;Bailey, Bradley ; Kowalski, Daniel Cc: Fleischer, Victor (Finance) ; Muzinich, Justin ; Conchu ratt, Sam (Fina nee) ; Conchuratt, Sam (Finance) Subject: RE: Treasury Mee ting Request: Business Tax Reform Discussion That works for Chris and Mark. From : treasur . ov mailto b(6) Sent: Friday, May 26, 2017 3:40 PM To : Bradley.Bailey@treasury.gov : Stegmaier, Jason (Finance) ; Daniel,Kowalski@treasury.gov Cc: Fleischer, Victor (Finance) ; Justin.Muzinich@treasury.gov ; Conchuratt, Sam (Finance) ; Conchuratt, Sam (Finance) Subject: RE: Treasury Meeting Request: Business Tax Reform Discussion Justin's calendar indicates that he's free at 3:00. From: Bailey, Bradley Sent.: Friday, May 26, 2017 2:22 PM To: Stegmaier, Jason (Finance); Kowalski, Daniel Cc: Fleischer, Victor (Finance); Muzinich, Justin; Conchuratt, Sam (Finance); Conchuratt, Sam (Finance); ~ubJect: RE: Treasury Meeting Request: Business Tax Reform Discussion Loop ing in ltmlm and Sam. From : Stegmaier, Jason (Finance) [mail t o?Jason Stegmajer@finance senate gov] Sent: Friday, May 26, 2017 2:05 PM To : Kowalski, Daniel Cc: Bailey, Bradley ; Fleischer, Victor (Finance) ; Muzinich, Justin Subject: Re: Treasury Meeting Request: Business Tax Reform Discussion >; Conchuratt, Let me check on our end. I am out of pocket at the moment so please stand by. Sent from my iPhone On May 26, 2017, at 2:04 PM, " Danje l, Kowalski@treasury .gov " wrote: Could we do this at 3:00 on Wednesday instead? UST 000413 TREAS-17-0313-C-000003 From: Stegmaier, Jason (Finance) [mailto:Jason Stegmaier@finance.senate.gov ] Sent: Friday, May 26, 2017 5:57 AM To: Bailey, Bradley Cc: Fleischer, Victor (Finance) ; Muzinich, Justin ; Kowalski, Daniel ; Conchuratt, Sam (Finance) Subject: Re: Treasury Meeting Request: Business Tax Reform Discussion Brad Would next Wednesday at 1 pm work for this meeting? Jason Sent from my iPhone On May 25, 2017, at 9:35 AM, Prater, Mark (Finance) wrote: Thanks, Brad. Am here all next week. Look forward to attending the meeting. From: Campbell, Chris (Finance) Sent: Thursday, May 25, 2017 9:14 AM To: Sheinkman, Joshua (Finance) ; Fleischer, Victor (Finance) ; Prater, Mark (Finance) ; Justin.Muzin ich@treasury.gov ; Daniel .Kowalski@treasury.gov ; Conchuratt, Sam (Finance) ; Stegmaier, Jason (Finance) Subject: Re: Treasury Meeting Request: Business Tax Reform Discussion > And Jason has our schedules. Chris Campbell Staff Director U.S. Senate Finance Committee 219 Dirksen Senate Office Building Washington. DC 20510 W: o o F: (202) 228-0554 E: chris campbell@finance.senate .gov On May 25, 2017, at 9:11 AM, Sheinkman, Joshua (Finance) wrote: Brad, Thanks for your note. We would be happy to meet to discuss business tax reform early next week. My assistant Sam Conchuratt can work with you to find a time that works for the Wyden tax team. Look forward to getting together next week. UST 000414 TREAS-17-0313-C-000004 Josh From: Bradley.Ba iley@treasury.gov [ma ilto :Brad ley.Bailey@treasury.gov ] Sent: Thursday, May 25, 2017 9:05 AM To: Smith, Tiffany (Finance) ; Fleischer, Victor (Finance) ; Prater, Mark (Finance) Cc: Campbell, Chris (Finance) ; Sheinkman, Joshua (Fina nee) ; Justin .Muzinich@treasury.gov ; Dan iel.Kowa lski@treasury.gov Subject: Treasury Meeting Request: Business Tax Reform Discussion Mark, Vic and Tiffany: Treasury would like to see if you'd be willing to have an informal discussion about business tax reform. Tiffany and Vic, we'd be especially interested in learning more about the business components of Senator Wyden's tax reform proposals. If possible, we'd try to find a time that works on Tuesday or Wednesday are happy to come to the Hill if that is easier. next week. We Thank you in advance. Brad Brad Bailey Deputy Assistant Secretary for Tax and Budget Office of Legislative Affairs U.S. Department of the Treasury Brad Iey. ba i ley@treasury.gov C: lb(6) 0: UST 000415 TREAS-17-0313-C-000005 RE: Treasury Meeting Request: Business Tax Reform Discussion From : "Bailey, Bradley" <"/o=ustreasury/ou =exchange administrative group (fydibohf23spdlt)/cn=recipients/cn= 7eb678b02d9b41 c0af365038a082c58e-bailey, brad I"> To: "Stegmaier, Jason (Finance)" , "Conchuratt, Sam (Finance)" , "Muzinich, Justin" , "Wooten, Linda" , "Kowalski, Daniel" Cc: "Fleischer, Victor (Finance)" Date: Wed, 31 May 2017 16:57:45 -0400 I believe Justin is not available tomorrow. point. I'll let Linda confirm. Next week seems more likely at this From: Stegmaier, Jason (Finance) [mailt o:Jason_Stegmaier@finance.senate.gov] Sent: Wednesday, May 31, 2017 4:12 PM To : Conchuratt, Sam (Finance) ; Muz inic h, Justin ; Wooten, Linda ; Kowalski, Daniel ; Bailey, Bradley Cc: o o Fleischer, Victor (Finance) Subject : RE: Treasury Meeting Request: Business Tax Reform Discussion Folk s, Sam and I spoke and we wanted to propo sed 1 p.m on Thursday. Doe s that work for everyone? If that doe sn't work we may have to look into next week. Jason Stegmaier Office Manager U.S. Senate Finance Committee 219 Dirksen Senate Office Building Washington, DC 20510 \.York: (202) 224-4515 Fax: (202) 228-0554 Tiffany will not be in on Friday. Doe s Thursday work? Sent from my Verizon, Samsung Galaxy smartphone -------- Original message -------- UST 000416 TREAS-17-0313-C-000006 From: Justin .Muzinich@treasury .gov Date: 5/30/17 15:22 (GMT-05:00) To: "Ste ier, Jason (Finance)" , Ci treas . ov, "Conchuratt, Sam (Finance)" < am_ one uratt@finance.senate.gov >, Daniel.Kowalski@treasury.gov , Bra~ Cc:~ "Fleischer, Victor(Finance)" Subject: RE: Treasury Meeting Request: Business Tax Reform Discuss ion 4pm tmrw does not work. Suggest we look for a time Friday. Hi all: Treasury's email server is malfunctioning. 4pm works on my end. Will try to confirm with the rest. From: Stegmaier, Jason (Finance) Date: Ma 30 2017 at 3:10:06 PM EDT To: treasur . ov>, Conchuratt, Sam (Finance) , Kowalski, Daniel , Bailey, Bradley Cc: Muzinich, Justin , Fleischer, Victor (Finance) Subject: RE:Treasury Meeting Request: Business Tax Reform Discussion Could 4 p.m work for you all? Jason Stegmaier Office Manager U.S. Senate Finance Committee 219 Dirksen Senate Office Building \iVashington,DC 20510 \.York: (202) 224-4515 Fax: (202) 228-0554 From: Conchuratt, Sam (Finance) Sent: Tuesday , May 30, 2017 2:16 PM To: Stegmaier, Jason (Finance) ; UST 000417 TREAS-17-0313-C-000007 Brad ley.Baii ey@t reasury .gov Cc: Fleischer, Victor (Finance) ; Justi n. Muzinich@treasury .gov Subject : RE: Treasury M eeting Request : Business Tax Reform Discussion I got a bounce back fr o m you r ema ils so j ust making sure you received my ema il below. From : Conchuratt, Sam (Finance) Sent: Tuesday, May 30, 2017 12:18 PM To : Stegma ier, Jason (Finance) <.="""'-'-''-"'~ >I..U.>....,,..u=..u.u. ................"""-'-~ "iiiJ!i!i 'Dan iel.Kowa lski@treasury.gov' ; o o Brad ley.Baii ey@t reasury.gov Cc: Fleischer, Victor (Finance) ; Justin .Mu zin ich@treasury .gov Subject : RE: Treasury M eeting Request: Business Tax Reform Discussion Apologies for t he delay in my respon se. 4 pm to mor row wo rks for our te am as wel l. - Sam From : Stegmaier, Jason (Finance) Sent: Tuesday, M ay 30, 2017 11:59 AM To : 'Daniel .Kowa lski@treasury.gov ' b(6) Brad ley .Ba ii ey@t reasury.gov Cc: Fleischer, Victor (Finance) ; Justin.Muzinich@treasury.gov Conchuratt, Sam (Finance) Subject: RE: Treasury M eeting Request : Business Tax Reform Discussion ; Folks , My apologies for complicating this further, but we have had some issues pop up. Could we do 4 p.m. instead in our ante room here in Dirkse n? Jason Stegmaier Office Manager U.S. Senate Finance Committee 219 Dirksen Senate Office Building \.Vashington,DC 20510 \.York: (202) 224-45 15 Fax: (202) 228-0554 From : Danie l.Kowalski@treasury.gov fmai lto :Daniel.Kowalski@treasury .gov] Sent: Tuesday, M ay 30, 2017 11:05 AM To: Stegma ier, Jason (Finance) ; Brad ley.Bailey@t reasury.gov Cc: Fleischer, Victor (Finance) ; Justin .Muzinich@treasury .gov; Conchuratt, Sam (Finance) ; Conchuratt, Sam (Finance) Subject : RE: Treasury M eeting Request: Business Tax Reform Discussion Let's close the loop on this. Looks like we have established a meeting time (Wednesday at 3:00). Where shall we meet? Might make sense to meet you on the Hill, but happy to host here at Treasury if you would like . From : Stegmaier, Jason (Finance) [mailt o :Jason Stegmajer@fi nance.senat e.gov] Sent: Friday, May 26, 2017 3:59 PM To : jfflij @t reasury.gov >;Bailey , Bradley ; Kowalsk i, Daniel UST 000418 TREAS-17-0313-C-000008 Cc: Fleischer, Victor (Finance) ; Muzinich, Justin ; Conchuratt, Sam {Finance) Subject: RE: Treasury Meeting Request: Business Tax Reform Discussion .senate.gov >; That works for Chris and Mark. .o treasur . ov ] From: b(6) treasur . ov [mailto :b(6) Sent: Friday, May 26, 2017 3:40 PM To: Bradley.Bailey@treasury .gov ; Stegmaier, Jason {Finance) ; Justin .Muzinich@treasury.gov Conchuratt, Sam {Finance) ; Conchuratt, Sam {Finance) Subject: RE: Treasury Meeting Request: Business Tax Reform Discussion >; ; Justin's calendar indicates that he's free at 3 :00. From: Bailey, Bradley Sent: Friday, May 26, 2017 2:22 PM To: Stegmaier, Jason (Finance); Kowalski, Daniel Cc: Fleischer Victor (Finance); Muzinich, Justin; Conchuratt, Sam (Finance); Conchuratt, Sam (Finance); o reasury Meeting Request: Business Tax Reform Discussion Looping in Linda and Sam. From: Stegmaier, Jason (Finance) [mailto :Jason Stegmaier@finance .senate .gov ) Sent: Friday, May 26, 2017 2:05 PM To: Kowalski, Daniel Cc: Bailey, Bradley ; Fleischer, Victor (Finance) ; Muzinich, Justin Subject: Re: Treasury Meeting Request: Business Tax Reform Discussion .gov >; Conchuratt, Let me check on our end. I am out of pocket at the moment so please stand by. Sent from my iPhone On May 26, 2017, at 2 :04 PM, " Daniel .Kowalski@treasury .gov " wrote : Could we do this at 3:00 on Wednesday instead? From: Stegmaier, Jason (Finance) [ mailto :Jason Stegmaier@finance .senate.gov ] Sent: Friday, May 26, 2017 5:57 AM To: Bailey, Bradley Cc: Fleischer, Victor {Finance) ; Muzinich, Justin ; Kowalski, Daniel ; Conchuratt, Sam {Finance) Subject: Re: Treasury Meeting Request: Business Tax Reform Discussion Brad Would next Wednesday at 1 pm work for this meeting? Jason UST 000419 TREAS-17-0313-C-000009 Sent from my iPhone On May 25, 2017, at 9:35 AM, Prater, Mark (Finance) wrote: Thanks, Brad. Am here all next week . Look forward to attending the meeting . From: Campbell, Chris (Finance) Sent: Thursday, May 25, 2017 9:14 AM To: Sheinkman, Joshua (Finance) ; Fleischer, Victor (Finance) ; Prater, Mark (Finance} ; Justin.Muzin ich @treasury.gov ; Daniel.Kowalski@treasury .gov ; Conchuratt, Sam (Finance} ; Stegmaier, Jason (Finance} Subject: Re: Treasury Meeting Request: Business Tax Reform Discussion > And Jason has our schedules. Chris Campbell Staff Director U.S. Senate Finance Committee 219 Dirksen Senate Office Building Washington. DC 20510 W: (202) 224-3338 F: (202) 228-0554 E: chris campbell@finance.senate.gov On May 25, 2017, at 9:11 AM, Sheinkman, Joshua (Finance} wrote: Brad, Thanks for your note. We would be happy to meet to discuss business tax reform early next week. My assistant Sam Conchuratt can work with you to find a time that works for the Wyden tax team. Look forward to getting together next week. Josh From: Brad ley.Ba iley@treasury.gov [ma il t o :Brad ley.Bailey@treasury.gov ] Sent: Thursday, May 25, 2017 9:05 AM To: Smith, Tiffany (Finance) ; Fleischer, Victor (Finance) ; Prater, Mark (Finance) Cc: Campbell, Chris (Finance} ; Sheinkman, Joshua (Fina nee) ; Justin .Muzinich@treasury.gov ; Daniel.Kowalski@treasury.gov Subject: Treasury Meeting Request: Business Tax Reform Discussion Mark, Vic and Tiffany: Treasury would like to see if you'd be willing to have an informal discussion about UST 000420 TREAS-17-0313-C-000010 business tax reform. Tiffany and Vic, we'd be especially interested in learning more about the business components of Senator Wyden's tax reform proposals. If possible, we'd try to find a time that works on Tuesday or Wednesday next week. We are happy to come to the Hill if that is easier. Thank you in advance. Brad Brad Bailey Deputy Assistant Secretary for Tax and Budget Office of Legislative Affairs U.S. Department of the Treasury Br~ easury.gov C: oo 0: b(6) UST 000421 TREAS-17-0313-C-000011 RE: Tax Reform Meetin From: "Prater, Mark (Finance)" To: Cc: "Knight, Shahira E. EOP/WHO" > , "Mackie, James Ill" , uzIrnc , us 1n <1usm.muz1mch@treasury.gov>, "Kowalski, Daniel" , "Chalkey, Richard J. EOP/WHO" > Date: Wed , 31 May 2017 16:59:04 -0400 We're at 17th and State. Sent from my Verizon, Samsung Galaxy smartphone -------- Original message -------From : "Dunn , Brendan (McConnell)" Date: 5/31/17 4:45 PM (GMT-05:00) To: "Gross, Mackenzie A. EOP/WHO" > Cc: "Knight, Shahira E. EOP/WHO" rater, Mark (Finance)" , ams ac re ames.mac re reasury.gov)" , Justin.Muzinich@treasury.gov, "Dan Kowalksi (Daniel.kowalski treasu . ov ", "Chalkey, Richard J. EOP/W HO" > Ok. I'm in a car. Will lay low for awhile. Sent from my iPhone On May 31, 2017, at 4:41 PM, Gross, Mackenzie A. EOP/WHO wrote: We're looking into it. Someone jumped the fence apparently SentrrommyiPhone On May 31, 2017, at 4:38 PM, Knight, Shahira E. EOP/WHO It is?? I had no idea . Mackenzie or Richard - are we on lockdown? > wrote: Any idea what is going on or how long it will be? From : Prater, Mark (Financ e) (mailto:Mark Prater@finance .senate .gov ) Sent: Wednesday, May 31, 2017 4:37 PM To : Knight, Shahira E. EOP/WHO >; Dunn, Brendan (McCon nell ) ; Jams Mackie james.mackie@treasury.gov ) ; Justin .Muzinich@treasury.gov ; Dan Kowal ksi (Dan iel .kowalski@treasury.gov ) Cc: Gross, M ackenzie A. EOP/WHO >; Chalkey, Richard J. EOP/WHO UST 000422 TREAS-17-0313-C-000012 Subject : RE: Tax Reform Meeting Importance: High Hey guys, See WH is on lockdown. We're all ready to hop in a cab. From : Knight, Shahira E. EOP/WHO mailto Sent: Tuesday, May 30, 2017 11:31 AM To : Prater, Mark (Finance) ; Dunn, Brenda n (McConne ll) ; Jams Mackie (iames .mackie@treasury.gov ) ; Justin .Muzinich@treasury.gov ; Dan Kowalksi (Daniel.kowalski@treasury.gov ) Cc: Gross, M ackenzie A. EOP/WHO >; Chalkey, Richard J. EOP/WHO > Subject : Tax Refor m M eeting All, We are set for tomorrow afternoon. Meet i ng deta ils are below. Wednesday, M ay 31 5 PM -6 PM Wh ite House, West Wing, Situation Room Please have all attendees use this link to enter their persona l info for security clearance by 4:30 PM today . Please be sure to list your name exactly as it appears on your ID and be careful not to t ranspose any numbers. They w ill deny entrance if t here are any typos: https://events.whitehouse.gov/form?rid =WRPBDPHJJ3 Treasury: Mackenz ie will meet you at the East W ing entrance at 4:55 so that you don't have to walk all the way around. Senate: The easiest entrance to use is the Northwest Gate fo r Appoi ntments and Pass Holders. It is located on Pennsylvania Ave at Lafayette Park (map below if helpful) . Ask the guard to direct you to t he West Wing lobby (not the lower lobby) . I wi ll meet you there and bring you down to the Situation Room. I can drive four of you back to the Senate after our meeting. Finally, please note that phones are not allowed in t he Situation Room, so hopefully you w ill be okay separating from your devices for one hour. Thanks and see you tomorrow. UST 000423 TREAS-17-0313-C-000013 RE:BEPS "Porns, Douglas" <"/o =ustreasury/ou=exchange administrative group (fydibohf23spdlt)/c n=reci pients/c n=pomsd"> From: To: "Doss, Darrell" , "Huynh, Quyen" Date : Wed , 31 May 20 17 17:05:05 -0400 Hi Rico, I could do a meeting one of those days in the morning. Thanks, Doug From: Doss, Darrell [mai lto: Darrell.Doss@mail.house.gov] Sent: Wednesday, May 31, 2017 3:28 PM To: Huynh, Quyen; Porns, Douglas Subject: RE: BEPS Hi Doug, Just circling back-any chance you or anyone on your team wou ld be able to meet wi t h this group? Thanks , Rico Darrell Rico Dos s Legislative Counsel Office of Congressman Dwight Evans (PA-02) 1105 Longworth House Office Building ~ 20515 mDJ111111111111 direct (202) 225-40 01 office darrell.doss@ mail.house .gov Join the 011/ineconversation: @0 0 Click here for more legislative updates from Congressman Evans From : Quyen.Huynh@treasury .gov fmai lto:Quyen .Huynh@treasury.gov ] Se nt: Tuesday, May 23, 2017 1:17 PM To : Douglas.Poms@treasury.gov ; Doss, Darrell Subject : FW: BEPS Hello Darrell, I am looping in my colleague Doug Porns who may be available to discuss the issues/topics below. Thanks, Quyen From : Quyen .Huynh@treasury .gov fmai lto:Quyen .Huynh@treasury .gov] Sent: Tuesday, May 23, 2017 1:04 PM To : Doss, Darrell Subject : RE: BEPS UST 000424 TREAS-17-0313-C-000014 Hello Darrell , I will send this to my colleagues to see if someone from the office of tax policy is available to chat about the tax reform topics below, although we would not be able to offer IRS' perspectives. I hope to get back to you shortly about this. Thanks, Quyen From: Doss, Darrell [ mailto:Darrell.Doss@mail.house.gov ] Sent: Tuesday, May 23, 2017 12:49 PM To: Huynh, Quyen Subject: RE: BEPS Quyen: Below is a brief descriptio n- and sorry for the late reply. Keidanren is sending a delegation of researchers and corporate representatives to DC next month focusing on the U.S. tax reform effort. It would be extremely informative for the delegation to meet with you and hear IRS' perspective. The delegation will be in DC June 7-9. Would you have any availability to meet with them during that time? Below is an outline of the delegation. IT'he Trump administration is expected to unveil its comprehensive tax reform plan in coming weeks or months, which would affect not only U.S. taxpayers but also Japanese companies. In order to be updated on the state of play of the proposal, Keidanren is currently planning to send a delegation to Washington, D.C. in June where we will exchange views with policy makers at Congress and executive branch, and other key figures in the U.S. tax community on what the reform would mean for the U.S and the rest of the world. Keidanren USA is the U.S. liaison entity for Keidanren , the Japan Business Federation. Keidanren is a comprehensive Japanese economic organization with a broad membership consisting of 1,329 Japanese companies, 109 industry associations , and 47 regional economic organizations . It is somewhat similar to a Japanese version of the U.S. Chamber of Commerce , though not quite as political :) For more information , please see below. http://keidanren .us/about/ http://www. keidanren .or .jp/en/ Thank you! Rico Darrell Rico Doss Legislative Counsel Office of Congressman Dwight Evans (PA-02) 1105 Longworth House Office Building ~ 20515 -direct (202) 225-4001 office darrell.doss@mail.house.gov UST 000425 TREAS-17-0313-C-000015 Join the 011/ine conversation: @0 0 Click ~ for more legislative updates from Congressman Evans From : Ouyen.Huynh@tr easury .gov fmailt o :Ouyen.Huynh@tre asury .gov) Sent: Thurs day, May 18, 2017 11:36 AM To : Doss, Darrell Subject: RE: BEPS Do you know what the topics are that they would like to discuss? Depending on the topics I may be able to find others within my office who may be better suited to speak about with this group. I will also coordinate within the building to see what approvals, if any, we may need in order to assist you. Thanks, Quyen Associate lnternationa l Tax Counsel (202) 622-1707 From: Doss, Darrell [mailto:Darrell.Doss@ma il.house.gov] Sent: Th ursday, May 18, 2017 11:25 AM To: Huynh, Quyen Subject: RE: BEPS Hi Quyen: I wanted to follow-up on the request to speak to the Japanese Keidanren (Chamber of Commerce). The group will be here from June 7-9. Please let me know if you think you can work it into your sched ule any of those days? Thanks, Rico Darrel I Rico Dos s Legislative Counsel Office of Congressman Dwight Evans (PA-02) 1105 ~ngworth House Office Building 0 ) 5-40 1 C?.zce darre ll.doss@mail.house.gov loin the 011/ine conversation: @0 0 Click her e for more legislative updates from Congressman Evans UST 000426 TREAS-17-0313-C-000016 Tax Working Group Where: 3120 Main Treasury -- cont call 202.927 .2255 (PIN 919150) When : Tue Jun 20 16:30 :00 2017 (America/New_ York) Until: Tue Jun 20 17:30 :00 2017 (America/New_York) Required Attendees : )" Optional Attendees: b(6) @treasury.gov> @treasury.gov> oo If you are on this invite, we have the information needed to clear you into the building. If this invite has been forwarded to youtilease send clearance information to both @treasury.gov and @treasury.gov (they work as a team) . They will need your name as on id date of birth social secur ity number , citizenship , country of birth and city of residence . You can also call b(6) if you prefer to not send this information over emai l. V l:firi Thanks. UST 000427 TREAS-17-0313-C-000017 Senate Finance Committee International Tax Reform Working Group: Final Report July 7, 2015 Senator Rob Portman, Co-Chair Senator Charles Schumer, Co-Chair UST 000428 TREAS-17-0313-C-000018 TABLE OF CONTENTS Foreword by the co-chairs ......................... . ........ . .. . .. . .. . ......... . ............. . ........ . ....... 5 I. Reasons for Action ........ . .. .. . .. .. ...... ... ...... ... .. .. . .... ........ .. . . . . . . ...... . .. . .. . .. ..... . . ..... . .7 A. Inversions / Foreign Acquisitions .. ... . .... . .. . .. . .. .. .. . .... . .. . .. . ..................... . ......... 7 B. OECD's Base Erosion and Profit Shifting Project. . ........ . .. .. .. .. . .. . .. . ..... ..... ......... . . 8 II. International Principles of Taxation .... . ........ . ........ . .. . .. . ........... . .. . . .. ........ . ...... . .. . .. 10 A. General Overview . . ........ . .. . .. . .. . .. . .. . .. . ..... . .. . .. . .. . .. . .. . .. . ................. . .. . ......... . 10 B. International Principles as Applied in the U.S . System .. . ... . . .. . ..... .. .. .. . .. . . .. .. .. .. .... . . 13 III. Present Law ...................... . .. . .. . .. . ........... . .................... . .... . ... . ............ . ......... 15 A. Principles Common to Inbound and Outbound Taxation . ..... .. .. . .. . .. ... . .. ...... .. .. . . .... 15 1. Transfer Pricing .. .. . .. . .. . .. . .. . ........... . .. . ................. . .. . .. . .. . .. . .. . ..... . .... . ..... 15 2. Entity Classification ...... .. ........ . .. . ..... . .. . .. . .......................... . ........ . ........ 16 3. Source of Income Rules .. .. . ..... ..... .... . ..... . .. . .. . .. ..... .. ........ . .. . .. . ..... . ..... .. .... 17 4 . Corporate Residence ........ . ............. . ............. . ... . .. . . . ......... . .. . .. . .. . .... . ... . .21 B. U.S . Tax Rules Applicable to Nonresident Aliens and Foreign Corporations (Inbound) ................... . .. . .. . .. . ........ ................................ .. ........ . .. . .. . .. . .... 24 1. Gross-basis taxation ofU.S.-source income .. .. .. ...... .......... . .. . .. . .. .. .. .. . .. .... .... 24 2. Net-basis taxation ofU.S.-source income .... . ..... . .. . .. . .. . .. . .. . ........ . ........ .. .. .. . . .28 3. Special Rules ...................................................................... . ........ . .... 32 C. U.S. Tax Rules Applicable to Foreign Activities of U.S. Persons (Outbound) .... . .. . .... . .35 1. In General. .. .. . ....... . ........ . .. . ............ . ............. 2. Anti-deferral regimes .... . ........ . ........... . .. . ........ . .. . .. . .. . ........ . .............. 3. Foreign tax credit. ..................... 4 . Special rules .......... . ..... . .. . ........... . .. . .. . .............. . .. . .. . .. . ............. . ...... . .. . .. 35 . .................................. . . . ......... . .. . .. . .. . .... . ... . ........... . .. . .. 35 . .41 . .. . ....... .43 2 UST 000429 TREAS-17-0313-C-000019 D. U.S. tax rules applicable to the U.S. territories .. .. .......... .. ... ... ... ... ... ... .. .... ......... . .46 1. Background .. .. ... ..... .. .. ......... ... ... ......... ... . .. ... ......... . ........ ... ... .............. 2. In General ............. 46 . ..... ... ... ... ... ..... .......... . .. . .. ... . .. ... ... .. ... ........... ... ... ..46 3. Income Taxation of Individuals .......... . ..... . .. ... . .. . .. ... ......... ... ... ...... .... ... ..... 48 4. Income Taxation of Corporations .... ...... . .. ............ . ........ . ........................... 50 5. Estate and Gift Taxation .... . ... .. ... ...... ... .. ... ...... .... . .. ...... .. ... .. .. .. ... .. ...... .. .. 52 6. Payroll Taxes ....... ......... ... .... . ....... . .. ... .............. ....... ... ......... ............... 53 7. Excise Taxes ....... ... . .. ... ... ..... .. ..... ... ... ... ... . .. ... ............ . .. ... ... ... ... ..... ... .. 54 8. Tax Incentives .... ......... ........................ ... . .. ... ......... ... ... ....................... 9. Tax Treaties ..... .. . .. ... ... . .. ... ......... .. .. .. .................. 54 ... . .. . .. ... ... . .. ... ... ........ 55 IV . Prior International Tax Reform Efforts .. .. .. .. .... .... . ........ ..... .. ..... ... ... . .. ... ...... .. ..... . 56 A. The Tax Reform Act of2014 ("TRA14") .... ...... . .. ... ......... .............. ................. 56 1. Ninety-five percent dividend received deduction .. . ..... ........ . .. . .. .... .... . ... .. ... ... 56 2. Foreign base company intangible income .... ... ... ... ... ... ... . .. .... ........ ... . .. ... ... .. 59 3. Denial of deduction for interest expense of U.S. shareholders which are members of worldwide affiliated groups with excess domestic indebtedness ....... .. ............... 61 4. Modifications to section l 63(j), limitation on deduction for interest on certain indebtedness . ............ ...... . .. ... ... . ..... . ........... ... ... ... ... ...... ............ ....... . .63 5. Deemed repatriation of deferred foreign income .... . .. ............ ......... . .... .... .. ...... 63 B. President's FY 2016 Budget Proposal .... . .... .. .... ... .......... .. ....... . .. ... ... .. ... ......... 68 1. Impose a 19-percent Minimum Tax on Foreign Income .......... .... . .... ... . .. ... . ..... 68 2. Interest allocation ......... .. ........ ... . ..... ... . .. ........................... ......... ......... 70 3. Impose a 14-percent One-Time Tax on Previously Untaxed Foreign Income ....... ..71 V. Bipartisan Framework for International Tax Reform ....... ... . .. ... .............. .... . .. . ..... ... . .72 3 UST 000430 TREAS-17-0313-C-000020 A. Ending the lock-out effect. . .. . .. . .. . .. .. ... .. .. ...... . .. . . .. .. . .. . .. . ........ . .. . .. . ... . .. .... . .. . .72 B. Patent Box Regime .. .. . .................... . ..... . .. . . .. ... . .... . ........ . .. . .. . .. .. ............... 73 C. Base Erosion .... . .. . . .. .. . . .. .. . .. .. .. .. . .. ... ... .. .. .. . .. . .. . .. . .. .. ... .. ........ . .. . ..... .. . .. . .. . .76 D. Interest Expense Limitations .. .. . ..... . .............. E. Deemed Repatriation .. .. . ........... . .. . .. . .. . .. . .. . .. . .. . ........... . .... . .. . .. . . 77 . .. . .. . .. . .. . .. . .. . .. . .. . ......... . ....... . .. . .. . ... . .......... 78 VI. Miscellaneous Issue s ... ... ... .. .. .. . ... . .. . .. . .. .... . . . . . .. . .. . ... . .. . . .. .. .. ... . .. ....... ... . . . . . . ..... 78 A. CFC Look-Through ....... . ... . .... . .. . .. . .. .............. . ... . .. . . . ......... . ...................... 78 B. Active Financing Exception .. .. .. ...... .... . .. . .. . .. . .. . .. ..... .. . ....... . .. . .. . .. . .. . ...... .. . .... 79 C. Foreign Investment in Real Property Tax Act . . ........ . .. . .. . .. .. .. .. . ..... . .. . ............ . ... 79 D. Foreign Affiliate Reinsurance .. ..... .. .. . .. .. . .. . .. . ........ . .. . .. . .. . .. . .. . .................... . . 80 E. Territories ..... .. . .. .... .. . .. . . .. .. .. ...... . . .. . . . . .. .. .. .. . .. ..... .. .. . .. . .. . .. . .. . .. .. .... .. .. .. . .... 80 F. Overseas Americans ..... . .. .. . ........... . .............. . .. . .. . .. . .................. ........... . .. . . 80 4 UST 000431 TREAS-17-0313-C-000021 FOREWORD BY THE CO-CHAIRS Over the past few months, the working group has examined every aspect of the international tax code in an attempt to find ways to fix a system that is clearly broken. Our current system of international taxation was put into place during the Kennedy Administration and reflects the realities of a different era. By standing still, the United States has fallen behind other countries that have adopted modem international tax rules to help their companies and workers compete in the global marketplace. As the Business Roundtable pointed out in their submission to the working group, " [n]ew technologies , emerging economies , and falling trade barriers have significantly increased global cross-border investment and trade over this period , while increasing economic competition ." And the numbers bear this out. In 1982 , U.S . multinational companies earned only about 23 percent of their income from outside the United States. In 2012 , 54 percent of the income of U.S. multinational companies was earned outside the United States. When U.S . businesses can compete and win in this growing global market , the real winners are U.S . workers . A 2009 study on the domestic effects of the foreign activities of U .S. companies found that every 100 jobs added abroad by U.S. multinational companies resulted in an average increase of 124 jobs added in the United States .1 A March 2015 report by Ernst & Young found that for each dollar of additional wages paid in U.S. foreign affiliates, U.S. wages increased by $1.84 .2 Further , the report found that each dollar of foreign investment by U.S . multinational companies led to $3 .50 of additional investment here at home .3 Unfortunately , as the importance of success in foreign markets has grown , the United States has become less competitive abroad because of its worldwide system of international taxation . In 1989, only 10 OECD member countries had territorial tax systems and just two of the G-7 countries had such a system .4 Today , 28 OECD countries and every other G-7 country has adopted some form of territorial system 5 - and all of these countries have lower corporate tax rates than the United States . This means that no matter what jurisdiction a U.S . multinational company is competing in, it is competing at a disadvantage . The National Association of Manufacturers may have said it best in their submission: " [i]f American companies cannot 1 See Mihir Desai, C. Fritz Foley, & James R. Hines, Jr., Domestic Effects of the Foreign Ac tivities of US Multinationals , Am . Econ. J.: Econ. Pol'y (2009) . 2 Ernst & Young , Buying and Selling: Cross-border mergers and acquisitions and the US corporate income tax (prepared for the Business Roundt able) (2015). 3 Id . 4 See Alliance for Competitive Taxation, Comments Submitted to the Senate Committee on Finance Interna tional Tax Working Group 7 (2015). 5 Id . 5 UST 000432 TREAS-17-0313-C-000022 compete abroad, where 95 percent of the world's consumers are located, the U.S. economy suffers from the loss of both foreign markets and domestic jobs that support foreign operations." 6 Like any major tax reform, fixing the international tax code won't be easy, but it will be essential if we want U.S. businesses and their workers to be able to compete and win in an increasingly global economy. While we are still working with the staff of the Joint Committee on Taxation on the specifics of an international tax reform proposal , we believe that the framework below represents what a bipartisan proposal should look like. While not within the jurisdiction of the international working group , there is no doubt that the policies below work best with a substantial corporate tax rate reduction and broader tax reform for all businesses. We would like to thank the member s of the International Tax Reform Working Group : Senator Pat Roberts (R-KS) , Senator Sherrod Brown (D-OH) , Senator Michael Enzi (R-WY) , Senator Tom Carper (D-DE) , Senator John Comyn (R-TX) , and Senator Mark Warner (D-VA) ; as well as their staffs and the professional staff of Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) . Their participation and engagement is a large part of what made the working group process successful ; however , it should be noted their participation does not imply agreement with all of the details of the framework outlined below . We would also especially like to thank Tom Barthold and his staff at the Joint Committee on Taxation for their countless hours spent with Senators and staff discussing the technical details involved in various international tax reform measures , and for their assistance in the preparation of this report. Finally , we would like to thank the stakeholders who took the time to be engaged in the process. Their continued participation and input will be vital in moving this process forward . 6 National Association of Manufacturers, Comments Submitted to the Submitted to the Senate Finance Committee International Tax Working Group 2 (2015) . 6 UST 000433 TREAS-17-0313-C-000023 I. REASONS FOR ACTION A. Inversions / Foreign Acquisitions Unfortunately, the negative consequences of our current tax code have played out in the headlines over the last two years. From 2013 through September 2014, at least a dozen companies pursued tax inversions, transactions which move a company's corporate tax home outside of the United States. 7 Last September, the Treasury Department issued anti-inversion regulations to combat the problem. Although the regulations have had an impact, staving off additional inversions , it's clear that the fundamental problem cannot be fixed without reform of our tax system . For example , take the saga of Salix Pharmaceuticals . Salix is a North Carolina-based pharmaceutical company . Last fall, Salix attempted to buy an Irish subsidiary of Cosmo Pharmaceuticals and invert to Ireland. As a result of Treasury's regulations , Salix called off the deal due to "more uncertainty regarding the potential benefits" 8 that Salix hoped to achieve through the transaction . Instead of being the end of the story, the collapsed deal sparked a bidding war for Salix . All but one of the bidders for Salix were foreign headquartered companies , and the one that was based in the United States , Mylan Inc., has subsequently inverted to the Netherlands . In the end, Valeant Pharmaceuticals , a former U.S . company which inverted to Canada in 2010 , won the bidding .9 In April , Valeant announced that it would lay off 258 Salix workers in Raleigh - approximate ly one third of its workforce_lO The story illustrates the simple fact that today ' s U.S. tax code makes U.S. companies more valuable in the hands of foreign acquirers - and it's a trend that appears to be growing. According to the Wall Street Journal , "[fJoreign takeovers of U.S . companies have surged lately , hitting $275 billion last year, according to data provider Dealogic . That is double the 2013 amount and far outpaces the increase in overall global mergers and acquisitions , which rose 30 percent in dollar volume." 11 And this isn't to say that foreign investment in the United States is 7 Liz Hoffm an & John D . McKinnon , Foreign Takeovers See U.S. Losing Tax Revenue : Wave of tie-ups is steering more money out of Uncle Sam's coffers, Wall St. J., March 5, 2015. 8 Chad Bray , Salix Calls Off Inv ersion Deal With Irish Arm of Dn1g Maker Cosmo, N.Y. Times , October 3, 2014. Available at: http ://dealbook.nytimes.com/2014 / I 0/03/salix-calls-off -inversion-deal-with-irish-arm-of-drugmakcr-cosmo /? r=O 9 Maureen Farrell , Valeant-Salix Deals Shows Why Inverted Companies Will Keep Winning, Wall St. J., February 23, 2015. Available at: http ://blogs .wsj .com/moneybeat /2015 /02/23/valeant -salix -deals-shows -whyinvcrted-companics-will-kccp -winningi . 10 Jason deBruyn , Will the Salix-Valeant story play out over and over again, Trian gle Bus. J., April , 23, 2015. Available at: http: //www.bizjournals .com/triangle /news/2015 /04/23/salix -valeant -story-play-out-o veragain. html. 11 Supra note 7. 7 UST 000434 TREAS-17-0313-C-000024 bad, it's not; but when tax reasons, not business reasons, are the driver of acquisitions of U.S. companies, it's bad for U.S. businesses, bad for their workers, and bad for the U.S. Treasury. Several recent studies show that tax reform in the United States is the answer. One suggests that if the United States converted from a worldwide to a hybrid territorial-like system of international taxation, that the number of cross-border deals where the United States company is the acquirer would increase by seventeen percent. 12 In Ernst and Young's recent cross-border mergers and acquisitions (M&A) study , they estimate that a 25 percent corporate tax rate would have kept 1,300 companies from leaving the United States through acquisition or inversion over the last ten years. 13 B. OECD's Base Erosion and Profit Shifting (BEPS) Project Almost every U.S. multinational company and trade group that met with the working group has expressed serious concerns about the impact the BEPS Project will have and , in fact , is already having on their business decisions , the U.S . corporate tax base , and our economy as a whole . For background , at the request of the G20 finance ministers, the OECD has undertaken work to develop an Action Plan on Base Erosion and Profit Shifting (i .e., the BEPS Project) . This project is intended to develop policy and administrative recommendations in fifteen discreet action areas in an effort to harmonize international tax rules between jurisdictions and combat tax avoidance by multinational companies. The project is operating on a rapid timeline , with recommendations to be finalized by the end of 2015. An outline ofBEPS Action Items and timeline is below : OECD'S BEPS Action Plan September 2014 Action I Action 2 Action 5 Action 6 Action 8 Final report identifying tax challenges raised by the digital economy and the necessary actions to address them Interim report regarding rules for dealing with hybrid mismatch arrangements Interim report reviewing member country regime s in order to counter harmful tax practices by increasing transparency Interim report regarding rules on the design of domestic and tax treaty measures to prevent abuse of tax treaties Interim report regarding rules for transfer pricing involving intangibles 12 Lars P. Feld , Martin Ruf, Uwe Scheuerin g, Ulrich Schreiber , & Johannes Voget, Eff ects of Territorial and Worldwide Corporation Tax Systems on Outbound M&A 's, Center for Europe an Economic Rese arch, Discussion Paper No . 13-088 (201 3). 13 Sup ra note 2. 8 UST 000435 TREAS-17-0313-C-000025 Action 13 Action 15 Interim report regarding rules for transfer pricing in relation to country-bycountry documentation requirements Final report on the development of a multilateral, as opposed to a bilateral, mechanism to implement BEPS measures, particularly with regard to treaty modification September 2015 Action 3 Recommendations regarding the design of domestic rules to strengthen Controlled Foreign Companies (CFC) Rules Action 4 Recommendations regarding the design of domestic rules to limit base erosion via interest deductions and other financial payments Strategy to expand participation to non-OECD members to counter harmful tax practices more effectively Tax treaty measures to prevent the artificial avoidance of pennanent establishment status Changes to the transfer pricing rules in relation to risks and capital , and other high-risk transactions Recommendations regarding data on BEPS to be collected and methodologies to analyze them Recommendations regarding the design of domestic rules to require taxpayers to disclose their aggressive tax planning arrangements Tax treaty measures to make dispute resolution mechanisms more effective Action 5 Action 7 Actions 9 and 10 Action 11 Action 12 Action 14 December 2015 Action 4 Action 5 Action 15 Changes to the transfer pricing rules to limit base erosion via interest deductions and other financial payments Revision of existing criteria to counter harmful tax practices more effectively The development of a multilateral instrument Completion of the full 15 item Action Plan Pressure for action developed over the past few years , primarily in the European Union , where alleged gaming of the differences in tax rates among member nations received significant media scrutiny and became a political issue . In 2012 , the Public Accounts Committee of the British House of Commons called upon Amazon , Google and Starbucks to explain their companies' U.K. tax strategies . The European Commission has undertaken formal state aid investigations oflreland , Luxembourg and The Netherlands-largely focused on tax treatment of U.S. multinational companies . Additionally , German Chancellor Angela Merkel urged action to crack down on profit shifting in a speech at the OECD in February 2014 ; French President Francois Hollande has called for some form of global tax harmonization to combat stateless income ; and many countrie s have increased audit scrutiny on multinational companie s in an effort to combat tax avoidance-notably , with Italy going so far as to raid the Italian headquarters of multiple U .S. companies , including Facebook and Apple , in recent years. Additionally , although coordination amongst taxing jurisdictions is one goal of the BEPS project , some participating countries have already begun to take unilateral actions before the 9 UST 000436 TREAS-17-0313-C-000026 project is complete. In addition to investigations and audits such as those listed above , statutory changes are already going into effect. Approximately thirty unilateral measures were introduced in 2014, including guidance and legislation or proposed legislation on hybrid mismatches, interest deductibility and controlled foreign corporation rules, among others. 14 The United Kingdom plans to enact a new nexus requirement for participation in its patent box in line with the OECD's new requirements for acceptable preferential tax regimes for intangible property. In addition, the U.K. enacted a new "diverted profits tax" that went into effect April 1, 2015. Under the diverted profits tax, a 25 percent tax will be imposed on profits considered to be artificially shifted out of the United Kingdom. This is intended to curtail the ability of a company to book sales associated with mobile income within the country through lower-tax jurisdictions . Similar efforts are being taken by other countries around the globe , including Australia, which has put forth a number of proposals consistent with BEPS efforts in its 2015-2016 federal budget ; and Spain , France and Mexico have all recently implemented stricter interest deductibility limits. Even if the United States does not accede to the BEPS recommendations , U.S . multinational companies will still be impacted . U.S. companies will be subject to base erosion rules in effect in other countries; and, in fact, are the intended targets of many of the new rules going into effect. The U.K. diverted profits tax is often referred to as the "Google Tax" and the Australian proposal as the "Netflix Tax ." As fom1er Chainnan Camp recently stated , "the bottom line is that change is coming-- if not here at home , then it is certainly coming from overseas ." If policymakers fail to implement new rules in a timely fashion to combat overseas action , BEPS-related and unilateral actions around the globe will undoubtedly result in far more taxes paid into foreign coffers by U.S. multinational companies , with a corresponding revenue and job loss here in the United States . II. INTERNATIONAL PRINCIPLES OF TAXATION A. General Overview A number of co1mnonly accepted principles have developed to minimize the extent to which conflicts arise between countries as a result of extraterritorial or overlapping exercise of authority . International law generally recognizes the right of each sovereign nation to prescribe rules to regulate conduct with a sufficient nexus to the sovereign nation . The nexus may be between conduct and the territory of the nation or it may be between a person (whether natural or juridical) and the status of that person in the view of the sovereign nation . 15 Normative limitations based on the reasonableness of such regulatory action have developed. In addition , most legal systems respect limits on the extent to which extraterritorial measures can be given 14 Pricewaterhouse Coopers (April 2014). The Forces and Tensions Shaping BEPS . PwC TaxTalk Monthly. 15 Americ an Law Institute , Restatement (Third) of Foreign Relations Law of the United States , secs. 402 and 403, (1987). 10 UST 000437 TREAS-17-0313-C-000027 effect. The broad acceptance of such norms extends to cross-border trade and economic dealings. These two broad bases of jurisdiction, i.e., territoriality and nationality of the person whose conduct is regulated, have been refined and, in varying combinations, form the bases of most systems of income taxation. Exercise of taxing authority based on a person's status as a national, resident, or domiciliary of a jurisdiction reaches worldwide activities of such persons and is the broadest assertion of taxing authority. A more limited exercise of taxation occurs when taxation is imposed only to the extent that activities occur, or property is located, in the territory of the taxing jurisdiction. If a person conducts business or owns property in a jurisdiction , or if a transaction occurs in whole or in part in a jurisdiction , the resulting limited basis of taxation is a territorial application . Regardless of which basis of taxation is used by a jurisdiction , the identification of its tax base depends upon establishing rules for determining whether the income falls within its authority to tax. The source of income and its related expenses are governed by source rules that specify the treatment of income derived from a broad range of activities . Those rules sometimes turn on residency , leading to another set of rules that determine how to identify which persons have sufficient contact with a jurisdiction to be considered resident. For individuals, the test may depend solely upon nationality , or a physical presence test , or some combination . For all other persons , determining residency may require more complex consideration of the level of activities within a jurisdiction. Such rules generally reflect a policy decision about the requisite level of activity within a geographic location that warrants assertion of taxing jurisdiction. Mechanisms to eliminate double taxation were developed to address those situations in which the source and residency determinations of the respective jurisdictions result in duplicative assertion of taxing authority , as well as to permit limited mutual administrative assistance between jurisdictions. 16 For example , asymmetry between different standards adopted in two countries for determining residency of persons , source of income , or other basis for taxation may result in income that is subject to taxation in both jurisdictions . When the rules of two or more countries overlap , potential double taxation is usually mitigated by operation of bilateral tax treaties or by legislative measures permitting credit for taxes paid to another jurisdiction. In addition to bilateral treaties , countries work with multilateral organizations to develop common principles for adoption by its members and to identify emerging issues and possible solutions. As mentioned above , the Organization for Economic and Cooperation and Development ("OECD") , in response to concerns raised by the G20 about base erosion and profit shifting and the desire to provide an internationally coordinated approach to such concerns , is conducting an ongoing project , which began with the release of a report on February 12, 2013 , Although U.S. courts extend comity to foreign judgments in some instances , they are not required to recognize or assist in enforcement of foreign judgments for collection of taxes, consistent with the common law "revenue rule" in Holman v. Johnson , 1 Cowp. 34 l , 98 Eng. Rep . 1120 (K.B.1775) . American Law Institute , Restatement (I'hird) of Foreign Relations Law of the United States , sec. 483, (1987). To the extent that the revenue rule is abrogated , it is done so in bilateral treaties , to ensure reciprocity . 16 11 UST 000438 TREAS-17-0313-C-000028 Addressing Base Erosion and Profit Shifting. 17 That report presents an overview of data and global business models , identifies the issues under study and provides timeframes in which it is issuing reports and delivering recommendations to the G20. The European Union and several of its member states have introduced proposals or enacted laws that deny tax benefits in arrangement s in which companies might otherwise derive low-tax or zero-tax cross-borde r mcome. OECD Publishin g, Addr essing Base Erosion and Profit Shifiing , 2013 , available at http ://dx.doi.or g/ 10.l 787/9789264192744- en ("BEPS Report "). 17 12 UST 000439 TREAS-17-0313-C-000029 B. International Principles as Applied in the U.S. System The United States has adopted a Code 18 that combines the worldwide taxation of all U.S. persons (U.S. citizens or resident aliens and domestic corporations) 19 on all income , whether derived in the United States or abroad, with territorial-based taxation ofU.S.-source income of nonresident aliens and foreign entities, and limited deferral for foreign income earned by subsidiaries of U.S. companies. Under this system (sometimes described as the U.S. hybrid system), the application of the Code differs depending on whether the income arises from outbound investment or inbound investment. Outbound investment refers to the foreign activities of U.S. persons, while inbound investment is investment by foreign persons in U.S. assets or activities . With respect to outbound activities , income earned directly by a U.S . per son, including as a result of a domestic corporation's conduct of a foreign business itself (by means of direct sales , licensing or branch operations in the foreign jurisdiction) , or through a pass-through entity such as a partnership , is taxed on a current basis . However , active foreign business income earned by a domestic parent corporation indirectly through a foreign corporate subsidiary generally is not subject to U .S. tax until the income is distributed to the domestic corporation . This result is circumscribed by the anti-deferral regimes of the Code , described below . By contrast , nonresident aliens and foreign corporations are generally subject to U.S . tax only on income that has a sufficient connection with the United States . Thus , the source and type of income received by a foreign person generally determines whether there is any U.S . income tax liability , and the mechanism by which it is taxed (either by gross-basis withholding or on a net basis through tax return filing). Category-by-category rules determine whether income has a U.S . source or a foreign source . For example , compensation for personal services generally is sourced based on where the services are performed , dividends and interest are, with limited exceptions , sourced based on the residence of the taxpayer making the payments , and royalties for the use of property generally are sourced based on where the property is used . These and other source rules are described in more detail below. To mitigate double taxation of foreign-source income , the United States allows a credit for foreign income taxes paid . As a consequence, even though resident individuals and domestic corporations are subject to U .S. tax on all their income , both U.S . and foreign source , the source of income remains a critical factor to the extent that it determines the amount of credit available for foreign taxes paid . In addition to the statutory relief afforded by the credit , the network of 18 Unless otherwise stated, all section references are to the Internal Revenue Code of 1986, as amended (the "Code"). 19 Sec. 770l( a)(30) defines U.S . person to include all U.S . citizens and residents as well as domestic entities such as partnerships , corporations , estates and certain trusts. Whether a noncitizen is a resident is determined under rules in section 770l(b). 13 UST 000440 TREAS-17-0313-C-000030 bilateral treaties to which the United States is a party provides a system for elimination of double-taxation and ensuring reciprocal treatment of taxpayers from treaty countries. Present law provides detailed rules for the allocation of deductible expenses between U.S.-source income and foreign-source income. These rules do not, however, affect the timing of the expense deduction. A domestic corporation generally is allowed a current deduction for its expenses (such as interest and administrative expenses) that support income that is derived through foreign subsidiaries and on which U.S. tax is deferred. The expense allocation rules apply to a domestic corporation principally for determining the corporation's foreign tax credit limitation. This limitation is computed by reference to the corporation's U.S. tax liability on its taxable foreign-source income in each of two principal limitation categories, commonly referred to as the "general basket" and the "passive basket." Consequently , the expense allocation rules primarily affect taxpayers that may not be able to fully use their foreign tax credits because of the foreign tax credit limitation. U.S. tax law includes rules intended to prevent reduction of the U.S. tax base, whether through excessive borrowing in the United States, migration of the tax residence of domestic corporations from the United States to foreign jurisdictions through corporate inversion transactions or aggressive intercompany pricing practices with respect to intangible property. 14 UST 000441 TREAS-17-0313-C-000031 III. PRESENT LAW A. Principles Common to Inbound and Outbound Taxation Although the U.S. tax rules differ depending on whether the activity in question is inbound (United States activities of nonresident aliens and foreign corporations) or outbound (foreign activities of U.S. persons), there are certain concepts that apply to both inbound and outbound investment. Such areas include the transfer pricing rules, entity classification, the rules for determination of source, and whether a corporation is foreign or domestic . 1. Transfer pricing A basic U.S. tax principle applicable in dividing profits from transactions between related taxpayers is that the amount of profit allocated to each related taxpayer must be measured by reference to the amount of profit that a similarly situated taxpayer would realize in similar transactions with unrelated parties . The transfer pricing rules of section 482 and the accompanying Treasury regulations are intended to preserve the U.S . tax base by ensuring that taxpayers do not shift income properly attributable to the United States to a related foreign company through pricing that does not reflect an arm's-length result. 20 Similarly, the domestic laws of most U .S. trading partners include rules to limit income shifting through transfer pricing .2 1 The arm's-length standard is difficult to administer in situations in which no unrelated party market prices exist for transactions between related parties. When a foreign person with U.S . activities has transactions with related U.S . taxpayers , the amount of income attributable to U.S. activities is determined in part by the same transfer pricing rules of section 482 that apply when U.S . persons with foreign activities transact with related foreign taxpayers . Section 482 authorizes the Secretary of the Treasury to allocate income , deductions , credits , or allowances among related business entities 22 when necessary to clearly reflect income or otherwise prevent tax avoidance , and comprehensive Treasury regulations under that section adopt the arm's-length standard as the method for determining whether allocations are appropriate .23 The regulations generally attempt to identify the respective amounts of taxable income of the related parties that would have resulted if the parties had been unrelated parties dealing at arm ' s length. For income from intangible property , section 482 provides "in the case 20 For a detailed description of the U.S. transfer pricing rules, see Joint Committee on Taxation , Present Law and Background Related to Possible In come Shifting and Transfer Pricing (JCX-37-10), July 20, 2010, pp. 1850. 21 See, OECD, Transfer Pricing Guidelines/or Multinational Enterprises and Tax Administrations , September 1, 2010. 22 The term "related" as used herein refers to relationships described in section 482, which refers to "two or more organizations, trades or businesses (whether or not incorporated , whether or not organized in the United States, and whether or not affiliated) owned or controlled directly or indirectly by the same interests ." 23 Section 1059A buttresses section 482 by limiting the extent to which costs used to determine custom valuation can also be used to determine basis in property imported from a related party . A taxpayer that imports property from a related party may not assign a value to the property for cost purposes that exceeds its customs value. 15 UST 000442 TREAS-17-0313-C-000032 of any transfer (or license) of intangible property (within the meaning of section 936(h)(3)(B)), the income with respect to such transfer or license shall be commensurate with the income attributable to the intangible." By requiring inclusion in income of amounts commensurate with the income attributable to the intangible, Congress was responding to concerns regarding the effectiveness of the arm's-length standard with respect to intangible property-including, in 24 particular, high-profit-potential intangibles. 2. Entity classification A business entity is generally eligible to choose how it is classified for Federal tax law purposes , under the "check-the-box" regulations adopted in 1997 .25 Those regulations simplified the entity classification process for both taxpayers and the Internal Revenue Service ("IRS") , by making the entity classification of unincorporated entities explicitly elective in most instances .26 Whether an entity is eligible and the breadth of its choices depends upon whether it is a ''per se corporation " and the number of beneficial owners . Certain entities are treated as per se corporations for which an election is not permitted . Generally , these are domestic entities formed under a State corporation statute . A number of specific types of foreign business entities are identified in the regulations as per se corporations. These entities are generally corporations that are not closely held and the shares of which can be traded on a securities exchange .27 An eligible entity with two or more members may elect , however , to be classified as a corporation or a partnership. If an eligible entity fails to make an election , default rules apply . A domestic entity with multiple members is treated as a partnership . A foreign entity with multiple members is treated as a partnership , if at least one member does not have limited liability , but is treated as a corporation if all members have limited liability . The regulations also provide explicitly that a single-member unincorporated entity may elect either to be treated as a corporation or to be disregarded (treated as not separate from its 24 H.R. Rep. No. 99-426, p. 423 . 25 Treas. Reg. sec. 301.7701-1 , et seq. 26 The check-the-box regulations replaced Treas. Reg. sec. 301.7701-2 , as in effect prior to 1997, under which the classification of unincorporated entities for Federal tax purposes was determined on the basis of a four characteristics indicative of status as a corporation: continuity of life, centralization of management, limited liability, and free transferability of interests. An entity that possessed three or more of these characteristics was treated as a corporation; ifit possessed two or fewer, then it was treated as a partnership. Thus, to achieve characterization as a partnership under U1issystem, taxpayers needed to arrange the governing ins1rnmentsof an entity in such a way as to eliminate two of these corporate characteristics. The advent and proliferation of limited liability companies ("LLCs") under State laws allowed business owners to create customized entities that possessed a critical co1mnonfeature-limited liability for investors- as well as other corporate characteristics the owners found desirable. As a consequence, classification was effectively elective for well-advised taxpayers. For domestic entities, the State corporation statute must describe the entity as a corporation, joint-stock company, or in similar terms. The regulations also treat insurance companies, organizations that conduct certain banking activities, organizations wholly owned by a State, and organizations that are taxable as corporations under other Code provisions as per se corporations. 27 16 UST 000443 TREAS-17-0313-C-000033 owner). A disregarded entity owned by an individual is treated in the same manner as a sole proprietorship. In the case of an entity owned by a corporation or partnership, the disregarded entity is treated in the same manner as a branch or division. The default treatment for an eligible single-member domestic entity is as a disregarded entity. For an eligible single-member foreign entity, the default treatment depends upon whether the single -member entity has limited liability. If it does, the foreign entity is treated as a corporation; otherwise, its default treatment is that of a disregarded entity. The regulations extended elective classification to foreign, as well as domestic, entities on the basis that the complexities and resources devoted to classification of domestic unincorporated business entities were mirrored in the foreign context. As a result , it is possible for an entity that operates across countries to elect into a hybrid status . "Hybrid entities" refers to entities that are treated as flow-through or disregarded entities for U.S. tax purposes but as corporations for foreign tax purposes ; for "reverse hybrid entities ," the opposite is true . The existence of hybrid and reverse hybrid entities can affect whether the taxpayer can use foreign tax credits attributable to deferred foreign-source income or income that is not taxable in the United States , as well as whether income is currently includible under subpart F . 3. Source of income rules The rules for determining the source of certain types of income are specified in the Code and described briefly below . Various factors determine the source of income for U.S . tax purposes , including the status or nationality of the payor , the status or nationality of the recipient , the location of the recipient's activities that generate the income , and the location of the assets that generate the income . If a payor or recipient is an entity that is eligible to elect its classification for Federal tax purposes , its choice of whether to be recognized as legally separate from its owner in another jurisdiction can affect the determination of the source of the income and other tax attributes, if the hybrid entity is disregarded in one jurisdiction , but recognized in the other. To the extent that the source of income is not specified by statute , the Treasury Secretary may promulgate regulations that explain the appropriate treatment. However , many items of income are not explicitly addressed by either the Code or Treasury regulations , sometimes resulting in non-taxation of the income. On several occasions , courts have determined the source of such items by applying the rule for the type of income to which the disputed income is most closely analogous , based on all facts and circumstances. 28 Interest Interest is derived from U.S . sources if it is paid by the United States or any agency or instrumentality thereof , a State or any political subdivision thereof , or the District of Columbia . Interest is also from U .S. sources if it is paid by a resident or a domestic corporation on a bond, note , or other interest-bearing obligation .29 Special rules apply to treat as foreign-source certain amounts paid on deposits with foreign commercial banking branches of U .S. corporations or 28 See, e.g. , Hunt v. Commissioner, 90 T.C. 1289 (1988). 29 Sec. 861(a)(l) ; Treas. Reg. sec. l.861-2( a)(l) . 17 UST 000444 TREAS-17-0313-C-000034 partnerships and certain other amounts paid by foreign branches of domestic financial institutions. 30 Interest paid by the U.S. branch of a foreign corporation is also treated as U.S.source income. 31 Dividends Dividend income is generally sourced by reference to the payor's place of incorporation. 32 Thus, dividends paid by a domestic corporation are generally treated as entirely U.S.-source income. Similarly, dividends paid by a foreign corporation are generally treated as entirely foreign-source income. Under a special rule, dividends from certain foreign corporations that conduct U.S . businesses are treated in part as U.S .-source income. 33 Rents and royalties Rental income is sourced by reference to the location or place of use of the leased property. 34 The nationality or the country of residence of the lessor or lessee does not affect the source of rental income . Rental income from property located or used in the United States ( or from any interest in such property) is U.S.-source income , regardless of whether the property is real or personal , intangible or tangible . Royalties are sourced in the place of use of (or the place of privilege to use) the property for which the royalties are paid. 35 This source rule applies to royalties for the use of either tangible or intangible property , including patents , copyrights , secret processes , formulas , goodwill , trademarks , trade names , and franchises . Income from sales of personal property Subject to significant exceptions, income from the sale of personal property is sourced on the basis of the residence of the seller. 36 For this purpose, special definitions of the terms "U.S . resident" and "nonresident" are provided. A nonresident is defined as any person who is not a U.S . resident,37 while the term "U.S . resident" comprises any juridical entity which is a U.S . 30 Secs. 86l(a)(l) and 862(a)(l) . For purposes of certain reporting and withholding obligations the source rule in section 861(a)(l )(B) does not apply to interest paid by the foreign branch of a domestic financial institution . This results in the payment being treated as a withholdable payment. Sec. 1473(1)(C). 31 Sec. 884(f)(l) . 32 Secs. 86l(a)(2) , 862(a)(2). 33 Sec. 86l(a)(2)(B). 34 Sec. 86 l(a)( 4). 35 Ibid. 36 Sec. 865(a). 37 Sec. 865(g)(l)(B) . 18 UST 000445 TREAS-17-0313-C-000035 person, all U.S. citizens, as well as any individual who is a U.S. resident without a tax home in a foreign country or a nonresident alien with a tax home in the United States. 38 As a result, nonresident includes any foreign corporation. 39 Several special rules apply. For example, income from the sale of inventory property is generally sourced to the place of sale, which is determined by where title to the property passes. 40 However , if the sale is by a nonresident and is attributable to an office or other fixed place of business in the United States, the sale is treated as U.S.-source without regard to the place of sale, unless it is sold for use, disposition, or consumption outside the United States and a foreign office materially participates in the sale. 41 Income from the sale of inventory property that a taxpayer produces (in whole or in part) in the United State s and sells outside the United States , or that a taxpayer produces (in whole or in part) outside the United States and sells in the United States is treated as partly U.S.-source and partly foreign-source. 42 In determining the source of gain or loss from the sale or exchange of an interest in a foreign partnership , the IRS applies the asset-use test and business activities test at the partnership level to determine whether there is a U.S . business and , if so, the extent to which income derived is effectively connected with that U.S . business . To the extent that there is unrealized gain attributable to partnership assets that are effectively connected with the U .S. busine ss, the foreign per son ' s gain or loss from the sale or exchange of a partnership intere st is effectively connected gain or loss to the extent of the partner 's distributive share of such unrealized gain or loss . Similarly , to the extent that the partner 's distributive share of unrealized gain is attributable to a permanent establishment of the partnership under an applicable treaty provision , it may be subject to U.S . tax under a treaty .43 38 Sec. 865(g)( l )(A). 39 Sec. 865(g). 40 Secs. 865(b), 86 l( a)(6), 862(a)(6); Treas. Reg. sec. l. 86 1-7(c). 41 Sec. 865(e)(2) . 42 Sec. 863(b). A taxpayer may elect one of three methods for allocating and apportionin g income as U.S.or foreign-source : (l) 50-50 method under which 50 percent of the income from the sale of inventory property in such a situation is attributable to the production activities and 50 percent to the sales activities, with the income sourced based on the location of those activities ; (2) IFP method under which , in certain circumstances , an independent factory price ("IFP ") may be established by the taxpayer to determine income from production activities ; (3) books and records method under which , with advance permission , the taxpayer may use books of account to detail the allocation of receipts and expenditures between produ ction and sales activities. Treas. Reg. sec. l. 863-3(b), (c). If production activity occurs only within the United States, or only within foreign countries , then all income is sourced to where the production activity occurs ; when production activities occur in both the United States and one or more foreign countries , the income attributable to production activities must be split between U.S. and foreign sources . Treas . Reg. sec. l.8 63-3(c)(l) . The sales activity is generally sourced based on where title to the propert y passes. Treas. Reg. secs. l. 863-3(c)(2) , l.8 6 1-7(c). 43 Rev. Rul. 91-32, 1991-1 C.B. 107. 19 UST 000446 TREAS-17-0313-C-000036 Gain on the sale of depreciable property is divided between U.S.-source and foreignsource in the same ratio that the depreciation was previously deductible for U.S. tax purposes. 44 Payments received on sales of intangible property are sourced in the same manner as royalties to the extent the payments are contingent on the productivity, use, or disposition of the intangible property. 45 Personal services income Compensation for labor or personal services is generally sourced to the place-ofperformance. Thus, compensation for labor or personal services performed in the United States generally is treated as U.S .-source income , subject to an exception for amounts that meet certain de minimis criteria .46 Compensation for services performed both within and without the United States is allocated between U .S.-and foreign-source .47 Insurance income Underwriting income from issuing insurance or annuity contracts generally is treated as U.S.-source income if the contract involves property in, liability arising out of an activity in, or the lives or health of residents of, the United States. 48 Transportation income Generally , income from furnishing transportation that begins and ends in the United States is U.S.-source income. 49 Fifty percent of other income attributable to transportation that begins or ends in the United States is treated as U.S.-source income. Income from space or ocean activities or international communications In the case of a foreign person , generally no income from a space or ocean activity or from international communications is treated as U.S.-source income. 50 With respect to the latter, an exception is provided if the foreign person maintains an office or other fixed place of business in the United States, in which case the international communications income attributable to such 44 Sec. 865(c). 45 Sec. 865(d). 46 Sec. 86l(a)(3). Gross income ofa nonresidentalien individual, who is present in the United Stales as a member of the regular crew of a foreignvessel, from the performanceof personal services in connectionwith the international operation of a ship is generally treated as foreign-sourceincome. 47 Treas. Reg. sec. l.861-4(b). 48 Sec. 86l(a)(7). 49 Sec. 863(c). 50 Sec. 863(d). 20 UST 000447 TREAS-17-0313-C-000037 fixed place of business is treated as U.S.-source income. 51 For U.S. persons, all income from space or ocean activities and 50 percent of international communications is treated as U.S.source mcome. Amounts received with respect to guarantees of indebtedness Amounts received, directly or indirectly, from a noncorporate resident or from a domestic corporation for the provision of a guarantee of indebtedness of such person are income from U.S. sources. 52 This includes payments that are made indirectly for the provision of a guarantee. For example, U.S.-source income under this rule includes a guarantee fee paid by a foreign bank to a foreign corporation for the foreign corporation's guarantee of indebtedness owed to the bank by the foreign corporation ' s domestic subsidiary , where the cost of the guarantee fee is passed on to the domestic subsidiary through, for instance, additional interest charged on the indebtedness . In this situation, the domestic subsidiary has paid the guarantee fee as an economic matter through higher interest costs , and the additional interest payments made by the subsidiary are treated as indirect payments of the guarantee fee and , therefore, as U.S .-source . Such U.S .-source income also includes amounts received from a foreign person, whether directly or indirectly, for the provision of a guarantee of indebtedness of that foreign person if the payments received are connected with income of such person that is effectively connected with the conduct of a U.S. trade or business. Amounts received from a foreign person, whether directly or indirectly , for the provision of a guarantee of that person's debt , are treated as foreignsource income if they are not from sources within the United States under section 86l(a)(9) . 4. Corporate residence The U.S. tax treatment of a multinational corporate group depends significantly on whether the parent corporation of the group is domestic or foreign . For purposes of U.S . tax law, a corporation is treated as domestic if it is incorporated under the laws of the United States or of any State .53 All other corporations (that is, those incorporated under the laws of foreign countries) are treated as foreign .54 Only domestic corporations are subject to U.S. tax on a worldwide basis. Foreign corporations are taxed only on income that has a sufficient connection with the United States . Thus , place of incorporation determines whether a corporation is treated 51 Sec. 863(e). 52 Sec. 86l(a)(9). This provision effects a legislative override of the opinion in Container Corp. v. Commission er, 134 T.C. 122 (February 17, 2010), affd 2011 WL1664358 , 107 A.F.T.R .2d 2011-1831 (5th Cir. May 2, 2011) , in which the Tax Court held that fees paid by a domestic corporation to its foreign parent with respect to guarantees issued by the parent for the debts of the domestic corporation were more closely analogous to compensation for services than to interest , and detennined that the source of the fees should be detennined by reference to the residence of the foreign parent -guarantor . As a result, the income was treated as income from foreign sources . 53 Sec. 770l(a)(4). 54 Sec. 770l(a)(5) . 21 UST 000448 TREAS-17-0313-C-000038 as domestic or foreign for purposes of U.S. tax law, irrespective of substantive factors that might be thought to bear on a corporation's residence, considerations such as the location of the corporation's management activities, employees, business assets , operations, or revenue sources ; the exchange or exchanges on which the corporation's stock is traded; or the country or countries ofresidence of the corporation's owners. The ability of a domestic corporation to expatriate and thus avoid taxation on its worldwide income was curtailed by the anti-inversion rules enacted as part of the American Jobs Creation Act of 2004 ("AJCA"). 55 Among other things, the general anti-inversion rules (the "toll charge rules") provide that during the IO-year period following the inversion transaction corporate-level gain recognized in connection with the inversion generally may not be offset by tax attributes such as net operating losses or foreign tax credits . These sanctions generally apply to a transaction in which , pursuant to a plan or a series ofrelated transactions : (1) a domestic corporation becomes a subsidiary of a foreign-incorporated entity or otherwise transfers substantially all of its properties to such an entity in a transaction completed after March 4, 2003 ; (2) the former shareholders of the domestic corporation hold (by reason of the stock they had held in the domestic corporation) at least 60 percent but less than 80 percent (by vote or value) of the stock of the foreign-incorporated entity after the transaction (this stock often being referred to as "stock held by reason of '); and (3) the foreign-incorporated entity , considered together with all companies connected to it by a chain of greater than 50 percent ownership (that is, the "expanded affiliated group") , does not have substantial business activities in the entity ' s country of incorporation , compared to the total worldwide business activities of the expanded affiliated group_s6 If a transaction otherwise satisfies the requirements for applicability of the anti-inversion rules and the former shareholders of the domestic corporation hold (by reason of the stock they had held in the domestic corporation) at least 80 percent (by vote or value ) of the stock of the foreign-incorporated entity after the transaction , the anti-inversion rules entirely deny the tax 55 Prior lo AJCA , shareholders of the re-domicil ed parent company who were U.S. persons generally would be subject to U.S. tax on the appreci ation in the value of their stock of the U.S. comp any unless a number of conditions were satisfied , including that U.S. persons who were shareholders of the U.S . company received 50 percent or less of the total voting power and total value of the stock of the new foreign parent company in the transaction . See section 367(a)(l) ; Treas. Reg. sec. l.3 67(a)-3(c)(l) . The IRS promul gated these greater-th an-50percent rles after becomin g aware of tax -motiv ated inversion transactions , including the publicly traded Helen of Tro y cosmetic comp any ' s re-domicili ation in Bennud a. See Notice 94-4 6, 1994-1 C.B. 356 (April 18, 1994); T.D . 8638 (December 26, 1995). Shareholder taxation under section 367 as a result of inversion transactions remains largely the same after enactment of AJCA. If an inversion transaction was effectuated by means of an asset acquisition , corporate-level gain generally would have been recognized under section 367( a). For a fuller description of the possible tax consequences of a reincorporation transaction before AJCA , see Joint Commit tee on Taxation, Background and Description of Presen t-Law Rules and Prop osals Relating to Corpo rate Inversion Transactions (JCX-52- 02), June 5, 2002, p. 4. 56 Section 7874(a). AJCA also imposes an excise tax on certain stock compens ation of some executives of companies that undert ake inversion transactions . Section 4985 . 22 UST 000449 TREAS-17-0313-C-000039 benefits of the inversion transaction by deeming the new foreign parent to be a domestic corporation for all Federal tax purposes. 57 Similar rules apply if a foreign corporation acquires substantially all of the properties constituting a trade or business of a domestic partnership. 58 The Treasury Department has promulgated detailed guidance under section 7874, including the recent IRS and Treasury Department notice intended to address avoidance of section 7874 and to restrict or eliminate certain tax benefits facilitated by inversion transactions. 59 57 Sec. 7874(b). 58 Sec. 7874(a)(2)(B)(i) . 59 Notice 2014-52 , 20 l4 I.R .B. LEXIS 576 (Sept. 22, 2014) . Among other things, the notice describes regulations that the Treasury Department and IRS intend to issue (1) addressing some taxpayer planning to keep the percent age of the new foreign parent company stock that is held by former owners of the inverted domestic parent company (by reason of owning stock of the domestic parent) below the 80 or 60 percent threshold ; (2) restricting the tax-free post-inversion use of untaxed foreign subsidiary earnings to make loans to or stock purchases from certain foreign affiliates, and (3) preventing taxpayers from avoiding U.S . taxation of pre-inversion earnings of foreign subsidiaries by engaging in post-inversion transactions that would end the controlled foreign corporation status of those subsidiaries . 23 UST 000450 TREAS-17-0313-C-000040 B. U.S. Tax Rules Applicable to Nonresident Aliens and Foreign Corporations (Inbound) Nonresident aliens and foreign corporations are generally subject to U.S. tax only on income that has sufficient connection with the United States. Thus, the source and type of income received by a foreign person generally determines whether there is any U.S. income tax liability and the mechanism by which it is taxed. The U.S . tax rules for U.S. activities of foreign taxpayers apply differently to two broad types of income: U.S.-source income that is "fixed or determinable annual or periodical gains, profits, and income" ("FDAP income") or income that is "effectively connected with the conduct of a trade or business within the United States" ("ECI") . FDAP income generally is subject to a 30-percent gross-basis withholding tax, while ECI is generally subject to the same U.S . tax rules that apply to business income derived by U.S . persons. That is, deductions are permitted in determining taxable ECI, which is then taxed at the same rates applicable to U.S . persons . Much FDAP income and similar income is, however , exempt from withholding tax or is subject to a reduced rate of tax under the Code 60 or a bilateral income tax treaty. 61 1. Gross-basis taxation of U .S.-source income Non-business income received by foreign persons from U.S . sources is generally subject to tax on a gross basis at a rate of 30 percent , which is collected by withholding at the source of the payment. As explained below , the categories of income subject to the 30-percent tax and the categories for which withholding is required are generally coextensive , with the result that determining the withholding tax liability determines the substantive liability. The income of non-resident aliens or foreign corporations that is subject to tax at a rate of 30-percent includes FDAP income that is not effectively connected with the conduct of a U.S . trade or business .62 The items enumerated in defining FDAP income are illustrative ; the common characteristic of types of FDAP income is that taxes with respect to the income may be readily computed and collected at the source , in contrast to the administrative difficulty involved in determining the seller's basis and resulting gain from sales of property .63 The words "annual or periodical" are "merely generally descriptive" of the payments that could be within the 60 E.g. , the portfolio interest exception in section 87 l(h) ( discussed below). 61 The United States has set forth its negoti ating position on withholding rates and other provisions in the United States Model Income Tax Convention of November 15, 2006 (the "U. S. Model Treaty") . Because each treaty reflects considerations unique to the relationship between the two treaty countries , treaty withholding tax rates on each category of income are not uniform across treaties. 62 Secs. 87l(a), 881. If the FDAP income is also ECI, it is taxed on a net basis , at graduated rates. 63 Commissioner v. Wodehouse, 337 U.S . 369, 388-89 (1949). Afler reviewing legislative history of the Revenue Act of 1936, the Supreme Court noted that Congress expressly intended to limit taxes on nonresident aliens to taxes that could be readily collectible , i.e., subject to withholding , in response to "a theoretical system impractical of administration in a great number of cases . H.R. Rep. No. 2475 , 74th Cong ., 2d Sess. 9-10 (1936). " In doing so, the Court rejected P.G. Wodehouse's arguments that an advance royalty payment was not within the purview of the statutory definition ofFDAP income . 24 UST 000451 TREAS-17-0313-C-000041 purview of the statute and do not preclude application of the withholding tax to one-time, lump sum payments to nonresident aliens. 64 Types of FDAP income FDAP income encompasses a broad range of types of gross income, but has limited application to gains on sales of property, including market discount on bonds and option premiums. 65 Capital gains received by nonresident aliens present in the United States for fewer than 183 days are generally treated as foreign source and are thus not subject to U.S. tax, unless the gains are effectively connected with a U.S. trade or business; capital gains received by nonresident aliens present in the United States for 183 days or more 66 that are treated as U.S .source are subject to gross-basis taxation. 67 In contrast , US-source gains from the sale or exchange of intangibles are subject to tax, and subject to withholding if they are contingent upon productivity of the property sold and are not effectively connected with a U.S. trade or business .68 Interest on bank deposits may qualify for exemption on two grounds , depending on where the underlying principal is held on deposit. Interest paid with respect to deposits with domestic banks and savings and loan associations, and certain amounts held by insurance companies, are U.S. source but are not subject to the U.S . withholding tax when paid to a foreign person , unless the interest is effectively connected with a U.S. trade or business of the recipient. 69 Interest on deposits with foreign branches of domestic banks and domestic savings and loan associations is not treated as U.S .-source income and is thus exempt from U .S. withholding tax (regardless of whether the recipient is a U.S. or foreign person) .70 Similarly, interest and original issue discount on certain short-term obligations is also exempt from U.S . withholding tax when paid to 64 Commissioner v. Wodehouse, 337 U.S. 369, 393 (1949). 65 Although technically insurance premiums paid to a foreign insurer or reinsurer are FDAP income , they are exempt from withholding under Treas. Reg. sec . 1.144 l-2(a)(7) if the insurance contract is subject to the excise tax under section 4371. Treas. Reg. sec . l.1441-2(b)(l)(i) , -2(b)(2). 66 For purposes of this rule, whether a person is considered a resident in the United States is determined by application of the rules under section 770l(b) . Sec. 871(a)(2) . In addition , cert ain capital gains from sales of U.S . real property interests are subject to tax as effectively connected income (or in some instances as dividend income) under the Foreign Investment in Real Property Tax Act of 1980, discussed infra at part 11.B.3. 67 68 Secs. 87l(a)(l)(D) , 88l(a)(4). 69 Secs. 871 (i)(2)(A) , 88 1(d); Treas. Reg. sec. 1.1441-1 (b)(4)(ii). 70 Sec. 861(a)(l)(B) ; Treas. Reg . sec. l.144l-J(b)(4)(iii). 25 UST 000452 TREAS-17-0313-C-000042 a foreign person. 71 Additionally , there is generally no information reporting required with respect to payments of such amounts .72 Although FDAP income includes U.S .-source portfolio interest , such interest is specifically exempt from the 30 percent withholding tax. Portfolio interest is any interest (including original issue discount) that is paid on an obligation that is in registered form and for which the beneficial owner has provided to the U.S . withholding agent a statement certifying that the beneficial owner is not a U.S . person. 73 For obligations issued before March 19, 2012 , portfolio interest also includes interest paid on an obligation that is not in registered form , provided that the obligation is shown to be targeted to foreign investors under the conditions suffic ient to estab lish deductibility of the payment of such intere st. 74 Portfolio interest , however , does not include interest received by a IO-percent shareholder ,75 certain contingent interest, 76 interest received by a controlled foreign corporation from a related person ,77 or interest received by a bank on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of its trade or business .78 Imposition of gross-basis tax and reporting by U.S. withholding agents The 30-percent tax on FDAP income is generally collected by means ofwithholding. 79 Withholding on FDAP payments to foreign payees is required unless the withholding agent, 80 71 Secs. 87 l( g)(l)( B), 881(a)(3); Treas. Reg. sec. 1.1441- l(b) (4)(iv). 72 Treas . Reg. sec. l.1461 - l(c)(2) (ii)(A), (B). Regulations require a bank to report interest if the recipient is a nonresident alien who resides in a country with which the United States has a satisfactory exchange of information program under a bilateral agreement and the deposit is maintained at an office in the United States. Treas. Reg. secs. l. 6049-4(b)(5) and 1.6049-8. The IRS has published a list of the 84 countries whose residents are subject to the reporting requirements , and a list of countries with respect to which the reported information will be automatica lly exchanged naming 18 countries. Rev. Proc . 2014-64 , I.R. B. 2014-53 (December 29, 2014) , available at http ://www .irs.gov/pub/irs-irbs/irb 14-53 .pdf. 73 Sec. 87 l(h)(2) . 74 Sec. l 63(f)(2)(B) . The exception to the registration requirements for foreign targeted securities was repealed in 2010 , effective for obligations issued two years after enactment , thus narrowing the portfolio interest exemption for obligations issued after March 18, 2012. See Hiring Incentives to Restore Employment Law of 2010, Pub. L. No. 111-147, sec. 502(b). 75 Sec. 87 l(h)(3). 76 Sec. 87 l(h)( 4) . 77 Sec. 881(c)(3)(C). 78 Sec. 881(c)(3)(A). 79 Secs. 1441, 1442. 80 Withholding agent is defined broadly to include any U.S. or foreign person that has the control , receipt, custody, disposal, or payment of an item of income of a foreign person subject to withholding. Treas. Reg. sec. l.l441-7(a). 26 UST 000453 TREAS-17-0313-C-000043 i.e., the person making the payment to the foreign person receiving the income, can establish that the beneficial owner of the amount is eligible for an exemption from withholding or a reduced rate of withholding under an income tax treaty. 81 The principal statutory exemptions from the 30-percent withholding tax apply to interest on bank deposits, and portfolio interest, described above. 82 In many instances, the income subject to withholding is the only income of the foreign recipient that is subject to any U.S. tax. No U.S. Federal income tax return from the foreign recipient is required with respect to the income from which tax was withheld, if the recipient has no ECI income and the withholding is sufficient to satisfy the recipient's liability. Accordingly, although the 30-percent gross-basis tax is a withholding tax, it is also generally the final tax liability of the foreign recipient. A withholding agent that makes payments of U.S.-source amounts to a foreign person is required to report and pay over any amounts of U.S . tax withheld . The reports are due to be filed with the IRS by March 15 of the calendar year following the year in which the payment is made . Two types of reports are required : (I) a summary of the total U.S.-source income paid and withholding tax withheld on foreign persons for the year and (2) a report to both the IRS and the foreign person of that person's U.S.-source income that is subject to reporting .83 The nonresident withholding rules apply broadly to any financial institution or other payor , including foreign financial institutions .84 To the extent that the withholding agent deducts and withholds an amount , the withheld tax is credited to the recipient of the income. 85 If the agent withholds more than is required , and results in an overpayment of tax, the excess may be refunded to the recipient of the income upon filing of a timely claim for refund . Excise tax on foreign reinsurance premiums An excise tax applies to premiums paid to foreign insurers and reinsurers covering U .S. The excise tax is imposed on a gross basis at the rate of one percent on reinsurance and life insurance premiums , and at the rate of four percent on property and casualty insurance risks .86 81 Secs. 871, 881, 1441, 1442; Treas . Reg . sec. l.1441-l(b). A reduced rate of withholding of l4 percent applies to certain scholarships and fellowships paid to individuals temporarily present in the United States. Sec. 144l(b). In addition to statutory exemptions , the 30percent withholdin g tax with respect to interest, dividends or royalties may be reduced or eliminated by a tax treaty bet ween the United States and the country in which the recipient of income otherwise subject to withholding is resident. 82 83 Treas. Reg. sec. 1.1461-l(b) , (c). 84 See Treas. Reg. sec. 1.1441-7(a) (definition of withholding agent includes foreign persons). 85 Sec. 1462. 86 Secs. 4371-4374. 27 UST 000454 TREAS-17-0313-C-000044 premiums. The excise tax does not apply to premiums that are effectively connected with the conduct of a U.S. trade or business or that are exempted from the excise tax under an applicable income tax treaty. The excise tax paid by one party cannot be credited if, for example, the risk is reinsured with a second party in a transaction that is also subject to the excise tax. Many U.S. tax treaties provide an exemption from the excise tax, including the treaties with Germany , Japan, Switzerland , and the United Kingdom. 87 To prevent persons from inappropriately obtaining the benefits of exemption from the excise tax, the treaties generally include an anti-conduit rule. The most common anti-conduit rule provides that the treaty exemption applies to the excise tax only to the extent that the risks covered by the premiums are not reinsured with a person not entitled to the benefits of the treaty (or any other treaty that provides exemption from the excise tax) .88 2. Net-basis taxation of U.S.-source income The United States taxes on a net basis the income of foreign persons that is "effectively connected " with the conduct of a trade or business in the United States .89 Any gross income derived by the foreign person that is not effectively connected with the person's U.S . business is not taken into account in determining the rates of U.S. tax applicable to the person's income from the business .90 U.S. trade or business The question whether a foreign person is engaged in a U.S . trade or business is factual and has generated much case law . Basic issues include whether the activity constitutes business rather than investing , whether sufficient activities in connection with the business are conducted in the United States, and whether the relationship between the foreign person and persons performing functions in the United States in respect of the business is sufficient to attribute those functions to the foreign person . Partners in a partnership and beneficiaries of an estate or trust 87 Generally, when a foreign person qualifies for benefits under such a treaty, the United States is not permitted to collect the insurance premiums excise tax from that person . 88 In Rev. Rul. 200 8-15, 2008-l C.B. 633, the IRS provided guidance to the effect that the excise tax is imposed separately on each reinsurance policy covering a U.S. risk. Thus, if a U.S . insurer or reinsurer reinsures a U.S . risk with a foreign reinsurer , and that foreign reinsurer in turn reinsures the risk with a second foreign reinsurer , the excise tax applies to both the premium to the first foreign reinsurer and the premium to the second foreign re insurer. In addition, if the first foreign re insurer is resident in a jurisdiction with a tax treaty containing an excise tax exemption, the revenue ruling provides that the excise tax still applies to both payments to the extent that the transaction violates an anti-conduit rule in the applic able tax treaty. Even ifno violation of an anti-conduit rule occurs , under the revenue ruling, the excise tax still applies to the premiwns paid to the second foreign reinsurer , unless the second foreign reinsurer is itself entitled to an excise tax exemption. 89 Secs. 871 (b), 882. 90 Secs. 87 l(b )(2), 882(a)(2) . 28 UST 000455 TREAS-17-0313-C-000045 are treated as engaged in the conduct of a trade or business within the United States if the partnership , estate, or trust is so engaged. 91 The trade or business rules differ from one activity to another. The term "trade or business within the United States" expressly includes the performance of personal services within the United States. 92 If, however, a nonresident alien individual performs personal services for a foreign employer , and the individual's total compensation for the services and period in the United States are minimal ($3,000 or less in total compensation and 90 days or fewer of physical presence in a year), the individual is not considered to be engaged in a U.S. trade or business. 93 Detailed rules govern whether trading in stocks or securities or commodities constitutes the conduct of a U.S . trade or business.94 A foreign person who trades in stock or securities or commodities in the United States through an independent agent generally is not treated as engaged in a U.S . trade or business if the foreign person does not have an office or other fixed place of business in the United States through which trades are carried out. A foreign person who trades stock or securities or commodities for the person ' s own account also generally is not considered to be engaged in a U.S. business so long as the foreign person is not a dealer in stock or securities or commodities . For eligible foreign persons , U.S . bilateral income tax treaties restrict the application of net-ba sis U.S . taxation . Under each treaty, the United States is permitted to tax business profit s only to the extent those profits are attributable to a U.S . permanent establishment of the foreign person . The threshold level of activities that constitute a permanent establishment is generally higher than the threshold level of activities that constitute a U.S. trade or business. For example , a permanent establishment typically requires the maintenance of a fixed place of business over a significant period of time . Effectively connected income A foreign person that is engaged in the conduct of a trade or business within the United States is subject to U.S. net-basis taxation on the income that is "effectively connected " with the business . Specific statutory rules govern whether income is ECI. 95 In the case of U.S .-source capital gain and U.S.-source income of a type that would be subject to gross basis U.S. taxation , the factors taken into account in determining whether the income is ECI include whether the income is derived from assets used in or held for use in the conduct of the U.S . trade or business and whether the activities of the trade or business were a 91 Sec. 875. 92 Sec. 864(b). 93 Sec. 864(b)(l). 94 Sec. 864(b )(2) . 95 Sec. 864(c). 29 UST 000456 TREAS-17-0313-C-000046 material factor in the realization of the amount (the "asset use" and "business activities" tests). 96 Under the asset use and business activities tests, due regard is given to whether the income, gain, or asset was accounted for through the U.S. trade or business. All other U.S.-source income is treated as ECI. 97 A foreign person who is engaged in a U.S. trade or business may have limited categories of foreign-source income that are considered to be ECI. 98 Foreign-source income not included in one of these categories generally is exempt from U.S. tax. A foreign person's foreign-source income generally is considered to be ECI only if the person has an office or other fixed place of business within the United States to which the income is attributable and the income is in one of the following categories : ( 1) rents or royalties for the use of patents , copyrights , secret processes or formulas , good will, trade-marks , trade brands , franchises , or other like intangible properties derived in the active conduct of the trade or business ; (2) interest or dividends derived in the active conduct of a banking , financing , or similar business within the United States or received by a corporation the principal business of which is trading in stocks or securities for its own account ; or (3) income derived from the sale or exchange (outside the United States), through the U .S. office or fixed place of business , of inventory or property held by the foreign person primarily for sale to customers in the ordinary course of the trade or business , unless the sale or exchange is for use, consumption , or disposition outside the United States and an office or other fixed place of business of the foreign person in a foreign country participated materially in the sale or exchange .99 Foreign-source dividends, interest, and royalties are not treated as ECI if the items are paid by a foreign corporation more than 50 percent (by vote) of which is owned directly , indirectly , or constructively by the recipient of the income . 100 In determining whether a foreign person has a U.S. office or other fixed place of business , the office or other fixed place of business of an agent generally is disregarded. The place of business of an agent other than an independent agent acting in the ordinary course of business is not disregarded, however , if the agent either has the authority (regularly exercised) to negotiate and conclude contracts in the name of the foreign person or has a stock of merchandise from which he regularly fills orders on behalf of the foreign person. 101 If a foreign person has a U.S. office or fixed place of business , income , gain, deduction , or loss is not considered attributable to the office unless the office was a material factor in the production of the income , 96 Sec. 864( c)(2) . 97 Sec. 864(c)(3). This income is subject to net-b asis U.S. taxation after allowance of a credit for any foreign income tax imposed on the income. Sec. 906. 98 99 Sec. 864( C )( 4)(B). 100 Sec. 864(c)(4)(D)(i). 101 Sec. 864(c)(5)(A). 30 UST 000457 TREAS-17-0313-C-000047 gain , deduction , or loss and the office regularly carries on activities of the type from which the income, gain, deduction, or loss was derived. 102 Special rules apply in determining the ECI of an insurance company. The foreign-source income of a foreign corporation that is subject to tax under the insurance company provisions of the Code is treated as ECI if the income is attributable to its United States business. 103 Income, gain, deduction, or loss for a particular year generally is not treated as ECI if the foreign person is not engaged in a U.S. trade or business in that year. 104 If, however, income or gain taken into account for a taxable year is attributable to the sale or exchange of property, the performance of services , or any other transaction that occurred in a prior taxable year , the determination whether the income or gain is taxable on a net basis is made as if the income were taken into account in the earlier year and without regard to the requirement that the taxpayer be engaged in a trade or business within the United States during the later taxable year. 105 If any property ceases to be used or held for use in connection with the conduct of a U.S . trade or business and the property is disposed of within 10 years after the cessation , the determination whether any income or gain attributable to the disposition of the property is taxable on a net basis is made as if the disposition occurred immediately before the property ceased to be used or held for use in connection with the conduct of a U .S. trade or business and without regard to the requirement that the taxpayer be engaged in a U. S. bu siness during the taxable year for which the income or gain is taken into account. 106 Allowance of deductions Taxable ECI is computed by taking into account deductions associated with gross ECI. For this purpose , the apportionment and allocation of deductions is addressed in detailed regulations . The regulations applicable to deductions other than interest expense set forth general guideline s for allocating deductions among classes of income and apportioning deductions between ECI and non-ECI. In some circumstances , deductions may be allocated on the basis of units sold , gross sales or receipts , costs of goods sold , profits contributed , expenses incurred , assets used , salaries paid , space used , time spent , or gross income received . More specific guidelines are provided for the allocation and apportiomnent of research and experimental expenditures , legal and accounting fees , income taxes , losses on dispositions of property , and net operating losses . Detailed regulations under section 861 address the allocation and apportionment of interest deductions. In general, interest is allocated and apportioned based on assets rather than income . 102 Sec. 864(c)( S)(B). 103 Sec. 864(c)(4)(C). 104 Sec. 864(c)(l)(B). 105 Sec. 864(c)(6). 106 Sec. 864(c)(7). 31 UST 000458 TREAS-17-0313-C-000048 3. Special rules FIRPTA The Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA") 107 generally treats a foreign person's gain or loss from the disposition of a U.S . real property interest ("USRPI") as ECI and, therefore, as taxable at the income tax rates applicable to U.S. persons, including the rates for net capital gain. A foreign person subject to tax on this income is required to file a U.S. tax return under the normal rules relating to receipt of ECI. 108 In the case of a foreign corporation, the gain from the disposition of a USRPI may also be subject to the branch profits tax at a 30-percent rate (or lower treaty rate) . The payor of income that FIRPTA treats as ECI ("FIRPTA income ") is generally required to withhold U .S. tax from the payment. Withholding is generally l Opercent of the sales price , in the case of a direct sale by the foreign person of a US RPI, and 3 5 percent of the amount of a distribution to a foreign person of proceeds attributable to such sales from an entity such as a partnership , real estate investment trust ("REIT ") or regulated investment company ("RIC ").109 The foreign person can request a refund with its U.S. tax return , if appropriate , based on that person's total ECI and deductions (if any) for the taxable year. Branch profits taxes A domestic corporation owned by foreign persons is subject to U.S . income tax on its net income . The earnings of the domestic corporation are subject to a second tax , this time at the shareholder level, when dividends are paid . As described previously , when the shareholders are foreign , the second -level tax is imposed at a flat rate and collected by withholding . Unless the portfolio interest exemption or another exemption applies , interest payments made by a domestic corporation to foreign creditors are likewise subject to U.S . withholding tax . To approximate these second-level withholding taxes imposed on payments made by domestic subsidiaries to their foreign parent corporations , the United States taxes a foreign corporation that is engaged in a U .S. trade or business through a U.S . branch on amounts of U.S . earnings and profits that are shifted out of, or amounts of interest that are deducted by, the U .S. branch of the foreign corporation . These branch taxes may be reduced or eliminated under an applicable income tax treaty . 110 107 Pub . L. No . 96-499. The mies governing the imposition and collection of tax under FIRPTA are contained in a series of provisions enacted in 1980 and subsequently amended . See secs . 897, 1445 , 6039C , 6652(f) . Sec. 897(a) . In addition , section 6039C authori zes regulations that would require a return reporting foreign direct investments in U.S. real property interests. No such regul ations have been issued , however . 108 109 Sec. 1445 and Tre asury regul ations thereunder. The Treasury Department is author ized to issue regul ations that reduce the 35-perc ent withholdin g on distributions to 20 -percent withholding durin g the time that the maximum income tax rate on dividends and capital gains of U.S. persons is 20 percent. 110 See Treas. Reg . sec. 1.884-l(g) , -5. 32 UST 000459 TREAS-17-0313-C-000049 Under the branch profits tax, the United States imposes a tax of 30 percent on a foreign corporation's "dividend equivalent amount."rn The dividend equivalent amount generally is the earnings and profits of a U.S. branch of a foreign corporation attributable to its ECI as adjusted for increases or decreases in U.S. net equity. 112 Limited categories of earnings and profits attributable to a foreign corporation's ECI are excluded in calculating the dividend equivalent amount. 113 In arriving at the dividend equivalent amount, a branch's effectively connected earnings and profits are adjusted to reflect changes in a branch's U.S. net equity (that is, the excess of the branch's assets over its liabilities, taking into account only amounts treated as connected with its U.S . trade or business). 114 The first adjustment reduces the dividend equivalent amount to the extent the branch's earnings are reinvested in trade or business assets in the United States ( or reduce U.S. trade or business liabilities). The second adjustment increases the dividend equivalent amount to the extent prior reinvested earnings are considered remitted to the home office of the foreign corporation . Interest paid by a U.S . trade or business of a foreign corporation generally is treated as if paid by a domestic corporation and therefore is subject to U .S. 30-percent withholding tax (if the interest is paid to a foreign person and a Code or treaty exemption or reduction would not be available if the interest were actually paid by a domestic corporation) . 115 Certain "excess interest" of a U.S. trade or business of a foreign corporation is treated as if paid by a U.S. corporation to a foreign parent and, therefore , is subject to U .S. 30-percent withholding tax . 116 For this purpose, excess interest is the excess of the interest expense of the foreign corporation apportioned to the U.S. trade or business over the amount of interest paid by the trade or business. Earnings stripping Taxpayers are limited in their ability to reduce the U.S. tax on the income derived from their U.S. operations through certain earnings stripping transactions involving interest payments . If the payor's debt-to-equity ratio exceeds 1.5 to 1 (a debt-to-equity ratio of 1.5 to 1 or less is considered a "safe harbor") , a deduction for disqualified interest paid or accrued by the payor in 111 Sec. 884(a). 112 Sec. 884(b). 113 See sec. 884(d)(2) (excluiling, for example , earnings and profits attributable to gain from the sale of U.S. real property interests described in section 897 (discussed below)). 114 Sec. 884(b). 115 Sec. 884(f)(l )(A). 116 Sec. 884(f)(l )(B) . 33 UST 000460 TREAS-17-0313-C-000050 a taxable year is generally disallowed to the extent of the payor's excess interest expense. 117 Disqualified interest includes interest paid or accrued to related parties when no Federal income tax is imposed with respect to such interest; 118 to unrelated parties in certain instances in which a related party guarantees the debt ("guaranteed debt"); or to a REIT by a taxable REIT subsidiary of that REIT. Excess interest expense is the amount by which the payor's net interest expense (that is, the excess of interest paid or accrued over interest income) exceeds 50 percent of its adjusted taxable income (generally taxable income computed without regard to deductions for net interest expense, net operating losses, domestic production activities under section 199, depreciation, amortization, and depletion). Interest amounts disallowed under these rules can be carried forward indefinitely and are allowed as a deduction to the extent of excess limitation in a subsequent tax year. In addition , any excess limitation (that is, the excess , if any, of 50 percent of the adjusted taxable income of the payor over the payor's net interest expense) can be carried forward three years. 117 Sec. 163U). 118 If a tax treaty reduces the rate of tax on interest paid or accrued by the taxpayer, the interest is treated as interest on which no Federal income tax is imposed to the extent of the same proportion of such interest as the rate of tax imposed without regard to the treaty, reduced by the rate of tax imposedunder the treaty, bears to the rate of tax imposed without regard to the treaty. Sec. 163(j)(5)(B). 34 UST 000461 TREAS-17-0313-C-000051 C. U.S. Tax Rules Applicable to Foreign Activities of U.S. Persons (Outbound) 1. In general U.S. citizens, resident individuals, and domestic corporations generally are taxed on all income, whether derived in the United States or abroad. Income earned by a domestic parent corporation from foreign operations conducted by foreign corporate subsidiaries generally is subject to U.S. tax when the income is distributed to the domestic parent corporation. Until that repatriation, the U.S. tax on the income generally is deferred. U.S. shareholders of foreign corporations are taxed by the U.S . when the foreign corporation distributes its earnings or when a U.S . shareholder sells it stock at a gain. Thus , the U .S. tax on foreign earnings of foreign corporations is "deferred" until distributed to a U.S . shareho lder or a U.S . shareholder recognizes gain on its stock. However , certain anti-deferral regimes may cause the domestic shareholder of a foreign corporation to be taxed on a current basis in the United States on certain categories of passive or highly mobile income earned by the foreign corporation , regardless of whether the income has been distributed to the domestic shareholder. The main anti -deferral regimes in this context are the controlled foreign corporation ("CFC") rules of subpart F 119 and the passive foreign investment company ("PFIC") rules which are discussed below . 120 A foreign tax credit generally is avai lable to offset , in whole or in part , the U.S . tax owed on foreign-source income , whether the income is earned directly by a U.S . person , repatriated from a foreign corporation , or included in the domestic shareholder ' s income under one of the anti-deferral regimes. 121 2. Anti-def err al regimes Subpart F Subpart F , applicable to CFCs and their shareholders , is the main anti-deferral regime of relevance to a U .S.-based multinational corporate group. A CFC generally is defined as any foreign corporation if U.S. persons own (directly , indirectly , or constructively) more than 50 percent of the corporation ' s stock (measured by vote or value), taking into account only those U.S. persons that own at least 10 percent of the stock (measured by vote only) . 122 Under the subpart F rules , the United States generally taxes the IO-percent U.S . shareholders of a CFC on their pro rata shares of certain income of the CFC (referred to as "subpart F income "), without regard to whether the income is distributed to the shareholders . 123 In effect , the United States 119 Secs. 951-964. 120 Secs. 1291-1298. 121 Secs. 901, 902, 960, 1293(t). 122 Secs. 95l(b) , 957,9 58. 123 Sec. 951 (a). 35 UST 000462 TREAS-17-0313-C-000052 treats the 10-percent U.S. shareholders of a CFC as having received a current distribution of the corporation's subpart F income. With exceptions described below , subpart F income generally includes passive income and other income that is readily movable from one taxing jurisdiction to another. Subpart F income consists of foreign base company income , 124 insurance income , 125 and certain income relating to international boycotts and other violations of public policy. 126 Foreign base company income consists of foreign personal holding company income , which includes passive income such as dividends , interest , rents, and royalties , and a number of categories of income from business operations , including foreign base company sales income , foreign base company services income , and foreign base compan y oil-related income .127 Insurance income subject to current inclusion under the subpart F rules includes any income of a CFC attributable to the issuing or reinsuring of any insurance or annuity contract in connection with risks located in a country other than the CFC's country of organization . Subpart F insurance income also includes income attributable to an insurance contract in connection with risks located within the CFC's country of organization , as the result of an arrangement under which another corporation receives a substantially equal amount of consideration for insurance of other country risks . In the case of insurance , a temporary exception from foreign personal holding company income applies for certain income of a qualifying insurance company with respect to risks located within the CFC's country of creation or organization . Temporary exceptions from insurance income and from foreign personal holding company income also apply for certain income of a qualifying branch of a qualifying insurance company with respect to risks located within the home country of the branch , provided certain requirements are met under each of the exception s. Further , additional temporary exception s from insurance income and from foreign personal holding company income apply for certain income of certain CFCs or branches with respect to risks located in a country other than the United States , provided that the requirements for these exceptions are met. In the case of a life insurance or annuity contract , reserves for such contracts are detennined under rules specific to the temporary exceptions . Present law also permits a taxpayer in certain circumstances , subject to approval by the IRS through the mling process or in published guidance , to establish that the reserve of a life insurance company for life insurance and annuity contracts is the amount taken into account in determining the foreign statement reserve for the contract (reduced by catastrophe , equalization , or deficiency reserve or any similar reserve) . IRS approval is to be based on whether the method , the interest rate , the mortality and morbidity assumptions , and any other factors taken into account in determining 124 Sec. 954. 125 Sec. 953. 126 Sec. 952(a)(3)-(5). 127 Sec. 954. 36 UST 000463 TREAS-17-0313-C-000053 foreign statement reserves (taken together or separately) provide an appropriate means of measuring income for Federal income tax purposes. Special rules apply under subpart F with respect to related person insurance income. 128 Enacted in 1986, these rules address the concern that "the related person insurance income of many offshore 'captive' insurance companies avoided current taxation under the subpart F rules of prior law because , for example , the company's U.S. ownership was relatively dispersed." 129 For purposes of these rules, the U.S. ownership threshold for CFC status is reduced to 25 percent or more. Any U.S. person who owns or is considered to own any stock in a CFC, whatever the degree of ownership, is treated as a U.S. shareholder of such corporation for purposes of this 25percent U.S. ownership threshold and exposed to current tax on the corporation's related person insurance income . Related person insurance income is def med for this purpose to mean any insurance income attributable to a policy of insurance or reinsurance with respect to which the primary insured is either a U.S . shareholder (within the meaning of the provision) in the foreign corporation receiving the income or a person related to such a shareholder . Investments in U .S. property The 10-percent U.S. shareholders of a CFC also are required to include currently in income for U.S. tax purposes their pro rata shares of the corporation's untaxed earnings invested in certain items of U.S. property. 130 This U.S. property generally includes tangible property located in the United States , stock of a U.S . corporation , an obligation of a U.S . person , and certain intangible assets , such as patents and copyrights , acquired or developed by the CFC for use in the United States . 131 There are specific exceptions to the general definition of U.S. property , including for bank deposits , certain export property , and certain trade or business obligations . 132 The inclusion rule for investment of earnings in U.S . property is intended to prevent taxpayers from avoiding U.S . tax on dividend repatriations by repatriating CFC earnings through non-dividend payments , such as loans to U.S. persons. Subpart F exceptions A provision colloquially referred to as the "CFC look-through " rule and applicable for taxable years beginning after 2005 and before 2015 , excludes from foreign personal holding company income dividends , interest , rents , and royalties received or accrued by one CFC from a related CFC (with relation based on control) to the extent attributable or properly allocable to 128 Sec. 953(c). 129 Joint Committee on Taxation, General Exp lanation of the Tax Reform Act of 1986 (JCS-10-87) , May 4, 1987, p. 968. 130 Secs. 95l(a)(l)(B) , 956. 13 1 Sec. 956(c)(l) . 132 Sec. 956(c)(2). 37 UST 000464 TREAS-17-0313-C-000054 non-subpart-F income of the payor. 133 The exclusion has been extended most recently to apply for taxable years of the foreign corporation beginning before 2015. 134 There is also an exclusion from subpart F income for certain income of a CFC that is derived in the active conduct of banking or financing business ("active financing income"). 135 The exception from subpart F for active financing income now applies to taxable years of foreign corporations starting before January 1, 2015 (and to taxable years of IO-percent U.S. shareholders with or within which those corporate taxable years end). With respect to income derived in the active conduct of a banking, financing, or similar business , a CFC is required to be predominantly engaged in such business and to conduct substantial activity with respect to such busine ss in order to qualify for the active financing exceptions . In addition , certain nexus requirements apply , which provide that income derived by a CFC or a qualified business unit ("QBU") of a CFC from transactions with customers is eligible for the exceptions if, among other things , substantially all of the activities in connection with such transactions are conducted directly by the CFC or QBU in its home country , and such income is treated as earned by the CFC or QBU in its home country for purposes of such country ' s tax laws. Moreover , the exceptions apply to income derived from certain cross border transactions , provided that certain requirements are met. In the case of a securities dealer , the temporary exception from foreign personal holding company income applies to certain income . The income covered by the exception is any interest or dividend (or certain equivalent amounts) from any transaction , including a hedging transaction or a transaction consisting of a deposit of collateral or margin , entered into in the ordinary course of the dealer ' s trade or business as a dealer in securities within the meaning of section 4 75. In the case of a QBU of the dealer , the income is required to be attributable to activities of the QBU in the country of incorporation , or to a QBU in the country in which the QBU both maintains its principal office and conducts substantial business activity . A coordination rule provide s that this exception generally takes precedence over the exception for income of a banking , financing or similar business , in the case of a securities dealer. Income is treated as active financing income only if, among other requirements , it is derived by a CFC or by a qualified business unit of that CFC . Certain activities conducted by persons related to the CFC or its qualified business unit are treated as conducted directly by the CFC or qualified business unit. 136 An activity qualifies under this rule if the activity is performed by employees of the related person and if the related person is an eligible CFC, the 133 Sec. 954(c)(6). 134 Sec. 954(c)(6)(C). Tax Increase Prevention Act of 2014, Pub. L. No . 113-295, sec. 135(a). 135 Congress has extended the applic ation of section 954(h) several times , most recently in 2014 . Sec. 954(11). Tax Increase Prevention Act of 2014 , Pub. L. No. 113-295; American Taxpayer Relief Act of 2012, Pub. L. No . 112-240, sec. 322(b) ; Pub. L. No . 111-312, sec. 750(a), 201 O; Pub . L. No . 110-343, div. C, sec. 303(b), 2008; Pub. L. No. 109-222, sec. 103(a)(2), 2006; Pub. L. No. 107-147, sec. 6 14, 2002 ; Pub . L. No. 106-170, sec. 503, 1999; Pub . L. No . 105-277, 1998. 136 Sec. 954(h)(3)(E). 38 UST 000465 TREAS-17-0313-C-000055 home country of which is the same as the home country of the related CFC or qualified business unit; the activity is performed in the home country of the related person ; and the related person receives arm's-length compensation that is treated as earned in the home country. Income from an activity qualifying under this rule is excepted from subpart F income so long as the other active financing requirements are satisfied. Other exclusions from foreign personal holding company income include exceptions for dividends and interest received by a CFC from a related corporation organized and operating in the same foreign country in which the CFC is organized and for rents and royalties received by a CFC from a related corporation for the use of property within the country in which the CFC is organized .137 These exclusions do not apply to the extent the payment s reduce the subpart F income of the payor. There is an exception from foreign base company income and insurance income for any item of income received by a CFC if the taxpayer establishes that the income was subject to an effective foreign income tax rate greater than 90 percent of the maximum U.S . corporate income tax rate (that is, more than 90 percent of 35 percent , or 31.5 percent) .138 Exclusion of previously taxed earnings and profits A 10-percent U.S. shareholder of a CFC may exclude from its income actual distributions of earnings and profits from the CFC that were previously included in the IO-percent U.S . shareholder's income under subpart F .139 Any income inclusion (under section 956) resulting from investments in U.S . property may also be excluded from the 10-percent U.S . shareholder ' s income when such earnings are ultimately distributed .140 Ordering rules provide that distributions from a CFC are treated as coming first out of earnings and profits of the CFC that have been previously taxed under subpart F, then out of other earnings and profits .14 1 Basis adjustments In general , a 10-percent U.S. shareholder of a CFC receives a basis increase with respect to its stock in the CFC equal to the amount of the CFC 's earnings that are included in the IO-percent U.S . shareholder 's income under subpart F. 142 Similarly , a IO-percent U.S . shareholder of a CFC generally reduces its basis in the CFC's stock in an amount equal to any 137 Sec. 954(c)(3). 138 Sec. 954(b)(4) . 139 Sec. 959(a)( l). 140 Sec. 959(a)(2) . 14 1 Sec. 959(c). 142 Sec. 96l (a). 39 UST 000466 TREAS-17-0313-C-000056 distributions that the IO-percent U.S. shareholder receives from the CFC that are excluded from its income as previously taxed under subpart F. 143 Passive foreign investment companies The Tax Reform Act of 1986 144 established the PFIC anti-deferral regime. A PFIC is generally defined as any foreign corporation if 7 5 percent or more of its gross income for the taxable year consists of passive income, or 50 percent or more of its assets consists of assets that produce, or are held for the production of, passive income. 145 Alternative sets of income inclusion rules apply to U.S. persons that are shareholders in a PFIC, regardless of their percentage ownership in the company . One set of rules applies to PFICs that are qualified electing funds, under which electing U .S. shareholders currently include in gross income their respective shares of the company's earnings , with a separate election to defer payment of tax , subject to an interest charge, on income not currently received. 146 A second set of rules applies to PFICs that are not qualified electing funds , under which U .S. shareholders pay tax on certain income or gain realized through the company , plus an interest charge that is attributable to the value of deferral. 147 A third set of rules applies to PFIC stock that is marketable, m1der which electing U.S. shareholders currently take into account as income (or loss) the difference between the fair market value of the stock as of the close of the taxable year and their adjusted basis in such stock (subject to certain limitations) , often referred to as "marking to market." 148 Other anti-deferral rules The subpart F and PFIC rules are not the only anti-deferral regimes . Other rnles that impose current U.S. taxation on income earned through corporations include the accumulated earnings tax rules 149 and the personal holding company rules. Rules for coordination among the anti-deferral regimes are provided to prevent U.S . persons from being subject to U.S. tax on the same item of income under multiple regimes . For example , a corporation generally is not treated as a PFIC with respect to a particular shareholder if the corporation is also a CFC and the shareholder is a IO-percent U .S. shareholder. Thus, subpart F is allowed to trnmp the PFIC rules. 143 Sec. 96l(b). 144 Pub. L. No. 99-514. 145 Sec. 1297. 116 Secs. 1293-1295. 147 Sec. 1291. 148 Sec. 1296. 149 Secs. 531-537 . 40 UST 000467 TREAS-17-0313-C-000057 3. Foreign tax credit Subject to certain limitations, U.S. citizens, resident individuals, and domestic corporations are allowed to claim credit for foreign income taxes they pay. A domestic corporation that owns at least 10 percent of the voting stock of a foreign corporation is allowed a "deemed-paid" credit for foreign income taxes paid by the foreign corporation that the domestic corporation is deemed to have paid when the related income is distributed as a dividend or is included in the domestic corporation's income under the anti-deferral rules. 150 The foreign tax credit generally is limited to a taxpayer's U.S. tax liability on its foreignsource taxable income (as determined under U.S . tax accounting principles) . This limit is intended to ensure that the credit serves its purpose of mitigating double taxation of foreignsource income without offsetting U.S. tax on U.S .-source income .151 The limit is computed by multiplying a taxpayer's total U.S. tax liability for the year by the ratio of the taxpayer 's foreignsource taxable income for the year to the taxpayer ' s total taxable income for the year. If the total amount of foreign income taxes paid and deemed paid for the year exceeds the taxpayer's foreign tax credit limitation for the year , the taxpayer may carry back the excess foreign taxes to the previous year or carry forward the excess taxes to one of the succeeding 10 years. 152 The computation of the foreign tax credit limitation requires a taxpayer to determine the amount of its taxable income from foreign sources in each limitation category (described below) by allocating and apportioning deductions between U.S .-source gross income , on the one hand , and foreign-source gross income in each limitation category , on the other. In general , deductions are allocated and apportioned to the gross income to which the deductions factually relate . 153 However , subject to certain exceptions , deductions for interest expense and research and experimental expenses are apportioned based on taxpayer ratios . 154 In the case of interest expense , this ratio is the ratio of the corporation's foreign or domestic (as applicable) assets to its worldwide assets . In the case of research and experimental expenses , the apportionment ratio is based on either sales or gross income . All members of an affiliated group of corporations generally are treated as a single corporation for purposes of determining the apportionment ratios . 155 150 Secs. 901, 902, 960, 129I(g). 15 1 Secs. 901, 904. 152 Sec. 904(c). 153 Treas. Reg. sec. l.861 -8(b), Temp. Treas. Reg. sec. l.86I-8T(c). 154 Temp. Treas. Reg. sec. l.861 -9T, Treas. Reg. sec. 1.861-17. 155 Sec. 864(e)(l) , (6); Temp. Treas. Reg. sec. l.86I-14T(e)(2). 41 UST 000468 TREAS-17-0313-C-000058 The term "affiliated group" is determined generally by reference to the rules for determining whether corporations are eligible to file consolidated returns. 156 These rules exclude foreign corporations from an affiliated group. 157 AJCA modified the interest expense allocation rules for taxable years beginning after December 31, 2008. 158 The effective date of the modified rules has been delayed to January I, 2021. 159 The new rules permit a U.S. affiliated group to apportion the interest expense of the members of the U.S. affiliated group on a worldwide-group basis (that is, as if all domestic and foreign affiliates are a single corporation). A result of this rule is that interest expense of foreign members of a U.S. affiliated group is taken into account in determining whether a portion of the interest expense of the domestic members of the group must be allocated to foreign-source income. An allocation to foreign-source income generally is required only if, in broad terms , the domestic members of the group are more highly leveraged than is the entire worldwide group . The new rules are generally expected to reduce the amount of the U.S . group 's interest expense that is allocated to foreign-source income. The foreign tax credit limitation is applied separately to passive category income and to general category income .160 Passive category income includes passive income , such as portfolio interest and dividend income , and certain specified types of income . General category income includes all other income . Passive income is treated as general category income if it is earned by a qualifying financial services entity . Passive income is also treated as general category income if it is highly taxed (that is, if the foreign tax rate is determined to exceed the highest rate of tax specified in Code section 1 or 11, as applicable) . Dividends (and subpart F inclusions) , interest , rents , and royalties received by a 10-percent U.S . shareholder from a CFC are assigned to a separate limitation category by reference to the category of income out of which the dividends or 156 Secs. 864(e)(5) , 1504. 157 Sec. 1504(b)(3). 158 AJCA sec. 401. 159 The most recent delay in these rules was enacted in the Hiring Incentives to Restore Employment Act, Pub . L. No. 111-147, sec. 55l (a). Sec. 904(d). AJCA generally reduced the number of income categories from nine to two, effective for tax years beginning in 2006. Before AJCA , the foreign tax credit limitation was applied separately to the followin g categories of income : (I ) passive income , (2) high withholdin g tax interest , (3) financial services income , (4) shipping income, (5) certain dividends received from noncontrolled section 902 foreign corporations (also known as " 10/50 companies "), (6) certain dividends from a domestic international sales corporation or former domestic international sales corporation, (7) taxable income attributable to certain foreign trade income, (8) certain distributions from a foreign sales corporation or former foreign sales corporation , and (9) any other income not described in items (1) through (8) (so-called "general basket" income). A number ofother provi sions of the Code, including several enacted in 2010 as part of Pub . L. No. 111-226, create additional separate categories in specific circumst ances or limit the availability of the foreign tax credit in other ways. See, e.g., secs. 865(h), 9010 ), 904(d)(G), 904(11)(10). 160 42 UST 000469 TREAS-17-0313-C-000059 other payments were made. 161 Dividends received by a I 0-percent corporate shareholder of a foreign corporation that is not a CFC are also categorized on a look-through basis. 162 In addition to the foreign tax credit limitation just described, a taxpayer's ability to claim a foreign tax credit may be further limited by a matching rule that prevents the separation of creditable foreign taxes from the associated foreign income. Under this rule, a foreign tax generally is not taken into account for U.S. tax purposes, and thus no foreign tax credit is available with respect to that foreign tax, until the taxable year in which the related income is taken into account for U.S. tax purposes. 163 4. Special rules Temporary dividends-received deduction for repatriated foreign earnings AJCA section 421 added to the Code section 965 , a temporary provision intended to encourage U.S. multinational companies to repatriate foreign earnings. Under section 965 , for one taxable year certain dividends received by a U.S. corporation from its CFCs were eligible for an 85-percent dividends-received deduction. At the taxpayer's election , this deduction was available for dividends received either during the taxpayer ' s first taxable year beginning on or after October 22, 2004 , or during the taxpayer 's last taxable year beginning before such date . The temporary deduction was subject to a number of general limitations . First , it applied only to cash repatriations generally in excess of the taxpayer ' s average repatriation level calculated for a three-year base period preceding the year of the deduction . Second , the amount of dividends eligible for the deduction was generally limited to the amount of earnings shown as permanently invested outside the United States on the taxpayer ' s recent audited financial statements. Third , to qualify for the deduction , dividends were required to be invested in the United States according to a domestic reinvestment plan approved by the taxpayer's senior management and board of directors . 164 No foreign tax credit (or deduction) was allowed for foreign taxes attributable to the deductible portion of any dividend. 165 For this purpose , the taxpayer was permitted to specifically identify which dividends were treated as carrying the deduction and which dividends were not. In other words , the taxpayer was allowed to choose which of its dividends were Sec. 904(d)(3). The subpart F mies applicable to CFCs and their 10-percent US . shareholders are described below . 161 162 Sec. 904(d)(4). 163 Sec. 909. 164 Section 965(b)(4) . The plan was required to provide for the reinvestment of the repatri ated dividends in the United States, including as a source for the funding of worker hiring and trainin g, infrastrncture , research and development , capital investments , and the financial stabilization of the corporation for the purposes of job retention or creation. 165 Sec. 965(d)(l) . 43 UST 000470 TREAS-17-0313-C-000060 treated as meeting the base-period repatriation level (and thus carry foreign tax credits , to the extent otherwise allowable), and which of its dividends were treated as part of the excess eligible for the deduction (and thus subject to proportional disallowance of any associated foreign tax credits). 166 Deductions were disallowed for expenses that were directly allocable to the deductible portion of any dividend. 167 U.S. citizens living abroad: the foreign earned income exclusion A U.S. citizen who earns income in a foreign country also may be taxed on that income by the foreign country. As a practical matter, the United States generally cedes the primary right to tax a U.S . citizen's foreign source income to the foreign country in which the income is derived . 168 This concession is effected by the allowance of a credit against the U .S. income tax imposed on foreign-source income for foreign taxes paid on that income . As described previously , the amount of the credit for foreign income tax paid on foreign-source income generally is limited to the amount of U .S. tax otherwise owed on that income . Accordingly , if the amount of foreign tax paid on foreign-source income is less than the amount of U.S . tax owed on that income, a foreign tax credit generally is allowed in an amount not exceeding the amount of the foreign tax , and a residual U.S. tax liability remains . A U.S . citizen or resident living abroad may be eligible to exclude from U.S . taxable income certain foreign earned income and foreign housing costs . 169 This exclusion applies regardless of whether any foreign tax is paid on the foreign earned income or housing costs . To qualify for these exclusions , an individual (a "qualified individual ") must have his or her tax home in a foreign country and must be either (1) a U.S . citizen 170 who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire taxable year, or (2) a U.S . citizen or resident present in a foreign country or countries for at least 330 full days in any 12-consecutive-month period . The maximum amount of foreign earned income that an individual may exclude in 2013 is $97,600.171 The maximum amount of foreign housing costs that an individual may exclude in 166 Accordingly , taxpayers generally were expected to pay regular dividends out of high-t axed CFC earnings (thereby genera ting deemed-p aid credits available to offset foreign-source income) and section 965 dividends out of low-taxed CFC earnings (thereby ava iling themselves of the 85-percent deduction) . 167 Sec. 965(d)(2) . 168 In a provision referred to as the "saving clause," the United States reserves the right to tax its citizens as citizens under bilateral income tax treaties. 169 Sec. 911. 170 Generally, only U.S . citizens may qualify under the bona fide residence test. A U.S . resident alien who is a citizen of a country with which the United States has a tax treaty may, however , qualify for the section 9 11 exclusions under the bona fide residence test by application of a nondiscrimination provision of the treaty. 17 1 Sec. 91 l(b)(2)(D)(i). This amount is adjusted annually for inflation. For the 2013 amount , see Rev. Proc. 2012- 41, 2012-2 C.B. 539 (Oct. 18, 2012), section 3. 17. The exclusion amount is taken against the lowest marginal tax rates. See sec. 9 11(f). 44 UST 000471 TREAS-17-0313-C-000061 2013 is, in the absence of Treasury adjustment for geographic differences in housing costs, $13,664. 172 The combined foreign earned income exclusion and housing cost exclusion may not exceed the taxpayer's total foreign earned income for the taxable year. The taxpayer's foreign tax credit is reduced by the amount of the credit that is attributable to excluded income. 172 Sec. 91 l(c)(l) , (2). The Treasury Secretary has authority to issue guidance making geographic costbased adjustments. Sec. 9 l l(c)(2)(B). The Secretary has exercised this authority annually. The most recent guidance, Notice 2013-31 , 2013 I.RB . LEXIS 253 (May 1, 2013), includes adjustments for many locations. Under these adjustments, the maximum housing cost exclusion for any geographic area is $101,484 for expenses for housing in Tokyo, Japan. 45 UST 000472 TREAS-17-0313-C-000062 D. U.S. tax rules applicable to the U.S. territories 1. Background The United States has 13 territories under the jurisdiction of the Department of the Interior. 173 Three of the territories , Navassa Island, Puerto Rico, and the U.S. Virgin Islands , are in the Caribbean Sea. Ten territories - American Samoa, Baker Island, Guam, Howland Island , Jarvis Island, Johnston Atoll, Kingman Reef, Midway Atoll, the Northern Mariana Islands, and Wake Atoll - are in the Pacific Ocean. Two territories, the Northern Mariana Islands (also referred to as "Northern Marianas") and Puerto Rico, are commonwealths. Commonwealth status typically involves a legal relationship with the United States that is embodied in a written mutual agreement. Territories that do not have commonwealth status generally have less developed legal relationships with the United States. Their governments are generally constituted by U.S . Federal statutes referred to as organic acts . The summary below describes U.S. Federal tax rules and issues related to the five territories that have significant populations : American Samoa , Guam , the Northern Mariana Islands , Puerto Rico, and the U.S . Virgin Islands . American Samoa became a U.S . territory by deed of cession from the local chiefs of the largest island in 1900. It has no organic act for the establishment of its government , but it adopted its own constitution in 1967. Guam became a territory in 1898, and its organic act was enacted in 1950. For the Northern Mariana Islands a covenant to establish political union with the United States signed in 1975 and came into full effect in 1986. Puerto Rico became a territory in 1898 and a commonwealth 1952. The United States purchased the U.S. Virgin Islands from Denmark in 1917, and the Virgin Islands' current organic act was enacted in 1954. The five territories are represented in the U.S . Congress by non-voting delegates (in the case of Puerto Rico , a non-voting resident commissioner) in the House of Representatives . Residents of Guam, the Northern Mariana Islands , Puerto Rico , and the U.S. Virgin Islands are generally U.S . citizens . American Samoa residents , by contrast , are generally national s but not citizens . Following common current and historical tax law usage , the summary below uses the term "possessions" interchangeably with "territories ." 2. In General While U.S. statutory laws apply to the U.S. possessions , and natives of U.S. possessions are U.S . citizens or nationals , for tax purposes the Code generally treats the U.S . possessions as foreign countries . When the Code uses the term in a geographical sense, the "United States" includes only the 50 States and the District of Columbi a. 174 173 The source of information about the territories included in this paragraph and the paragraph that follows is the website of the Office oflnsular Affairs of the Department of the Interior: http://www.doi.gov /oia/index.html. 174 Sec. 770l( a)(9) . 46 UST 000473 TREAS-17-0313-C-000063 The meaning of the term possession is not uniform throughout the Code, and is not among the defined terms in section 7701. For purposes of assessment and collection of Federal taxes, the possessions are generally treated the same as the States, except as provided in the Revised Organic Act of the Virgin Islands and the Organic Act of Guam with respect to certain taxes covered over to the treasuries of the U.S. Virgin Islands and Guam. 175 Taxes imposed by the Code in any possession are collected under the direction of the Secretary. Taxes with respect to any individual to whom section 931 or 932(c) applies are covered into the Treasury of the specific possession of which the individual is a bona fide resident. 176 Income derived from U.S. possessions is ordinarily treated as foreign-source income. Entities organized in U.S. possessions are generally treated as foreign persons . Of the various trust territories and possessions of the United States, only those with local taxing authorities that have entered into a tax coordination agreement with the United States, that is, American Samoa, Guam , the Northern Mariana Islands , Puerto Rico, and the U.S . Virgin Islands , are provided special treatment in the Code and are the focus of this pamphlet. 177 Three of the possessions employ a "mirror system" of taxation. In Guam , 178 the Commonwealth of Northern Mariana Islands 179 and the U.S. Virgin Islands , 180 the United States Federal income tax laws are in effect (or "mirrored") as the local territorial income tax . Proceeds of the mirror codes are generally paid to the treasuries of the possessions . Not all of the Code is mirrored; generally, only the income tax provisions of the Code are mirrored . 18 1 In the tax 175 Sec. 7651. 176 Sec. 7654 . 177 See Rev. Proc . 2006-23 , 2007-1 C.B. 900. In addition to these five jurisdictions , other territories may be considered possessions of the United States for political purposes but are not generally accorded special status under the Code or by Treasury. But see, e.g., section 274(h)(3)(A) (defines "North American area" to include the United States, its possessions and the Trust Territory of the Pacific islands , as well as Canada and Mexico) and Rev . Rul. 2011-26 , 2011-1 C.B. 803 (explains the current status of the entities that were part of the Trust Territory when 274(11)was enacted , and rules that "possessions " includes, in addition to the five discussed in this pamphlet, Baker Island , Howland Island , Jarvis Island, Johnston Island , Kingman Reef , the Midway Islands, Palmyra Atoll, Wake Island , and any other United States islands, cays, and reefs that are not part of the fifty states or the District of Columbia). 178 The 1950Org anicActofGuam , 48U.S.C.sec . 142li(h)(2012). 179 Covenant to Establish a Commonwealth of the Northern Mariana Islands in Political Union with the United States of America ("Covenant "), Act of March 24, 1976, Pub. L. No . 94-241, 48 U.S .C. sec. 1801 (note) (2012); President Ronald Reagan, "Placing Into Full Force and Effect the Covenant With the Commonwealth of the Northern Mariana Islands , and the Compacts of Free Association With the Federated States of Micronesia and the Republic of the Marshall Islands," Proclamation No . 5564, 51 Fed. Reg. 40,399-400 (Nov. 3, 1986). 180 Act July 12, 1921, ch 44, 42 Stat. 123, popularly known as the Naval Service Appropriation Act, 1922, codified at 48 U.S.C. sec. 1397 (2012) . 181 For example , 48USC 1421i(d) specified that for Guam , the mirrored sections include most of subtitle A (income tax), chapters 24 and 25 (withholding tax), and subtitle F (administrative) as applicable to tl1e income tax. 47 UST 000474 TREAS-17-0313-C-000064 statutes as in effect in each of these possessions, the name of the possession is substituted for "United States," and vice-versa. Although the reverse substitution is not explicitly described in any of the operative statutes for the possessions, two-way mirroring has been required to give effect to the intent of the mirroring requirement. To the extent that mirroring would produce a result manifestly incompatible with the Code or other provisions of the United States Code, mirroring is not required. 182 The Tax Reform Act of 1986 (the "1986 Act") granted authority to Guam, the Commonwealth ofNorthem Mariana Islands and American Samoa to cease use of the mirror system, and authorized the U.S. Virgin Islands to impose local taxes at variance from the rates in the Code as mirrored . It repealed the relevant rules that provide coordination between the Federal statutes and the statutes as mirrored in Guam, American Samoa and the Northern Mariana Islands and amended the coordination rules for the U.S . Virgin Islands. The changes are not yet in effect for Guam or the Northern Mariana Islands , because the effective date is contingent upon the existence of an implementation agreement , and the contingency has not been met. 1s3 3. Income Taxation of Individuals The United States generally imposes income tax on the worldwide income of U.S. citizens and residents. Thus , all income earned by a U.S. citizen or resident, whether from sources inside or outside the United States, is taxable whether or not the individual lives within the United States. All U .S. citizens and residents whose gross income for a taxable year is not less than the sum of the personal exemption amount and the basic standard deduction are required to file an annual U.S . individual income tax return . The taxable income of a U .S. citizen or resident is equal to the taxpayer's total worldwide income less certain exclusions , exemptions , and deductions . A foreign tax credit, with limitations , may be claimed for foreign income taxes paid or accrued , or, alternatively , foreign taxes may be treated as a deduction. Income taxes paid in a U .S. possession are generally creditable taxes for these purposes . Generally , special U .S. income tax rules apply with respect to U.S. persons who are bona fide residents of U .S. possessions and who have possession source income or income effectively 182 Gumataotao v. Director of Revenue and Taxation of Guam , 236 F.3d 1077, 1080 (9th Cir. 2001) ("Only those provisions of the I.RC . that are "mani festly inapplicable or incompatible with the intent of [the Income Tax Section do not apply to Guam taxp ayers."); 48 USC? 1421i(d); see Sayre & Co. v. Riddell, 395 F.2d 407, 410 (9th Cir. 1968) (en bane) ("Sayre") (G.T.I.T. "mirrors" the I.R.C ., except where "manifestly inapplicable or incompatible ")." 183 The special effective date for the revision of section 931 and repeal of section 935 is provided in section 1277(b) of the 1986 Act, stating "The amendments made by this subtitle shall apply with respect to Guam, American Samoa, or the Northern Mariana Islands (and to residents thereof and corporations created or organized therein) only if (and so long as) an implementin g agreement under section 1271 is in effect between the United States and such possession ." Tax Reform Act of 1986, Pub. L. No . 99-514 , sec. 1277(a), (b), 100 Stat. 2085, 2600 (1986). 48 UST 000475 TREAS-17-0313-C-000065 connected with the conduct of a trade or business within a possession. 184 The term bona fide resident means a person who meets a two-part test with respect to American Samoa, Guam, the U.S. Virgin Islands, Puerto Rico , or the Northern Mariana Islands as the case may be, for the taxable year. First, an individual must be present in the U.S. possession for at least 183 days in the taxable year. 185 Second, an individual must (1) not have a tax home outside such possession during the taxable year and (2) not have a closer connection to the United States or a foreign country during such year. Individual residents living in U.S. possessions generally are subject to either a single- or double-filing system with respect to their income. Individual residents subject to section 931 or 933 (that is, bona-fide residents of American Samoa and Puerto Rico) operate under a doublefiling system . Under a double-filing system , income that is not exempt from U.S. tax under section 931 or 933, and meets certain filing thresholds, must be reported to the United States on a U.S. return. Thus, an individual operating under a double-filing system that has income from sources outside the U.S . possession where the individual is resident (e.g., a Puerto Rico individual with non-Puerto Rico-source income) must file a tax return in the United States and in the U.S. possession where the individual is a bona-fide resident if such income is subject to reporting. Income reported on a U.S. return by a bona-fide resident of a U.S. possession is generally subject to the same U.S . tax treatment that applies to individuals resident in the United States. In contrast , individual residents subject to section 932( c) or 935 (that is, bona fide residents of the U.S. Virgin Islands, as well as the Northern Mariana Islands and Guam 186) generally operate under a single-filing system . Under a single-filing system, income is only reported in one jurisdiction, based on bona-fide residency . Thus, an individual operating under a single-filing system generally does not have to file a tax return with the United States. In a single-filing system, income is often allocated between the U.S. possession and the United States through a cover over 187 mechanism. As a general rule, the principles for determining whether income is U .S. source are applicable for purposes of determining whether income is possession source . In addition, the 184 For more detail about these special rules, see generally, Joel D. Kuntz and Robert J. Peroni, U.S. International Taxation, "U.S. Taxation Relating to Possessions" (Warren Gorman and Lamont-RIA, 2005), Part D. 185 Sec. 937(a). Treasury regulationsprovide guidancerelated to meeting the presence test, including exceptionsfor certain extended absences from the possession. Treas. Reg. sec. 1.937-1. 186 The repeal of section 935 is not yet effective for Guam or the Northern Marianas, due to failure to meet the condition in the special effective date provided in section 1277(b)of the 1986 Act, which states, "The amendmentsmade by this subtitle shall apply with respect to Guam, American Samoa, or the Northern Mariana Islands (and to residents thereof and corporationscreated or organized therein) only if (and so long as) an implementingagreementunder section 1271 is in effect between the United States and such possession." Tax Refonn Act of 1986, Pub. L. No. 99-514, sec. 1277(a), (b), 100 Stat. 2085, 2600 (1986). 187 Cover over refers to the collection of certain taxes and fees by the U.S. Treasury and subsequent payment of such taxes and fees to the governmentsof the territoriesas specified. 49 UST 000476 TREAS-17-0313-C-000066 principles for determining whether income is effectively connected with the conduct of a U.S. trade or business are applicable for purposes of determining whether income is effectively connected to the conduct of a possession trade or business. However, except as provided in regulations, any income treated as U.S. source income or as effectively connected with the conduct of a U.S. trade or business is not treated as income from within any possession or as effectively connected with a trade or business within any such possession. 188 For purposes of the foreign earned income exclusion, the U.S. possessions are not treated as foreign countries. Thus, residents of U.S. possessions do not qualify for the foreign earned income or housing exclusion under section 911 of the Code because they are not considered resident abroad .189 U.S . citizens who relinqui sh their citizenship and U.S . residents who terminate their longterm residency may be subject to special tax rules intended to limit any tax benefits from expatriation . Certain persons expatriating before June 17, 2008 are subject to an alternative tax regime for a period of 10 years if they meet certain income and net-worth thresholds or they fail to comply with certain U.S . Federal tax obligations . 19 Certain persons expatriating after June 16, 2008 , are treated as if all property was sold on the day before their expatriation date for its fair market value . 191 U.S . citizens and lawful permanent residents who leave the United States and establish residency in one of the possessions are generally not considered to have either relinquished their U.S . citizenship or terminated their U.S. residency ; however , the special source rules may apply to U .S. citizens and residents that leave the United States and establish residency in American Samoa , the Northern Mariana Islands , or Guam during the 10-year period beginning when the person first becomes a resident. 192 ? 4. Income Taxation of Corporations U.S. corporations U.S . corporation s are subject to U.S . income tax on their worldwide income , whether derived in the United States or abroad . Income earned by a domestic parent corporation from foreign operations conducted by foreign corporate subsidiaries generally is subject to U.S . tax when the income is distributed as a dividend to the domestic corporation . Until such repatriation , the U.S . tax on such income is generally deferred . However , certain anti-deferral regimes may cause the domestic parent corporation to be taxed on a current basis in the United 188 Sec. 937(b). 189 Treas. Reg. secs. l.91l-2(g),(h). 190 Sec. 877. 19 1 Sec. 877A. See section 1277(e)of the 1986 Act. Under this special source rule, gains from dispositionsof certain property held by a U.S. person prior to becoming a resident in American Samoa, the Northern Mariana Islands, or Guam are treated as income from sources within the United States for all purposes of the Code. 192 50 UST 000477 TREAS-17-0313-C-000067 States with respect to certain categories of passive or highly mobile income earned by its foreign subsidiaries. The main anti-deferral regimes in this context are the controlled foreign corporation rules of subpart F 193 and the passive foreign investment company rules. 194 A foreign tax credit is generally available to offset, in whole or in part, the U.S. tax owed on this foreignsource income , whether earned directly by the domestic corporation, repatriated as a dividend, or included under one of the anti-deferral regimes, subject to certain limitations. Foreign corporations Foreign corporations with U.S . source income are generally subject to U.S. tax on a net basis at graduated rates on income effectively connected to a U .S. trade or business . U .S.-source passive income paid to a foreign corporation is generally taxed on a gross basis at a withholding rate of 30 percent. Income earned by a foreign corporation from its foreign operations generally is subject to U.S . tax only when such income is distributed to any U.S . persons that hold stock in such corporation . However , several sets of anti-deferral rules impose current U.S . tax on certain income earned by a U.S . person through a foreign corporation . Corporations formed in the U .S. possessions are generally treated as foreign corporations for U.S. tax purposes. Thus , the foreign status of entities formed in a U.S. possession means that the shareholders of such entities may be subject to U.S . anti deferral regimes , such as the controlled foreign corporation regime (subpart F), and the shareholders of such entities may have to pay current U.S . tax on their foreign source income . However , notwithstanding the general rnle that companies organized in a U.S . possession are treated as foreign corporations , certain qualifying corporations are deemed not to be foreign corporations for purposes of withholding taxes on passive income . Corporations organized in American Samoa , Guam , the U.S. Virgin Islands , or the Northern Mariana Islands are not subject to withholding tax on payments from corporation s organi zed in the United States, provided that certain local ownership and activity requirements are met. 195 In turn , each of those possessions have adopted local internal revenue codes that provide a zero rate of withholding tax on payments made by corporations organized in such possession to corporations organized in the United States. Thus , certain corporations organized in American Samoa , Guam , the U.S . Virgin Islands , or the Northern Mariana Islands can receive dividend payments from a U.S . subsidiary at a zero rate of withholding . 193 Secs. 951-964. 194 Secs. 1291-1298. 195 Sec. 88l (b). 51 UST 000478 TREAS-17-0313-C-000068 5. Estate and Gift Taxation U.S. citizens and residents U.S. citizens and residents are subject to estate tax on the transfer of their worldwide estate at the time of death. The taxable estate is equal to the decedent's worldwide gross estate, less allowable deductions (including the marital deduction). Certain credits are allowed, including the unified credit, which directly reduce the amount of the estate tax. 196 U.S. citizens and residents are subject to gift tax on transfers of property by gift made directly or indirectly , in trust or otherwise . Thus , the gift tax applies to transfers of property , regardless of where such property is situated. The amount of a taxable gift is determined by the fair market value of the property on the date of the gift. An annual exclusion (adjusted periodically for inflation) 197 applies to gifts given in a calendar year. 198 A U.S . citizen residing in a U.S. possession is treated as a citizen for estate and gift tax purposes unless he acquired U.S . citizenship solely by reason of birth or residence within the possession . 199 Nonresident aliens The estate of a nonresident alien generally is taxed at the same estate tax rates applicable to U.S . citizens , but the taxable estate includes only property situated within the United States that is owned by the decedent at death (and certain property transferred during life subject to reserved interests or powers). This estate generally includes the value at death of all real and personal tangible property situated in the United States and certain intangible property , such as stock of a domestic corporation , considered to be situated in the United States .200 The estate of a nonresident alien is allowed a unified credit of $13,000 201 and under treaty may instead be allowed a pro rata portion of the generally applicable unified credit. Nonresident alien individuals are subject to gift tax with respect to certain transfers by gift of U.S .-situated property under the same tax rate schedule applicable to U.S . citizens . The 196 The unified credit amount is the tax computed on the applicable exclusion amount or $5.25 million for 2013 (indexed for inflation). The maximum estate tax rate is 40 percent. 197 Sec. 2503(b) . The annual gift tax exclusion amow1t for 2013 is $ 14,000. 198 An applicable exclusion amount applies for computing the gift tax on lifetime transfers ($5.25 million for 2013), and the maximum gift tax rate is 40 percent. 199 Secs. 2208 (estate tax) and 250l(b) (gift tax). 200 For these purposes the United States means the 50 States and the District of Columbia. 20 1 Sec. 2102(b ). This credit essentially acts to shelter the fust $60,000 of the taxable estate from Federal estate tax. 52 UST 000479 TREAS-17-0313-C-000069 tax applies only where the value of the transfer exceeds the annual exclusion amount. 202 Such property includes real estate and tangible property located within the United States. Nonresident aliens generally are not subject to U.S. gift tax on the transfer of intangibles, such as stock or securities, regardless of where such property is situated. A U.S. citizen residing in a possession is treated as a nonresident alien for estate and gift tax purposes if the individual's U.S. citizenship was acquired solely by reason of birth or residence within the possession. 203 Estates of decedents who are treated as nonresident aliens for purposes of this rule are allowed a credit against the estate tax equal to the greater of$13,000 or that proportion of $46,800 which the value the decedent's gross estate situated in the United States bears to the value of the entire gross estate wherever situated .204 6. Payroll Taxes Employees and employers in the United States are subject to payroll taxes for the Federal Insurance Contributions Act ("FICA ") that fund Social Security and certain Medicare benefits , Federal unemployment insurance payroll tax ("FUTA "), and the withholding tax for Federal income tax .205 FICA imposes tax on employers based on the amount of wages paid to an employee during the year. The tax imposed is composed of two parts: (1) the old age, survivors , and disability insurance ("OASDI ") tax as a percentage of covered wages ; and (2) the Medicare hospital insurance ("HI") tax amount , also a percentage of covered wages . In addition to the tax on employers , each employee is subject to FICA taxes equal to the amount of tax imposed on the employer. The employee level tax generally must be withheld and remitted to the Federal government by the employer. Certain categories of services and employment are often exempt from FICA , including foreign agricultural workers with appropriate visas . Similar FICA payroll tax obligations generally apply to persons in any of the U.S . posse ssions .206 In contrast, employees and employers in the possessions are generally not subject to the withholding at source for Federal income tax , although they are subject to withholding for local taxes. 207 These payroll obligations of the employers are generally applicable to Federal agencies with personnel in the possession . Finally , only Puerto Rico and 202 The annual exclusion amount is $ 14,000 for 2013 (indexed for inflation). 203 Sec. 2209 (estate tax) and 250l(c) (gift tax). 204 Sec. 2102(b)(2). 205 Secs. 312l(a) and 3402(a). 206 Internal Revenue Service, Federa l Tax Guide for Employers in the US. Virgin Islands, Guam, American Samoa, and the Commonwealt h of the Nor thern Mariana Islands (Publication 80 Circular SS), 2012. Under section 340l(a)(8), most wages paid to U.S. persons for services performed in one of the possessions are excluded if the payments are subject to withholding by the possession , or, in the case of Puerto Rico, the payee is a bona fide resident of the possession for the full year. 207 53 UST 000480 TREAS-17-0313-C-000070 the U.S. Virgin Islands are within the scope of the FUTA obligations. 208 Wages paid to persons employed in Puerto Rico or the U.S. Virgin Islands are subject to FUTA on wages for each calendar year paid by a covered employer to each employee. Federal unemployment insurance payroll taxes are used to fund programs maintained by the local jurisdictions for the benefit of unemployed workers. Employers in such jurisdictions with programs approved by the Federal government may qualify for a credit of 5 .4 percentage points against the 6.0 percent tax rate, making the minimum, net Federal unemployment tax rate 0.6 percent. 209 7. Excise Taxes U.S . excise taxes generally do not apply within the U.S. possessions. However , U.S. excise taxes equal to the taxes on domestically produced articles are imposed on articles of manufacture brought into the United States from Puerto Rico and the Virgin Islands and withdrawn for consumption or sale .210 These taxes are generally covered over to the respective treasuries . Articles imported from the United States into Puerto Rico , the Virgin Islands , Guam , and American Samoa are generally exempt from U.S. excise tax ; however articles imported from the United States into Puerto Rico and the Virgin Islands are subject to a local excise tax equal to the tax imposed under the revenue laws of the United States .211 Provisions related to the allowance of drawback 212 on excise tax on articles exported from the Unites States are extended to like articles when shipped from the United States to Puerto Rico , the Virgin Islands , Guam , or American Samoa. 213 8. Tax Incentives The Code contains other provisions that provide incentives for certain activities . Some of the provisions expand the incentives provided for State and local jurisdictions to the U.S. possessions while others are specifically targeted at certain activities within a specific U.S . posses sion . Examples of State and local incentives that apply to U.S . possessions include the 20 8 Section 3306(j) provides that for purposes of the FUTA tax, the term State includes both Puerto Rico and the Virgin Islands . 209 While the gross FUTA tax rate was 6.2 percent (until July 2011) , the net rate was 0.8 percent. The credit is not available to employers who are delinquent in repaying a Federal loan. 210 Sec. 7652. 2 11 Sec. 7653. 2 12 A drawback is a refund of certain duties, taxes and fees paid by the importer of record and granted to a drawback claimant upon the exportation , or destruction of eligible articles upon which the duties, taxes and fees have been paid. The purpose of drawback is to place U.S . exporters on equal footing with foreign competitors by refunding most of the duties, taxes and fees paid on imports used in domestic manufacturing intended for export. 2 13 Sec. 7653(c). 54 UST 000481 TREAS-17-0313-C-000071 exclusion of interest on State and local bonds, 214 the credit for research and experimentation, 215 and the low-income housing credit. 216 Other incentives are described in the discussion of the individual possessions below. 9. Tax Treaties In addition to the U.S. and foreign statutory rules for the taxation of foreign income of U.S. persons and U.S. income of foreign persons, bilateral income tax treaties limit the amount of income tax that may be imposed by one treaty partner on residents of the other treaty partner. For example, treaties often reduce or eliminate withholding taxes imposed by a treaty country on certain types of income , such as dividends , interest , and royalties paid to residents of the other treaty country . Treaties also include provisions governing the creditability of taxes imposed by the treaty country in which income is earned in computing the amount of tax owed to the other country by its residents with respect to that income. There are no bilateral tax treaties between any of the possessions and any foreign country . In addition , U.S . treaties typically do not include the possessions in the definition of United States for treaty purposes . However , for purposes of identifying the scope of exchange of information agreements, the possessions are included. 217 Treaties further provide procedures under which inconsistent positions taken by the treaty countries on a single item of income or deduction may be mutually resolved by the two countries. To the extent that inconsistent positions are taken by the Internal Revenue Service and the taxing authority of one of the possessions , relief from double taxation may be available by negotiation between the two taxing agencies . Each of the U.S . possessions has an agreement (variously styled as coordination, exchange of information , or implementation agreements) that permits entry into a memorandum of understanding to resolve such conflicts. The process for seeking such relief is similar to that available under competent authority procedures .218 214 Sec. 103. Section I 03(c)(2) defines State to include any possession of the United States. Sec. 41. The credit is generally not available to foreign research; however , section 4l(d)(4)(F) defines foreign research to be research conducted outside the United States, the Commonwealth of Puerto Rico, or any possession of the United States. 215 2 16 Sec. 42. Section 42(h)(8)(B) defmes State to include a possession of the United States. 217 See, e.g., Agreem ent between the Government of/he United State a/America and the Government of the Republic of Panama.for Tax Cooperation and the Exchange of Information Relating to Taxes Tax Information Agre ement between United States and Panama , entered inlo force April 18, 2011. 2 18 See section 1.02 of Rev . Proc. 2006 -23, 2007 -1 C.B. 900. 55 UST 000482 TREAS-17-0313-C-000072 IV. PRIOR INTERNATIONAL REFORM EFFORTS A. The Tax Reform Act of 2014 ("TRA14") 1. Ninety-five percent dividend received deduction In general TRA14 establishes a participation exemption system for foreign income. 219 This exemption is effectuated by means of a 95-percent deduction for the foreign-source portion of dividends received from certain foreign corporations ("specified 10-percent owned foreign corporations") by domestic corporations that are 10-percent U.S. shareholders of those foreign corporations . As under the exemption systems of some other countries , five percent of an otherwise deductible dividend from a foreign corporation remains taxable . This taxation is intended to be a substitute for the disallowance of deductions for expenses incurred to generate exempt foreign income. A specified l 0-percent owned foreign corporation is any foreign corporation if any domestic corporation owns directly , or indirectly through a chain of ownership described under section 958(a) , 10 percent or more of the voting stock of that foreign corporation. Foreign-source portion of a dividend The 95-percent exemption is available only for foreign income , not for US-source income . Some specified IO-percent owned foreign corporations , however , may have U .S.-source income . Consequently, the 95-percent dividends-received deduction is available only for the foreign-source portion of a dividend . The foreign-source portion of a dividend from a specified 10-percent owned foreign corporation for which the 95-percent deduction is allowed represents the portion of the dividend that relates to the foreign corporation ' s post-1986 undistributed foreign eamings. 220 The foreignsource portion of any dividend is, therefore , the amount that bears the same ratio to the dividend as the foreign corporation's post-1986 undistributed foreign earnings bears to the corporation's total post-1986 undistributed earnings. This rule complements the present law section 245 rule allowing a deduction for the U.S.-source portion of a dividend received from a qualified 10percent owned foreign corporation . The U.S .-source portion of any dividend for which a deduction is allowed under section 245 is the amount that bears the same ratio to the dividend as the dividend -paying corporation ' s post-1986 undistributed U.S. earnings bears to the corporation's total post-1986 undistributed earnings . For this purpose , a corporation's post-1986 undistributed U.S . earnings are, in general , undistributed earnings attributable to (a) the 2 19 The term "participation exemption ," commonly used in describing similar systems in other countries , refers to the exemption granted to a domestic corporation for earnings of a foreign corporation by virtue of the present corporation's participation in the ownership of the subsidiary. 220 Undistributed foreign earnings include both foreign income on which a U.S. taxpayer may be taxed under subpart F and other foreign income on which no U.S. taxpayer is taxed before receipt of the dividend. 56 UST 000483 TREAS-17-0313-C-000073 corporation's income that is effectively connected with the conduct of a trade or business within the United States, or (b) any dividend received (directly or through a wholly owned foreign corporation) from an SO-percent-owned (by vote or value) domestic corporation. 221 Under the proposal, a CFC's post-1986 undistributed foreign earnings are, in general terms, the portion of post-1986 undistributed earnings that is not attributable to post-1986 undistributed U.S. earnings . The term post-1986 undistributed earnings means the amount of the earnings and profits of the specified IO-percent owned foreign corporation (computed in accordance with sections 964(a) and 986) accumulated in taxable years beginning after December 31, 1986 as of the close of the taxable year of the foreign corporation in which the dividend is distributed and without diminution by reason of dividends distributed during that year. Rules similar to the rules just described apply when a dividend is paid out of earnings of a specified IO-percent owned foreign corporation accumulated in taxable years beginning before January 1, 1987. As a consequence , the participation exemption system is available for both post-1986 and pre-1987 foreign earnings . An ordering rule provides that dividends are treated as paid out of post-1986 undistributed earnings to the extent of those earnings. As a result of the coordination with the present law section 245 dividends received deduction for dividends received from certain IO-percent owned foreign corporations , the proposal provides the 95-percent dividends-received deduction for a dividend received by a United States shareholder from a specified IO-percent owned foreign corporation only to the extent the dividend is not deductible under present law section 245. More broadly , present law section 245 is intended to prevent a second imposition of U.S. corporate tax when a domestic corporation receives a dividend from a foreign corporation attributable to the foreign corporation's U.S .-source effectively connected income , whereas the proposal is intended to provide an exemption from U.S . corporate tax when a domestic corporation receives a dividend from an eligible foreign corporation attributable to the corporation 's foreign-source income . Foreign tax credit disallowance; foreign tax credit limitation No foreign tax credit is allowed for any taxes (including withholding taxes) paid or accrued with respect to any dividend for which the 95-percent dividends-received deduction is allowed . A deduction for any foreign tax paid or accrued in respect of a deductible dividend also is denied . This foreign tax credit disallowance and deduction denial apply to foreign tax with respect to the entire amount of any deductible dividend even though a deduction is available for only 95 percent of the dividend . By contrast , a foreign tax credit is allowed for foreign tax imposed on income included under subpart F and for foreign tax paid directly by a domestic corporation on foreign-source income (on, for example , income from foreign sales) . Likewise , a foreign tax credit generally is available for foreign withholding tax imposed on payments such as royalties and interest. A foreign tax credit is not, however , available for foreign withholding tax 22 1 Section 3650 of the discussion draft, described previously , modifies the definition of a domestic corporation for purposes of the definition ofpost-1986 undistributed U.S. earnings so that dividends derived from RICs and REITs are ineligible for the section 245 dividends received deduction. 57 UST 000484 TREAS-17-0313-C-000074 imposed on dividends for which the 95-percent deduction is permitted. The proposal's foreign tax credit rules are described in more detail below. For purposes of computing its section 904(a) foreign tax credit limitation, a domestic corporation that is a United States shareholder of a specified 10-percent owned foreign corporation must compute its foreign-source taxable income by disregarding the foreign-source portion of any dividend received from that foreign corporation and any deductions properly allocable to that foreign-source portion . Six-month holding period requirement A domestic corporation is allowed the 95-percent deduction for a dividend it receives on stock of a specified 10-percent owned foreign corporation only if the domestic corporation satisfies a six-month holding period requirement in respect of the stock on which the dividend is paid. No deduction is allowed in respect of any dividend on any share of stock that is held by the domestic corporation for 180 days or less during the 361-day period beginning on the date that is 180 days before the date on which the share becomes ex-dividend with respect to the dividend. A deduction also is not permitted in respect of any dividend on any share of stock to the extent the domestic corporation that owns the share is under an obligation (under a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. These holding period requirements parallel the section 246( c)(1) requirements for the dividends-received deductions available under present law sections 243, 244 , and 245. The proposal also incorporates some, but not all, of the other present law section 246( c) holdingperiod-related rules (including, for example, the section 246( c)(4) rule under which holding periods are reduced in a manner provided in Treasury regulations for any period during which the taxpayer has diminished its risk of loss in respect of stock on which a dividend is paid). The 180-out-of-361-days test described above is satisfied only if the specified IO-percent owned foreign corporation is a specified 10-percent owned foreign corporation at all times during the period and the domestic corporation is a United States shareholder of the foreign corporation at all times during the period. Foreign branches TRA14 does not change the general rules related to the taxation of foreign branches of domestic corporations. However , TRA 14 does provide a new income recognition rule when a domestic corporation transfers a foreign branch to its specified 10-percent owned foreign corporation and coordinates those new rules with the present law branch loss recapture rules. Conforming amendments and other changes The proposal includes a number of changes that coordinate the new dividends-received deduction rules with existing Code provisions or that conform existing Code provisions to the new dividends-received deduction rules. Certain changes are described below. 58 UST 000485 TREAS-17-0313-C-000075 Like the present law dividends-received deduction rules of sections 243, 244, and 245, the proposal's 95-percent dividends-received deduction is not available for any dividend from a corporation that is exempt from taxation under section 501 or 521. In conformity with the present law dividends-received deduction rules, deductible dividends under the proposal and the stock on which deductible dividends are paid are treated as 95-percent tax-exempt income and 95-percent tax-exempt assets , respectively , for purposes of allocating and apportioning deductible expenses . Present law section 1059 generally requires that a corporation that receives an extraordinary dividend in respect of stock that the corporation has not held for more than two years before the dividend announcement date must reduce its basis in the stock by the amount of the dividends-received deduction available under section 243 , 244, or 245. The proposal extends this rule to stock on which a dividend eligible for the 95-percent dividends-received deduction is paid. 2. Foreign base company intangible income In general TRA14 addresses erosion of the U.S. tax base through shifting intangible income by creating a new category of subpart F income for intangible income derived by CFCs and providing a phased deduction for a domestic corporation for income from its foreign exploitation of intangibles. As a result , the proposal both increases the U.S. taxation of income derived from intangibles owned or licensed by a CFC and decreases the U.S. tax on the income of a U.S. corporation from its use of intangibles in foreign markets. When fully phased in, the deduction from the gross income of the domestic corporation results in a reduced tax rate of 15 percent for income from the foreign exploitation of intangible property. Foreign base company intangible income The proposal adds a new category of subpart F income , foreign base company intangible income. Foreign base company intangible income is the excess of the corporation ' s adjusted gross income over 10 percent of the corporation's qualified business asset investment. This amount is reduced by the applicable percentage of the corporation's foreign personal holding company income, foreign base company sales income, foreign base company services income, and foreign base company oil related income. The applicable percentage is the excess of the corporation's adjusted gross income over 10 percent of the corporation's qualified business asset investment divided by the total adjusted gross income of the corporation. Adjusted gross income means the gross income of the corporation reduced by commodities gross income. A corporation's qualified business asset investment is the aggregate of the corporation's adjusted bases in specified tangible property. A corporation's aggregate basis in specified tangible property is determined as of the close of any taxable year after any adjustments made for the taxable year. Specified tangible property is any tangible property unless the property is used in the production of commodities gross income. The specified tangible property is property used in a trade or business of the corporation, and is of a type with respect to which a deduction is allowable under section 168. The basis of any property is determined in accordance with the 59 UST 000486 TREAS-17-0313-C-000076 new rules provided elsewhere in the discussion draft , and without regard to any provisions enacted after the enactment of these rules. The proposal includes authority for the Secretary to issue guidance appropriate to prevent the avoidance of the application of the tangible property rules, including guidance providing for the treatment of property if the property is transferred or held temporarily or if avoiding the purpose of the proposal is a factor in the transfer or holding of property. To illustrate , suppose a CFC in the business of manufacturing and selling widgets has an aggregate basis in specified tangible property of $300, and adjusted gross income of $50 which includes $10 of foreign personal holding company income. The amount of the CFC's adjusted gross income in excess of 10 percent of its basis in property is $20 [$50 - $30]. The applicable percentage of 40 percent [$20 / $50] multiplied by the $10 of foreign personal holding company income is $4. The CFC's foreign base company intangible income is $16. Foreign base company intangible income is only subpart F income under the proposal to the extent that the income is subject to a foreign effective tax rate lower than the effective U.S. tax rate imposed after taking into account the deduction for foreign intangible income discussed below. Commodities gross income Commodities gross income is excluded from the computation of foreign base company intangible income. A CFC's commodities gross income is the gross income derived from the sale , disposition , production or extraction of any commodity. Additionally , specified tangible property does not include property used in the production of commodities gross income. If a property is used for the production of both commodities gross income and other income, the property is treated under the proposal as specified tangible property in the same proportion as the adjusted gross income produced with respect to the property bears to the total gross income produced with respect to the property. For purposes of the TRAl 4, a commodity is any commodity described in section 475(e)(2)(A). Deduction for foreign intangible income TRAl 4 allows a domestic corporation a deduction equal to the applicable percentage of the lesser of ( 1) the sum of the domestic corporation's foreign percentage of its net intangible income and the domestic corporation's share of a CFC's foreign base company intangible income multiplied by the CFC's foreign percentage , and (2) the taxable income of the domestic corporation. The applicable percentage phases in over time in accordance with the phase-in of the lower domestic corporate tax rate introduced in TRA14. The applicable percentage is 55 percent for 2015 , 52 percent for 2016 , 48 percent for 2017 , 44 percent for 2018 , and 40 percent for 2019 and thereafter. The domestic corporation's intangible income is computed in the same manner as the foreign base company intangible income of a CFC. Intangible income of the domestic 60 UST 000487 TREAS-17-0313-C-000077 corporation is equal to the adjusted gross income in excess of 10 percent of the corporation's qualified business asset investment. Adjusted gross income and qualified business asset investment are defined the same for the domestic corporation as they are for the CFC. Net intangible income is the excess of the intangible income over deductions property allocable to that income. Only foreign intangible income is eligible for the deduction. Foreign intangible income is computed by multiplying the foreign percentage by the domestic corporation's net intangible income and multiplying the CFC's foreign percentage by the domestic corporation's share of the CFC's foreign base company intangible income. A corporation ' s foreign percentage is the ratio of the foreign -derived adjusted gross income over the corporation' s total adjusted gross income for the taxable year. Under the proposal , foreign-derived adjusted gross income is gross income derived in connection with property which is sold for use , consumption , or disposition outside the United States , or services provided with respect to persons or property located outside the United States . The location of title passage is not determinative of where property is sold for use , consumption , or disposition . For example , the gross income from a foreign military sale where title is transferred first to the U.S. government for on-sale to a foreign purchaser for use , consumption , or disposition outside the United States qualifie s as foreign-derived adjusted gross income . Property is not treated as sold for use , consumption , or dispo sition outside the United States if the taxpayer knew , or had reason to know , that the property would ultimately be sold for use , consumption , or disposition in the United States . Property sold to a related party will not be treated as sold for use , consumption , or disposition outside the United States unless the property is ultimately sold by a related party for use , consumption , or disposition outside the United States , or if the property is resold to an unrelated party outside the United States and no related party knew or had reason to know that the property would ultimately be sold for use , consumption , or disposition in the United States. Similar rules apply with respect to service s. A related party for these purposes means any member of an affiliated group defined in section 1504( a) determined by using "more than 50 percent " in place of "at least 80 percent " and by including insurance companies and foreign corporations. Any person (other than a corporation) is treated as a member of the group if the person is controlled by members of the group , or controls any member of the group . Control for these purposes is determined under the rules of section 954(d)(3) . 3. Denial of deduction for interest expense of U.S. shareholders which are members of worldwide affiliated groups with excess domestic indebtedness TRA14 addresses base erosion that results from excessive and disproportionate borrowing in the United States by limiting the deductibility of net interest expense 222 of a U.S . corporation that is a U.S . shareholder with respect to any CFC if both the CFC and U.S. corporation are part of a worldwide affiliated group . A portion of otherwise deductible interest is disallowed if the U.S . group fails to meet both a relative leverage test and a percentage of Net interest for these purposes is defined in section l63(i)(6)(B) as the excess of interest paid or accrued over the interest includible in gross income for the taxable year. 222 61 UST 000488 TREAS-17-0313-C-000078 adjusted taxable income test. The lesser of the two amounts determined under these tests is the amount by which deductible interest is reduced. The proposal does not apply to a wholly domestic group. A worldwide affiliated group is one or more chains of corporations, connected through stock ownership with a common parent that would qualify as an affiliated group under section 1504, with two differences. First, the ownership threshold of section 1504(a)(2) is applied using 50 percent rather than 80 percent. Second, the restriction on inclusion of a foreign corporation under section l 504(b )(3) is disregarded for purposes of identifying the worldwide affiliated group. In the relative leverage test, all U.S. members of the worldwide affiliated group are treated as one member in order to determine whether the group has excess domestic indebtedness as a result of a debt-to-equity differential. Excess domestic indebtedness is the amount by which the total indebtedness of the U.S. members exceeds 110 percent of the debt those members would hold if their aggregate debt-to-equity ratio were proportionate to the ratio of debt-toequity in the worldwide group. The percentage of aggregate domestic debt represented by excess domestic indebtedness is the debt-to-equity differential by which net interest expense is multiplied to determine the amount of interest that would be disallowed under the relative leverage test. Intragroup debt and equity interests are disregarded for purposes of this computation. The percentage of adjusted taxable income test computes the amount by which the net interest expense of a U.S. shareholder exceeds 40 percent of adjusted taxable income. The proposal requires that the U.S. shareholder first compute adjusted taxable income as defined in section 163(j)( 6)(A), that is, taxable income increased by deductible losses, interest, depreciation and amortization, qualified production expenses and as prescribed under regulations. The net interest expense is the amount of interest paid or accrued in the taxable year in excess of the amount of interest includible in gross income for the same taxable year, as defined in section 163(j)(6)(B). Several changes to section 163(j) conform its operation to the new subsection. Interest disallowed under either this rule or under section 163(j) may be carried forward to subsequent taxable years. The amount by which corporate net interest expense may exceed the adjusted taxable income of the corporation (plus any excess limitation carryforward from years beginning before January 1, 2015) is reduced to 40 percent from 50 percent. Excess limitation for years beginning after January 1, 2015 is not available to be carried forward. Finally , the amount of interest disallowed under section 163(j) is reduced to the extent that a disallowance of deduction is required by this proposal. The Secretary is provided regulatory authority to provide anti-avoidance rules and the treatment of partnership indebtedness, allocation of partnership debt, interest, or distributive shares. 62 UST 000489 TREAS-17-0313-C-000079 4. Modifications to section 163(j), limitation on deduction for interest on certain indebtedness TRAI 4 modifies the limitation on the deduction for interest expense under section 163(j). Under TRA14 , excess interest expense is the excess of the corporation's net interest expense over 40 percent (changed from present law 50 percent) of the adjusted taxable income of the corporation. Additionally , under TRA14, excess limitation from taxable years beginning after December 31, 2014 may not be carried forward . 5. Deemed repatriation of deferred foreign income In general TRA 14 generally requires that , for the last taxable year beginning before the participation exemption takes effect , any 10-percent U.S . shareholder of a CFC or other 10-percent owned foreign corporation must include in income its pro rata share of the undistributed , nonpreviousl y-taxed post-1986 foreign earnings of the corporation . Up to 90 percent of the amount so included in income is deductible by the U.S . shareholder , depending on whether the deferred earnings are in cash or other assets. The deduction results in a reduced rate of tax with respect to income from the required inclusion of pre-effective date earnings . A corresponding portion of the credit for foreign taxes is disallowed , thus limiting the credit to the taxable portion of the included income . In determining the increase in a IO-percent U.S. shareholder's U.S . tax liability as a result of the mandatory inclusion , the Code is applied as in effect before enactment of the discussion draft. For example , the corporate tax rate remains unchanged and the separate foreign tax credit limitation rules of present law section 904 apply . The increased tax liability generally may be paid over an eight-year period . An amount equivalent to the taxes collected under this proposal is appropriated to the Highway Trust Fund . Subpart F The mechanism for the mandatory inclusion of pre-effective date foreign earnings is subpart F. TRA14 provides that in the last taxable year of a specified foreign corporation that ends before January 1, 2015 , which is that foreign corporation's last taxable year before the participation exemption system begins , the subpart F income of the foreign corporation is increased by the accumulated deferred foreign income of the corporation determined as of the close of that taxable year. In contrast to the participation exemption deduction available only to domestic corporations that are U.S. shareholders under subpart F, the transition rule applies to all U.S. shareholders 223 of a specified foreign corporation , which includes any foreign corporation in which a U.S. person owns ten percent of the voting stock. Consistent with the general operation of subpart F, each l 0-percent U.S . shareholder of a specified foreign corporation must include in 223 Sec. 95l(b) , which defines United States shareholder as any U.S. person that owns 10 percent or more of the voting classes of stock of a foreign corporation . 63 UST 000490 TREAS-17-0313-C-000080 income its pro rata share of the foreign corporation's subpart F income attributable to its accumulated deferred foreign income. 224 A 10-percent U.S. shareholder of a specified foreign corporation is allowed a deduction in an amount determined by reference to the portion of deferred earnings and profits that are held in cash or liquid assets. The noncash portion is eligible for a deduction of 90 percent; the U.S. shareholder aggregate foreign cash position is eligible for a deduction of 75 percent. Accumulated def erred foreign income A specified foreign corporation ' s accumulated deferred foreign income that must be taken into account as subpart F income is the portion of the foreign corporation's post-1986 undistributed earnings that is not attributable to (1) income that is effectively connected with the conduct of a trade or business in the United States and subject to U.S . income tax , (2) subpart F income (determined without regard to the mandatory inclusion mle) of a CFC that is included in the gross income of a IO-percent U.S . shareholder of the CFC and with respect to which the CFC has not made distributions that are excludable from gross income under section 959 , (3) or, for PFICs , an amount that would be treated as an excess distribution or attributable to an unreversed inclusion. Undistributed earnings are the earnings and profits of the foreign corporation (computed in accordance with sections 964(a) and 986) as of the close of the corporation ' s last taxable year that ends before January 1, 2015. The income inclusion required of a U .S. shareholder under this transition rule is reduced by the portion of aggregate foreign earnings and profits deficit allocated to that person by reason of that person ' s interest in one or more E&P deficit foreign corporations . An E&P deficit foreign corporation is defined as any specified foreign corporation owned by the U .S. shareholder as of February 26 , 2014 and which also has a deficit in post-1986 earnings and profits as of that date . The U.S . shareholder aggregates its pro rata share in the foreign E&P deficits of each such company and allocates it among the deferred foreign income corporations in which the shareholder is a U.S . shareholder. The aggregate foreign E & P deficit allocable to a specified foreign corporation is in same ratio as the U.S . shareholder's pro rata share of post1986 deferred income in that corporation bears to the U .S. shareholder ' s pro rata share of accumulated post-1986 deferred foreign income from all deferred income companies of such shareholder. To illustrate , assume that a U .S. corporation is a U.S. shareholder with respect to each of four specified foreign corporations , two of which are E&P deficit foreign corporations , and that the foreign companies have the following accumulated post-1986 deferred foreign income or foreign E&P deficits as of Febmary 26 , 2014 : Table 8.-Example 224 For purposes of taking into account its subpart F income under this rule, a noncontrolled 10/50 corporation is treated as a CFC. 64 UST 000491 TREAS-17-0313-C-000081 Specified Foreign Corp. A B C D Foreign profit/deficit (1,000) (200) 2,000 1,000 Percentage Owned 60 10 70 100 Pro Rata Share (600) (20) 1,400 1,000 The aggregate foreign E & P deficit of the U. S. shareholder is (620), and the aggregate share of accumulated post-1986 deferred foreign income is 2400. Thus, the portion allocable to Corporation C is $362 , that is, $620 x 1400/2400 . The remainder of the aggregate foreign E&P deficit is allocable to Corporation D . Specific regulatory authority is granted to permit reductions of accumulated deferred earnings and profits where appropriate to effect the intent of the drafters that U.S . persons not incur tax with respect to earnings and profits of a controlled foreign corporation allocable to stock owned by persons other than United States shareholders as deferred foreign income . Foreign tax credit Like present law section 965 , the proposal disallows a foreign tax credit for the portion of foreign taxes paid with respect to the pre-effective-date undistributed CFC earnings inclusion . The proposal also denies a deduction for any foreign tax for which a credit is disallowed . A 10percent U.S . shareholder ' s income is not increased under section 78 by the amount of tax for which a foreign tax credit is not allowed . The required inclusion of deferred foreign income under this provision is disregarded for purposes of detennining the amount of income from foreign sources that a U.S . shareholder has for purposes of the recapture rules applicable to overall foreign losses. Installment payments A IO-percent U.S . shareholder may elect to pay the net tax liability resulting from the mandatory inclusion of pre-effective-date undistributed CFC earnings in eight installments , in the following amounts : installments one through five in an amount equal to eight percent of the net tax liability ; a sixth installment of 15 percent of the net tax liability ; the seventh is 20 percent and the eighth , 25 percent. The net tax liability that may be paid in installments is the excess of the IO-percent U.S . shareholder ' s net income tax for the taxable year in which the pre-effectivedate undistributed CFC earnings are included in income over the taxpayer's net income tax for that year determined without regard to the inclusion . Net income tax means net income tax as defined for purposes of the general business credit , but reduced by the amount of that credit. An election to pay tax in installments must be made by the due date for the tax return for the taxable year in which the pre-effective-date undistributed CFC earnings are included in income. The Treasury Secretary has authority to prescribe the mam1er of making the election. The first installment must be paid on the due date (determined without regard to extensions) for the tax return for the taxable year of the income inclusion. Succeeding installments must be paid annually no later than the due dates (without extensions) for the income tax return of each 65 UST 000492 TREAS-17-0313-C-000082 succeeding year. If a deficiency is later determined with respect to the net tax liability, the additional tax due may be prorated among all installment payments in most circumstances. The portions of the deficiency prorated to an installment for which the due date is past must be paid upon notice and demand. The portion prorated to any remaining installment is payable with the timely payment of that installment payment , unless the deficiency is attributable to negligence, intentional disregard of rules or regulations , or fraud with intent to evade tax, in which case the entire deficiency is payable upon notice and demand. The timely payment of an installment does not incur interest. If a deficiency is determined that is attributable to an understatement of the net tax liability due under this propo sal, the deficiency is payable with underpayment interest for the period beginning on the date on which the net tax liability would have been due, without regard to an election to pay in installments , and ending with the payment of the deficiency . Furthermore , any amount of deficiency prorated to a remaining installment also bears interest on the deficiency , but not on the original instalhnent amount. TRA14 also includes an acceleration rule. If (l) there is a failure to pay timely any required installment , (2) there is a liquidation or sale of substantially all of the 10-percent U .S. shareholder ' s assets (including in a bankruptcy case) , (3) the IO-percent U.S . shareholder ceases busine ss, or (4) another similar circumstance arises, the unpaid portion of all remaining installments is due on the date of the event (or, in a title 11 or similar case, the day before the petition is filed) . Special rule for S corporations A special rule permits deferral of the transition net tax liability for shareholders of a 10percent U.S . shareholder that is a flow-through entity known as an S corporation .225 Any shareholder of the S corporation may elect to defer his portion of the net tax liability at transition to the participation exemption system until the shareholder 's taxable year in which a triggering event occurs . If an election to defer tax is made , the S corporation and the electing shareholder are jointly and severally liable for any net tax liability and related interest or penalties . The election to defer the tax is due not later than the due date for the return of the S corporation for its last taxable year that begins before January 1, 2015. Three types of events may trigger an end to deferral of the net tax liability . The first type of triggering event is a change in the status of the corporation as an S corporation . The second category includes liquid ation, sale of substantially all corporate assets, termination of the company or end of business , or similar event, including reorganization in bankruptcy . The third type of triggering event is a transfer of shares of stock in the S corporation by the electing taxpayer , whether by sale , death or otherwise , unless the transferee of the stock agrees with the Secretary to be liable for net tax liability in the same manner as the transferor. Partial transfers 225 Section 1361 defines an S corporation as a domestic small business corporation that has an election in effect for status as an S corpo ration, with fewer than 100 shareholders , none of whom are nonresident aliens, and all of whom are individuals , estates, trusts or certain exempt organizations . 66 UST 000493 TREAS-17-0313-C-000083 trigger the end of deferral only with respect to the portion of tax properly allocable to the portion of stock sold. If a shareholder of an S corporation has elected deferral under the special rule for S corporation shareholders and a triggering event occurs, that shareholder may be eligible to elect to pay the net tax liability in installments, subject to rules similar to those generally applicable absent deferral. Whether or not a shareholder may elect to pay in installments depends upon the type of event that triggered the end of deferral. If the triggering event is liquidation, sale of substantially all corporate assets, termination of the company or end of business, or similar event, installment payments are not available. Instead, the entire net tax liability is due upon notice and demand . The installment election is due with the timely return for the year in which the triggering event occurs . The first installment payment is required by the due date of the same return, determined without regard to extensions of time to file . If an election to defer payment of the net tax liability is in effect for a shareholder , the period within which the IRS may collect such liability does not begin before the date of an event that triggers the end of the deferral. Highway Trust Fund TRA14 requires that income tax payments relating to the net tax liability for deemed repatriation of pre-effective date foreign earnings will be transferred to the Highway Trust Fund . The Highway Trust Fund, established in 1956, is divided into two accounts , a Highway Account and a Mass Transit Account , each of which is the funding source for specific programs. 226 The Highway Trust Fund is currently funded by taxes on motor fuels (gasoline , kerosene , diesel fuel , and certain alternative fuels) , a tax on heavy vehicle tires , a retail sales tax on certain trucks , trailers and tractors , and an annual use tax for heavy highway vehicles . Of the receipts received in the Treasury as a result of the deemed repatriation provision (and not otherwise appropriated) , an amount equivalent to twenty percent will be transferred to the Mass Transit Account , the balance transferred to the Highway Account. 226 Sec. 9503(e)(l). 67 UST 000494 TREAS-17-0313-C-000084 B. President's FY 2016 Budget Proposal 1. Impose a 19-Percent Minimum Tax on Foreign Income Minimum tax The Administration proposes to significantly change the taxation of foreign earnings of domestic C corporations and their CFCs by imposing a minimum tax on earnings from a CFC, branch , or from the performance of services abroad. Under the proposal, the foreign earnings of a CFC or branch or from the performance of services are subject to current U.S. taxation at a rate (not below zero) of 19 percent less 85 percent of the per-country foreign effective tax rate (the "residual minimum tax rate") . Under the proposal, the minimum tax for a particular country is computed by multiplying the applicable residual minimum tax rate by the minimum tax base for that country. A U.S. corporation's tentative minimum tax base with respect to a country for a taxable year is the total amount of foreign earnings for the taxable year assigned to that country for purposes of determining the effective tax rate for the country. Under the proposal , the minimum tax is computed country-by-country on the tax base assigned to the country. The tax base is the tentative minimum tax base reduced by an allowance for corporate equity. The ACE allowance provides a risk-free return on equity invested in active assets. Under the proposal active assets generally include assets that do not generate foreign personal holding company income (determined without regard to both the look-through rule of section 954(c)(6) and any election to disregard an entity as separate from its owner). Thus, the ACE allowance is intended to exempt from the minimum tax a return on the actual activities undertaken in a foreign country. The foreign effective tax rate under the proposal is computed on an aggregate basis determined over a 60-month period ending on the date the domestic corporation's current taxable year ends, or in the case of a CFC, that ends on the date on which the CFC's current taxable year ends. For purposes of computing the foreign effective tax rate , the foreign taxes taken into account are those taxes that, absent the proposal, would be eligible to be claimed as a foreign tax credit during the 60-month period. The foreign earnings taken into account for the 60-month period are determined using U.S. tax principles , but would include disregarded payments deductible elsewhere , such as disregarded intra-CFC interest or royalties , and would exclude dividends from related parties. These rules would be further subject to rules applicable to hybrid arrangements discussed below. The Administration's proposal includes rules for assigning foreign earnings and taxes to a foreign country. The basic rule assigns earnings and taxes to the country based on the tax residence detennined under foreign law. The Administration provides some examples. In the first example, a CFC is incorporated in Country X, but is a tax resident of Country Y under both the Country X and Country Y place of management tests for tax residence. In this example, the CFC's earnings and associated foreign taxes are assigned to Country Y for purposes of computing the foreign effective tax rate and the minimum tax. The Administration's second example follows the first, but instead of a place of management test, Country Y uses the place of 68 UST 000495 TREAS-17-0313-C-000085 incorporation test. Country X sees the CFC as a tax resident of Country Y, but Country Y sees the CFC as a tax resident of Country X . Here the CFC is not subject to foreign tax anywhere and the CFC's earnings are subject to the full 19 percent minimum tax under the proposal. The proposal provides that where the same earnings of a CFC are subject to tax in multiple countries, the earnings and all of the foreign taxes associated with those earnings are assigned to the highest-tax country. For example , if a CFC incorporated in high-tax Country Z has a pennanent establishment in low-tax Country Q and both Country Z and Country Q tax the earnings of the permanent establishment , the earnings and both the Country Z and Country Q taxes associated with those earnings are assigned to Country Z. In assigning earnings to countries under the proposal , both for purposes of determining the foreign effective tax rate as well as for determining the tentative minimum tax base for a particular year , rules are implemented to restrict the use of hybrid arrangements to shift earnings from a low-tax country to a high-tax country for U .S. tax purposes without triggering tax in the high-tax country . For example , no deduction is recognized for a payment from a low-tax country to a high-tax cow1try that is treated as a dividend eligible for a participation exemption in the high-tax country. In addition , the earnings assigned to a low-tax country are increased for a dividend payment from a high-tax country that is treated as deductible in the high-tax country . The Administration's minimum tax is imposed on current foreign earnings regardless of whether those earnings are repatriated to the United States . All foreign earnings could be repatriated without further U.S . tax . Thus , under the proposal , U.S . tax is imposed on a CFC's earnings either immediately ( either under present law subpart F rules or the minimum tax proposal) or not at all (if the income is subject to sufficient foreign tax or is exempt pursuant to the ACE allowance) . Additionally , rule s regarding CFC investments in United State s property and previou sly taxed earnings would be repealed for United States shareholders that are U .S. corporations . The proposal retains present law subpart F rules. Subpart F generally continues to require a United States shareholder of a CFC to include in its gross income on a current basis , at the full U.S . tax rate (with foreign tax credits available with respect to current year foreign taxes available as provided under present law) , the shareholder's share of the CFC's subpart F income , but the subpart F high-tax exception is made mandatory under the proposal for United States shareholders that are U.S. corporations . Under the proposal , no U.S . tax is imposed on the sale by a United States shareholder of stock of a CFC to the extent any gain reflect s the undistributed earnings of the CFC. These undistributed earnings would generally have already been subject to tax under the subpart F rules , the minimum tax , or the 14-percent one-time tax. 227 Additionally , the proposal taxes any stock gain attributable to unrealized gain in the CFC's assets in the same manner as would apply to the future earnings from the CFC's assets . Accordingly , stock gain is subject to the minimum See the discussion of the Administration's proposal to Impose a 14-PercentOne-TimeTax on Previously Untaxed Income described in Part ILG. ohhis document. 227 69 UST 000496 TREAS-17-0313-C-000086 tax or to tax at the full U.S. rate to the extent that the gain reflects unrealized appreciation in assets that would generate earnings subject to the minimum tax or subpart F, respectively. 2. Interest allocation The Administration's proposal modifies present-law rules for allocating interest expense incurred by the U.S. parent in support of its foreign operations. Additionally, the election to allocate worldwide interest is accelerated. As under present law , interest expense of the U.S. group would first be allocated between U.S.-source and foreign-source income. However, the amount of interest expense allocated to foreign-source income under these rules then would be further allocated between the three broad categories of foreign-source income on a pro rata basis , based on assets. Broadly , these foreign-source income categories include income that is subject to taxation at the full U.S. statutory tax rate , income that is entirely exempt from U.S . taxation , and income that is taxed at a variety of different tax rates under the minimum tax system. Interest allocated and apportioned to foreign-source income subject to the minimum tax would be deductible only at the applicable minimum tax rate , while no deduction would be permitted for interest expense allocated and apportioned to foreign-source income on which no U.S. tax is paid. The first category is for income that is taxed at the full U.S. statutory tax rate , and includes foreign-source royalty and interest income received directly by the U.S. group as well as foreign-source income that is generated through the subpart F mechanism , such as the various types of foreign base company income under present law . Under the proposal , this category of foreign-source income that is subject to tax at full U.S. rates would still be eligible for offset by foreign tax credits , though only with respect to current year foreign taxes. Accordingly , the interest allocated to this category would operate to compute the foreign tax credit limitation , but would remain fully deductible. The inclusion of branch income in the determination of the minimum tax base means that the deductibility of interest expense used to support branch operations is more limited than under present law, where those expenses are fully deductible as branch income is subject to the lower minimum tax under the proposal. The second category is for income that is not at all taxed , and includes foreign subsidiary earnings that were already subject to a local tax at a rate equal or exceeding 22.35 percent , thus yielding zero residual U.S. minimum tax. In addition , any foreign subsidiary earnings that are exempt from U .S. taxation based on the allowance for corporate equity would also be included in this category of foreign-source income that is not subject to further U.S . taxation . This would necessarily require that an interest allocation be made to the income exempt under the allowance for corporate equity on a per-country basis , as described below , in order to determine the interest expense disallowance with respect to earnings up to the allowance for corporate equity , which is exempt from the U.S . minimum tax , and therefore subject to interest expense disallowance. The third category of foreign-source income includes income that is earned by foreign subsidiaries and which is subject to the 19-percent minimum tax based on a residual tax rate on a per-country basis . Interest allocated to this category would only be deductible at the rate at which the residual minimum tax was applied. This would necessarily require that interest expense allocated to foreign earnings that are subject to the minimum tax be further allocated within this category to each country , in order to compute the interest expense disallowance on a 70 UST 000497 TREAS-17-0313-C-000087 per-country basis. Moreover, once the per-country interest allocation is determined, the interest must be further allocated within each country to earnings up to the allowance for corporate equity, which, as mentioned, results in complete disallowance of interest expense, and to the remainder of the earnings within the country, which results in partial expense disallowance. 3. Impose a 14-Percent One-Time Tax on Previously Untaxed Foreign Income The Administration's proposal imposes a one-time tax of 14 percent on earnings and profits of CFCs accumulated before January 1, 2016. The proposal allows a credit for the foreign taxes associated with the deferred earnings, multiplied by the ratio of the one-time tax rate (14 percent) to the maximum U.S. corporate tax rate in 2015 (35 percent) , or 40 percent. The one-time tax is payable ratably over five years. The proposal is contingent upon enactment of the related proposal for a minimum tax . Revenues from the proposal are intended to pay for a surface transportation reauthorization proposal and any shortfalls between revenue and surface transportation spending under present law for fiscal year 2016 .228 The Administration presents the 14 percent tax on deferred income as a transition rule to be enacted together with its proposed 19-percent minimum tax , rather than a proposal to be considered in the absence of comprehensive reform of U.S . rules on international taxation . 228 Budget of the US. Government, FY2016 (ISBN No. 978-0-16-092678-5 at pp 25-28; available at http://www.whitehouse .gov/sites/default/files /omb/budget /fy20l6 /assets/budget.pdf) includes a six year, $478 billion surface transportation reauthorization proposal. That proposal and its associated outlays are outside the scope of an analysis of tax policy and will not be discussed herein. 71 UST 000498 TREAS-17-0313-C-000088 V. BIPARTISAN FRAMEWORK FOR INTERNATIONAL TAX REFORM A. Ending the lock-out effect One crucial rationale for enacting reforms to the international tax system utilized by the United States is to end the "lock-out effect." As a result of our worldwide system of international taxation-combined with the high U.S. corporate tax rate and the option to defer those earnings overseas- U.S. multinational companies have a powerful incentive to make foreign, rather than domestic investments. The ability to defer payment ofresidual U.S. tax liability on the returns to the foreign investments may make those foreign investments more attractive on an after-tax basis, even if they yield the same pre-tax return as a domestic investment. Publicly traded firms have the additional incentive to declare in filings to the S.E.C. that they are reinvesting foreign earnings overseas rather than repatriate them to the United States. To eliminate the lock-out effect, a number of bipartisan panels, economists and experts in international taxation have recommended adoption of an international tax system that greatly diminishes the tax consequences for repatriation of overseas earnings, such as a dividend exemption or hybrid territorial-type system, paired with appropriate base erosion measures. Varying versions of this reform have been included in proposals made by the President's FY 2016 budget, TRA14, the President's Advisory Panel on Federal Tax Reform (2005), the cochairs of the Simpson-Bowles Commission (the National Commission on Fiscal Responsibility and Reform, 2010), the President's Export Council (2010), the President's Council of Advisors on Science and Technology (2011), and many members of the President's Council on Jobs and Competitiveness. As mentioned above, 28 of the 34 current OECD member countries, as well as every G-7 country except the United States, have some type of hybrid territorial system of taxation that exempts from taxation most active earnings that are repatriated in the form of a dividend from foreign subsidiaries. As shown in the chart below, of the 28 OECD countries with territorial tax systems, 20 countries exempt 100 percent of foreign subsidiary dividends, one country (Norway) exempts 97 percent of foreign subsidiary dividends, and seven countries exempt 95 percent of foreign subsidiary dividends. While most OECD nations do not require their multinationals to allocate costs that are deemed to relate to foreign earnings, the countries that allow less than a 100 percent dividend exemption generally cite the three or five percent inclusion as a proxy for expense allocation. This system trades the complexity of allocation for the complexity of the anti-abuse rules. In order to move the U.S. international tax system in a direction that keeps the U.S. economy globally competitive with their foreign rivals, the co-chairs believe that it is imperative to adopt a dividend exemption regime in conjunction with robust and appropriate base erosion rules. 72 UST 000499 TREAS-17-0313-C-000089 Taxation of Foreign Subsidiary Income Territorial Tax systems OECD Member Countries Australia, Austria, Canada, Czech Republic, Denmark, Estonia, Finland, Greece, Hungary, Iceland, Luxembourg, Netherlands, New Zealand, Poland, Portugal, Slovak Republic, Spain, Sweden , Turkey , United Kingdom Norway Belgium , France , Germany , Italy , Japan , Slovenia , Switzerland Dividend Exemption Percenta2e 100% 97% 95% Two areas present unique challenges under a dividend exemption system : the tax treatment of branches and S corporations. While the co-chairs are not yet issuing any formal recommendation regarding the treatment of branches, Congress faces two broad options : either I) treat branches similar to controlled foreign corporations (CFCs) by allowing branch earnings to qualify for exemption treatment , or 2) subject branch earnings to immediate U.S. tax as under current law. If branches are to be treated as CFCs and have their earnings qualify for the exemption , consideration should be given to enactment of an appropriate one-time transition tax for the branches electing to be eligible for the dividend exemption. Under such a proposed transition tax, all of the assets used in the foreign branch's active conduct of a trade or business , including intangible assets , would be treated as if such assets had been transferred to a CFC in a taxable transaction under Code section 367 and taxed at rates comparable to any accompanying deemed repatriation proposal. The working group has received comments regarding the tax treatment of S corporations. While the co-chairs are not yet issuing any formal recommendation , we believe that careful consideration of the appropriate tax treatment ofS corporations is warranted . TRA14 made S corporation earnings ineligible for that proposal's dividend exemption system . Other options might take a different approach , such as deferring tax on S corporation foreign earnings until distributed to shareholders and extending the exemption system (and any transition tax) to S corporations . B. Patent Box Regime Throughout the working group process , the co-chairs consistently heard from a wide range of U .S. companies regarding their concerns about the impact of the OECD Base Erosion and Profits Shifting (BEPS) project and unilateral actions already being undertaken in certain countries (discussed above) , with a particular emphasis on the impact ofreforms to existing innovation box regimes . 73 UST 000500 TREAS-17-0313-C-000090 For background, an innovation box provides a substantially discounted tax rate on certain forms of intangible business income. These discounted rates have the potential to be effective in encouraging the movement of ownership of intellectual property (IP) offshore. Concurrent with the increase in these discounted rate regimes around the globe, the United States will continue to experience an increase in the migration of intellectual property out of the country. The form of property covered as well as the discount provided varies country to country. Below is a summary of existing innovation box regimes. Country Patent Box Rate in 2015 Fully Phased-In Patent Box Rate Belgium Cypress Standar d Corp. Rate in 2015 33.99% 12.5% 6.8% 2.5% 6.8% 2.5% France 38.0% 15.0% 15.0% Hungary 19.0% 9.5% 9.5% Ireland (proposed) Italy 12.5% n.a. 5.0% to 6.25% 27.5% 19.25% 13.75% Luxembour g 29.22% 5.84% 5.84% Malta 35.0% 0.0% 0.0% Netherland s 25 .0% 5.0% 5.0% Spain 28 .0% 11.2% 10.0% United Kingdom 20 .0% 12.0% 10.0% Qualified IP Qualifying Patents Patents , copy-marks , trademarks , designs and models Patent granted in France , UK or European Patent Office Patents , know-how , trademarks , business names , business secrets and copyrights Patents and property functionally equivalent to patents Patents and property functionally equivalent to patents Patents , trademarks , designs , domain names , models and software copyrights Patented IP and qualifying copyrights Worldwide patents and IP arising from R&D activities for which the taxpayer has obtained declaration from the Dutch government (trademarks , non-technical design rights and literary copyrights are not included) Patents , drawings or models , plans , secret formulas or procedures and rights on information related to industrial , commercial , or scientific experiments Patents granted by the United Kingdom or European Patent Office (excludes trademarks and 74 UST 000501 TREAS-17-0313-C-000091 registered designs) and certain associated IP As mentioned in the discussion of the BEPS project above, Action 5 in the BEPS Action Plan considers reforms to counter harmful tax practices. Of note, consensus regarding a "substantia l activity" requirement for preferential IP regimes (i.e., innovation boxes) has been reached, with details still being finalized and expected by July of this year. Specifically, under the proposed BEPS modified nexus approach, businesses will be permitted to participate in existing innovation box regimes only to the extent they can show that business activities -- such as research and development (R&D) -- which give rise to IP income, were substantially performed in the country where the discounted rate is being received . This approach is consistent with new rules already scheduled to go into effect on the U.K. patent box in 2021 . The co-chairs agree that the anticipated impact of the new nexus requirements on innovation box regimes will have a significant detrimental impact on the creation and maintenance of intellectual property in the United States , as well as on the associated domestic manufacturing sector, jobs , and revenue base . Excerpts from several working group submissions regarding the anticipated impact of inaction by U .S. policymakers to combat OECD efforts are below : o "The creation and commercialization of R&D in the United States is directly tied to highly-skilled jobs with good wages and benefits . An Innovation Box would level the playing field with our foreign counterparts that have already reduced rated and tax incentives , and encourage companies to invest in innovation , manufacturing and retain ownership of the resulting , valuable IP in the United States ." o National Association ofManujacturers 229 o " ...the United States needs to take specific steps to address developments overseas that , if left unanswered, will result in significant U.S. job and revenue loss. Other countries are aggressively seeking to attract IP creation and conn11ercialization through the introduction of broad IP regimes ....In addition , the OECD Base Erosion and Profits Shifting (BEPS) project will likely require a stronger "nexus" between economic activity and location of IP income in order to take advantage of these incentives. Because companies like ours are facing increased pressures from stakeholders to take advantage of these incentives , many will decide to locate IP ownership and a higher proportion ofIP development functions overseas to establish the requisite "nexus" to claim such benefits ....This will cause U .S. tax revenues to shrink as the U. S. tax base attributable to IP decreases and credits for foreign taxes paid on IP developed and owned overseas increase ." o Motion Picture Association of America 230 229 Supra note 6. 230 Motion Picture Association of America , Inc. Submission to the International Tax Reform Working Group 4 (2015). 75 UST 000502 TREAS-17-0313-C-000092 o "Once decisions are made to shift existing and/or locate new R&D jobs and investment overseas, they will be difficult to reverse . As a result, the United States could lose (or not gain) significant high-paying jobs as well as the revenue base associated with the IP. This loss would be felt on a long-term or permanent basis , making it more difficult in the future to achieve revenue neutral reform." o Silicon Valley Tax Directors Group 231 o " ... creating an American 'Innovation Box ' now would relieve significant market pressure on companies such as ours to retain and invest resources in the United States . Creating an American 'innovation box' now would be a good down payment on comprehensive tax reform ...." o McGraw Hill Financia/ 232 The co-chairs agree that we must take legislative action soon to combat the efforts of other countries to attract highly mobile U.S . corporate income through the implementation of our own innovation box regime that encourages the development and ownership ofJP in the United States , along with associated domestic manufacturing . They continue to work to determine appropriate eligibility criteria for covered IP, a nexus standard that incentivizes U.S . research , manufacturing , and production , as well as a mechanism for the domestication of currently offshore IP. C. Base Erosion The adoption of a territorial-type international tax system could, on its own and without appropriate safeguards , exacerbate the incentive for multinational companies to erode the US tax base to tax haven jurisdictions. This is because income could be shifted to haven jurisdictions and repatriated to the United States with minimal tax consequences . As mentioned above, both TRA14 and the President's FY 2016 Budget impose a minimum level of tax on a subset of earnings by CFCs . During the working group process , feedback was received from former Ways and Means Committee staff and Treasury Department officials on why they structured their proposals in the maimer that they did, and from a wide variety of stakeho lders on how those proposal s would affect different businesses and sectors of the economy. The co-chairs are continuing to consider different options around the scope and design of this new proposal , or other targeted base erosion measures . Should there be a minimum tax, we believe that the type of income subject to a minimum level of tax and the rate applied to such income should meet the twin goals of preventing base erosion while ensuring that U.S. multinational companies are more competitive vis-a-vis their overseas rivals. 231 Silicon Valley Tax Director s Group Submission to the International Tax Reform Workin g Group 4 232 McGraw Hill Financial Submission to the International Tax Reform Working Group 3 (2015). (2015). 76 UST 000503 TREAS-17-0313-C-000093 The co-chairs are committed to designing base-erosion proposals that protect the US tax base and address the proliferation of tax havens, while not undermining the ability of American companies to compete abroad. This means creating clear, manageable standards that take into account the fact that losses can cause low effective tax rates in particular years and designing rules that dissuade companies from shifting money to tax haven jurisdictions. D. Interest Expense Limitations As described above, current law provides certain rules and limitations associated with interest expense on intra-group and third party financing of domestic companies operating abroad (i.e., subpart F and foreign tax credit limitation) and on intra-group financing of foreign companies operating in the U.S. (i.e., section 163(j) deduction limitation). In 1989, Congress deemed 163(j) to be necessary as the fungibility of capital assets provides a readily-available means for multinational companies to strip profits using intra-group debt beyond what a thirdparty lender would lend to a similarly situated borrower. Of note, experts agree that jurisdictions where the statutory tax rate is relatively high are at the greatest risk of suffering from this form of tax arbitrage. With that said, this is a tax strategy employed in jurisdictions around the world, which is why the OECD BEPS Project has included it as Action 4 in their action plan. The BEPS discussion draft released at the end of last year laid out a number of options to make existing limitations more restrictive, including group proportionality as well as fixed-ratio tests . The working group received input from both domestic and foreign multinational companies expressing the legitimate business purposes for which intra-group debt is necessary and the detrimental impact on capital investment that may occur if limits are inappropriately set. The working group also examined the common practice of significant leveraging of U.S. subsidiaries soon after corporate inversions occur. The co-chairs agree that it is important to design measures that discourage excessive leverage for both domestic companies operating globally and foreign companies operating in the U.S. to simply reduce their tax bills. They acknowledge concerns raised through the working group process and by experts in the field regarding the administrability of the President's proposed proportionality test and regarding TRA14 , which, similar to current law , arguably doesn't provide sufficient limits in light of international norms and unilateral actions of other countries. As a result , the co-chairs will continue working to determine the appropriate net limitation necessary to allow for legitimate intra-group lending while at the same time stopping disproportionate leveraging to avoid U.S. taxation and gaming of interest expense limits in place. They are also committed to designing rules that keep inbound and outbound companies on a level playing field. Finally, the co-chairs will continue to examine the appropriate use of excess limitation and carryforward rules for disallowed interest expense; as well as whether additional limits should be placed on domestic companies that choose to invert. 77 UST 000504 TREAS-17-0313-C-000094 E. Deemed Repatriation Under current law, U.S. multinational companies pay no U.S. tax on most active profits earned by foreign subsidiaries until those profits are repatriated into the U.S. (i.e. sent back to the U.S. parent company as dividend payments). When this income is repatriated, the U.S. parent can offset its U.S. tax on those foreign earnings with a foreign tax credit for any foreign taxes paid with respect to those earnings. According to a recent Bloomberg News analysis of securities filings of U.S. multinational companies , approximately $2.1 trillion dollars of deferred income has been accumulated offshore untaxed by the U .S., increasing at an average of eight percent yearly. 233 As discussed above, the significant amount of deferred overseas earnings shows the twin faults of our current system: an incentive to shift money to low or no tax jurisdictions and a disincentive to bring the money back home to reinvest in jobs and wages . To account for this untaxed , deferred income in the transition to a new international tax system , both the President's budget proposal as well as Chairman Camp's tax refonn proposal would impose a one-time transition toll charge at a rate significantly lower than the statutory corporate rate . Chairman Camp's draft provides a bifurcated rate structure with a lower tax rate on "non -cash" holdings to account for the fact that many companies have reinvested a significant part of their foreign earnings in hard, brick-and-mortar assets. In addition , both proposals allow the toll charge to be paid ratably over a number of years , provide a tax credit for foreign taxes paid and specify that certain associated one-time revenues will be used for investment in transportation infrastructure . The co-chairs have agreed to the framework contemplated by Chairman Camp and President Obama. They continue work to design a toll charge with the appropriate discounted rate, foreign tax credit treatment and ratable transition . Additionally , they continue to examine whether a multi-tiered rate structure is appropriate to account for income already permanently reinvested overseas. VI. MICELLANEOUS ISSUES A. CFC Look-Through As stated above, absent extension of the CFC look-through exception payments attributable to active foreign earnings by a CFC to a related CFC would be treated as foreign personal holding company income subject to subpart F. As expressed through the National Association of Manufacturer ' s submission to the working group, these payments represent an important source of funding for U.S. manufacturers actively operating globally. This provision provides companies the ability to move cash between foreign related parties without triggering an immediate U.S. tax . Opponents of the provision argue that its effect within the current system of worldwide taxation and deferral results in the ability of multinational corporations to strip their Richard Rubin , U.S. Companies Are Stashing $2.J Trillion Overseas to Avoid Taxes, Bloomber g Bus, March 4, 2015 233 78 UST 000505 TREAS-17-0313-C-000095 global earnings out of foreign jurisdictions, resulting in "stateless income" that is never taxed in any jurisdiction. The co-chairs contemplate that if the new international tax regime would retain the subpart F foreign personal holding company income rules in order to prevent passive investment type income from qualifying for exemption from U.S. tax, then exceptions from subpart F for CFC look-through treatment will likely continue to be a necessary, permanent part of the tax code. B. Active Financing Exception As said in SIFMA's submission to the working group, the active financing exception (APE) reflects "Congress's recognition that: (i) the business conducted by financial services companies can be just as active as the businesses conducted by manufacturing , pharmaceutical or high-tech companies , but (ii) the principles used to distinguish active from passive income in the context of non-financial businesses don 't work for financial services businesses. " 234 The co-chairs contemplate that if the new exemption regime would largely retain the subpart F foreign personal holding company income rules in order to prevent passive investment type income from qualifying for exemption from U.S . tax , then exceptions from subpart F for active financing income will likely continue to be a necessary , permanent part of the tax code . The co-chairs are also considering several proposed modifications to the current AFE rules submitted by stakeholders . These proposals include modifying the rules regarding related party reinsurance contracts that currently treat premiums paid between affiliates as subpart F income unless the reinsurance relates to home country risks and allowing more realistic assessment of msurance company reserves. C. Foreign Investment in Real Property Tax Act FIRPTA imposes U.S. tax on gain realized by a foreign investor on the disposition of a U.S . real property interest , including commercial real estate and infrastructure assets. A U.S . real property interest generally includes stock in a U.S . corporation where the majority of the corporation's assets are U.S . real property (unless the corporation is publicly-traded and the shareholder owns 5 percent or less of the relevant shares of stock) . In contrast , foreign investors in U.S . corporations that hold assets other than U.S. real property are not subject to any tax on disposition of their stock in such corporations. As a result of this disparity in treatment , foreign long-term capital is discouraged from flowing into much needed infrastructure investments . The co-chairs agree the reforms included in the bipartisan Real Estate Investment and Jobs Act of 2015 (H .R . 2128) should be included in any international tax reform package . Specifically , reforms should : o Increase the ownership stake that a foreign investor can take in a U.S. publicly traded REIT without triggering FIRPTA liability by increasing the FIRPTA exemption for portfolio investors in a U.S. publicly traded REIT from 5 percent to 10 percent ; and 234 SIFMA Views on Tax Reform LO(20l5). 79 UST 000506 TREAS-17-0313-C-000096 o Improve tax parity and put foreign pension funds on a level playing field with domestic pension funds by exempting foreign pension funds from FIRPTA. D. Foreign Affiliate Reinsurance As mentioned above, under current law, insurance companies generally may deduct premiums paid for reinsurance. While insurance income of a CFC owned by a U.S. insurance company generally is subject to current U.S. taxation, insurance income of a foreign-owned company that is not engaged in a U.S. trade or business generally is not subject to U.S. tax. Thus, according to the Administration, "Reinsurance transactions with affiliates that are not subject to U.S. Federal income tax on insurance income can result in substantial U.S. tax advantages over similar transactions with entities that are subject to tax in the United States .... These tax advantages create an inappropriate incentive for foreign-owned domestic insurance companies to reinsure U.S. risks with foreign affiliates." To address this advantage, both TRA14 and the President's FY '16 budget placed limits on the deductibility of reinsurance premiums paid to non-taxed foreign affiliates. Foreign-owned US insurance firms argue that foreign affiliate reinsurance is a vital tool for inter-company transfers ofrisk, and that proposals like TRA14 and the Administration's would all but eliminate the offshore affiliate reinsurance market, favor domestic companies over foreign companies, cause higher prices and reduced availability of insurance for US homeowners and businesses, be a potential treaty violation, and disproportionately affect certain states and lines of business. Domestically-owned insurance firms argue that the proposed rule puts US and foreign insurance carriers on the same footing - making the rule non-discriminatory and treaty compliant. They also contend it would have no effect on market capacity because in affiliate reinsurance scenarios does not add capacity, as the risk remains in the same overall enterprise, and would have little effect on short-tailed lines of business such as catastrophe coverage in coastal markets. The co-chairs will continue to consider both sides' arguments moving forward. E. Territories The working group requested and received a briefing for its staff with regard to tax reform issues that focus primarily on Puerto Rico and the other U.S. possessions. While this report does not include any specific recommendations with respect to those issues, the co-chairs acknowledge that federal tax policy has traditionally recognized the unique relationship of Puerto Rico to the United States, as well as the important role manufacturing plays in the Puerto Rican economy. Such issues, as well as the economic impact of existing laws in Puerto Rico regarding the taxation of capital gains and dividends, will warrant specific consideration and further review when the committee moves forward with international tax reform. F. Overseas Americans According to working group submissions, there are currently 7.6 million American citizens living outside of the United States. Of the 347 submissions made to the international working 80 UST 000507 TREAS-17-0313-C-000097 group , nearly three-quarters dealt with the international taxation of individuals , mainly focusing on citizenship-based taxation , the Foreign Account Tax Compliance Act (FATCA) , and the Report of Foreign Bank and Financial Accounts (FBAR). While the co-chairs were not able to produce a comprehensive plan to overhaul the taxation of individual Americans living overseas within the time-constraints placed on the working group , the co-chairs urge the Chairman and Ranking Member to carefully consider the concerns articulated in the submissions moving forward . 81 UST 000508 TREAS-17-0313-C-000098 RE: Treasury Meeting Request: Business Tax Reform Discussion From : "Con churatt. Sam (Finance)" To : "Bailey , Brad ley" Date : Mon , 05 Jun 2017 12:35:15 -0400 Yes, t hat wou ld be best. Thank s! From : Brad ley.Bailey@treasury.gov [ma ilto:Bradley.Ba i ley@treasury.gov) Sent: Monday, June OS, 2017 12:34 PM To: Conchuratt, Sam (Finance) Subject: RE: Treasury M eeting Request: Business Tax Reform Discussion Should we just come to 219? From : Conchuratt, Sam (Finance) [mailto:Sam Conchuratt@finance .senate .gov] Sent: Monday, June OS, 2017 11:51 AM To : Bailey, Bradley ; Stegmaier, Jason (Finance) ; o , Subject: RE: Treasury M eeting Request: Business ax treasur . ov > e orm 1scuss1o n Yes, I have reserved ou r mai n confe rence roo m for the m eeting. From : Brad ley.Bailey@treasury.gov [ma ilto :Bradl ey. Bailey@treasury.gov ] Sent: Monday, June 05, 2017 11:35 AM To : Stegmaier, Jason (Finance) ; Conchuratt, Sam (Finance) ; !(? @treasury .gov Subject : RE: Treasury M eeting Request: Business Tax Reform Discussio n Are one of you able to host? From : Stegmaier, Jason (Finance ) [mailto:Jason Stegmaier@finance.senate.gov ] Sent: Monday, June OS, 2017 11:34 AM To: Conchuratt, Sam (Finance) ; Bailey, Bradley lhtiJ @treasury.gov > ; Subject : RE: Treasury M eeting Request : Business Tax Reform Discussion That works for us. Jason Stegmaier Office Manager U.S. Senate Finance Committee 219 Dirksen Senate Office Building \.Vas hington, DC 20510 Work: (202) 224-4515 Fax: (202) 228-0554 From : Conchu ratt, Sam (Finance) Sent: Saturday, June 3, 2017 2:12 PM To: Bradlev.Bajley@treasury .gov : Unda.Wooten@treasury UST 000509 .gov : Stegmaier, Jason (Finance) TREAS-17-0313-C-000099 Subject: Re: Treasury Meeting Request: Business Tax Reform Discussion That works on our end. Sent from my Verizon, Samsung Galaxy smartphone -------- Original message -------From: Bradley.Bailey@treasury .gov Date: 6/2/17 18:12 (GMT-05:00) To: treasu . ov, "Stegmaier, Jason (Finance)" , "Conchuratt, Sam (Finance)" Subject: RE: Treasury Meeting Request: Business Tax Reform Discussion Thursday from 3-4pm should work on our end. Can we lock this in? From: Conchuratt, Sam (Finance) Date: June 2, 2017 at 11:47:14 AM EDT To: Stegmaier, Jason (Finance) , b(6) ffi vtreasury.gov >, Bailey, Bradley Subject: RE: Treasury Meeting Request: Business Tax Reform Discussion Following up on this. Do any of these time work for you? From: Stegmaier, Jason (Finance) Sent: Thursday, June 01, 2017 1:08 PM To: 'Bradley.Bailey@treasury.gov' ; Conchuratt, Sam (Finance) ; o o treasur . ov Cc: Fleischer, Victor (Finance) Subject: RE: Treasury Meeting Request : Business Tax Reform Discussion We can do 2:30 p.m for 30 minutes or 6 p.m on Tuesday. If that doesn't work we can do Thursday afternoon at 3 p.m. Jason Stegmaier Office Manager U.S. Senate Finance Committee 219 Dirksen Senate Office Building Washington, DC 20510 Work: (202) 224-4515 Fax: (202) 228-0554 From: Bradley .Bailey@treasury .gov [ma i lto :Bradley .Bai ley@treasury .gov] Sent: Thursday, June 1, 2017 12:28 PM To: Conchuratt, Sam (Finance) ; Stegmaier, Jason (Finance) ;lffm 'llltreasu ry.gov UST 000510 TREAS-17-0313-C-000100 Cc: Fleischer, Victor (Finance) Subject: RE: Treasury Meeting Request: Business Tax Reform Discussion We can't unfortunately. Any other windows? From: Stegmaier, Jason (Finance} Date: June 1, 2017 at 12:13:38 PM EDT To: Conchuratt, Sam (Finance} , Bailey, Bradley , treasur . ov > Cc: Fleischer, Victor (Finance} Subject: RE: Treasury Meeting Request: Business Tax Reform Discussion That doesn 't work on the Hatch end. Could we make 3 p.m work on Tuesday ? Ja son Stegmaier Office Manager U.S. Senate Finance Committee 219 Dirksen Senate Office Building Washington, DC 20510 Work: (202) 224-4515 Fax: (202) 228-0554 From: Brad ley .Bailey@treasury.gov [ma i lto :Bradley.Bai ley@treasury .gov) Sent: Thursda June 1, 2017 12:01 PM To:o o trea sur . ov ; Conchuratt, Sam (Finance) ; Stegmaier, Jason (Finance) Cc: Fleischer, Victor (Finance) Subject: RE: Treasury Meeting Request : Business Tax Reform Discussion Jason/ Sam: Linda and I spoke. Since Monday will not work, could the Hatch and Wyden teams do 5:30pm on Tuesday? Best, Brad From: b(6) Sent: Thursday, June 01, 2017 11:35 AM To: 'Conchuratt, Sam (Finance)' ; Bailey, Bradley ; Stegmaier, Jason (Finance) Cc: Fleischer, Victor (Finance) Subject: RE: Treasury Meeting Request: Business Tax Reform Discussion Good morning Mr. Conchuratt , Justin Muzinich is available for this meeting on Monday June 5 at 2:00 p.m. Please let me know if you require additional information. UST 000511 TREAS-17-0313-C-000101 - Regards, Administrative Specialist Office of the Assistant Secret ary for Econom ic Policy Room 3454 Fax: 622-6233 Office: lffm From: Conchuratt , Sam (Finance) [ mailto:Sam Conchuratt@fi nance.senate.gov] Sent: Th ursday, June 01, 2017 9:37 AM To: Bailey, Bradley; Stegmaier, Jason ( Finance); Muzinich, Justin; b(6) Kowalski, Daniel Cc: Fleischer, Victor (Finance) Subject: RE: Treasury Meeting Req uest: Business Tax Reform Discussion Followin g up on th is. If Justin is not available t oday at 1, below are th e t imes Josh, Tiffa ny and Vic w oul d be available next wee k: M onday 1-2 pm and 4-5 pm Tuesday after 2 pm Friday aft er 1:30 pm From : Brad ley.Bailey@t reasury.gov [ma ilto:Bradl ey. Bai ley@tre asury.gov ] Sent: Wednesda y, May 31, 2017 4:58 PM To : Stegmaier , Jason (Finance) ; Conchura t t, Sam (Finance) @treasury.gov ; ; Justin.Muzinich@treasury.gov ; 1ffl5 Daniel.Kowalski@treasury.gov Cc: Fleischer, Victo r (Finance) Subject: RE: Treasury M eeting Request: Business Tax Reform Discussion I believe Justin is not availab le tomorrow. point. I'll let Linda confirm. Next week seems more likely at this From : Stegmaier, Jason (Finance) (mailto:Jason Stegmaier@finance.senate.gov ] Sent: Wednesday, May 31, 2017 4:12 PM To : Conchuratt, Sam (Finance) ; M u zinich, Justin ;jfa9 @t reasury.gov >; Kowalski, Danie l ; Bailey, Bradley Cc: o o Fleischer , Victor (Finance) Subject: RE: Treasury M eeting Request : Business Tax Reform Discussion Folks , Sam and I spoke and we wanted to proposed 1 p .m. on Thursday . Does that work for everyo ne? If that doesn't work we may have to look into next week. Jason Stegma ier Office Manager UST 000512 TREAS-17-0313-C-000102 U.S. Senate Finance Committee 219 Dirksen Senate Office Building \.Vashington,DC 20510 \.Vork: (202) 224-4515 Fax: (202) 228-0554 From: Conchuratt, Sam (Finance) Sent: Tuesday, May 30, 2017 3:33 PM To: Justin.Muzinich@t reasury.gov ; Stegmaier, Jason (Finance) ; ; Dani el, Kowa lski@treasury.gov : Brad ley,Bailey@treasu ry,gov Cc: o o Fleischer, Victor (Finance) Subject: Re: Treasury Mee ting Request: Business Tax Reform Discussion Tiffany will not be in on Friday. Doe s Thursday work? Sent from my Verizon, Samsung Galaxy smartphone -------- Original message -------From: Just in.Muzinich@treasmy.gov Date: 5/30/ 17 15:22 (GMT-05:00) To: "Ste ier, Jason (Finance)" , c.treasu . ov, "Conchuratt, Sam (Finance)" , Daniel.Kowa lski@treasm:y.gov, Bradley,Bai ley@treasury .gov Cc: o o "Fleischer , Victor (Finance)" Subject : RE: Treasury Meeting Request: Business Tax Reform Discuss ion 4pm tmrw does not work. Suggest we look for a time Friday. From: Bailey, Bradley Date: May 30, 2017 at 3:16:58 PM EDT To: Kowalski, Daniel , Ste , o o Conchuratt, Sam (Finance) Cc: Muzinich, Just in , Brad Bailey o o , Fleischer, Victor (Finance) Subject: RE: Treasury Meeting Request: Business Tax Reform Discussion Hi all: Treasury's email server is malfunctioning. 4pm works on my end. Will try to confirm with the rest. From: Stegmaier, Jason (Finance) Date: May 30, 2017 at 3:10:06 PM EDT UST 000513 TREAS-17-0313-C-000103 To: b(6) o treasur . av>, Conchuratt, Sam (Finance) , Kowalski, Daniel , Bailey, Bradley Cc: Muzinich, Just in , Fleischer, Victor (Finance) Subject: RE: Treasury Meeting Request: Business Tax Reform Discussion Could 4 p.m work for you all? Jason Stegmaier Office Manager U.S. Senate Finance Committee 219 Dirksen Senate Office Building Washington, DC 20510 \Vork: (202) 224-4515 Fax: (202) 228-0554 From: Conchu ratt , Sam (Finance) Sent: Tuesday, May 30, 2017 2:16 PM To: Stegmaier, Jason (Finance) ; 'Dan iel.Kowa lski@treasury.gov' ; oo Brad ley.Ba ii ey@treasury.gov Cc: Fleischer, Victor (Finance) ; Justin .Muzinich@treasury .gov Subject: RE: Treasury Me eting Request: Business Tax Reform Discussion I got a bounce back from your emails so just making sure you received my emai l below. From: Conchuratt, Sam (Finance) Sent: Tuesday, May 30, 2017 12:18 PM To: Stegmaier, Jason (Finance) ; TT @t reasury .gov; Brad ley.Ba ii ey@t reasury.gov Cc: Fleischer, Victor (Finance) ; Justin.Muzinich@treasury .gov Subject: RE: Treasury Me eting Request: Business Tax Reform Discussion Apologies for the delay in my response . 4 pm tomorrow works for our team as well. - Sam From : Stegmaier, Jason (Finance) Sent: Tuesday, May 30, 2017 11:59 AM To : 'Da ni el .Kowa lski@treasury.gov' < Dan iel. Kowalski@treasury.gov >; Brad ley .Ba ii ey@treasury.gov Cc: Fleischer, Victor (Finance) ; Justin .Mu zi n ich@treasury .gov ; Conchuratt, Sam (Finance) Subject: RE: Treasury Mee ting Request: Business Tax Reform Discussion Folks, My apologies for complicating this further, but we have had some iss ues pop up. Could we do 4 p.m instead in our ante room here in Dirksen ? Ja son Stegmaier Office Manager U.S. Senate Finance Committee UST 000514 TREAS-17-0313-C-000104 219 Dirksen Senate Office Building ?washington, DC 205 10 \.Vork: (202) 224-4515 Fax: (202) 228-0554 From : Daniel ,Kowalski@tr easury .gov [mailt o:Dani el,Kowalski@treasu ry,goy] Sent: Tuesday, May 30, 2017 11:05 AM To: Stegmaier, Jason (Finance) ; b(6) ,, treasur . ov; Bradley.Bailey@t reasury .gov Cc: Fleischer, Victor (Finance) ; Justin.Muzinich@treasury.gov ; Conchuratt, Sam (Finance) ; Conchuratt, Sam (Finance) Subject : RE: Treasury Meeting Request: Business Tax Reform Discussion Let's close the loop on this. Looks like we have established a meeting time (Wednesday at 3:00). Where shall we meet? Might make sense to meet you on the Hill, but happy to host here at Treasury if you would like. From : Stegmaier, Jason (Finance) [mail t o:Jason Stegmaier@financ e.senate.gov ) Sen? ? To : t reasur . ov>; Bailey, Bradley ; Kowalski, Daniel Cc: Fleischer, Victor (Finance) ; Muzinich, Justin ; Conchuratt, Sam (Finance) ; Conchuratt, Sam (Finance) Subject: RE: Treasury Meeting Request: Business Tax Reform Discussion That works for Chris and Mark. From : b(6) treasur . ov U-U.l ......... ,.... Sent: Friday, May 26, 2017 3:40 PM To : Brad!ey,Baile y@tre asury.gov; Stegmaier, Jason (Finance) ; Daoiel,Kowa lski@treasury .gov Cc: Fleischer, Victor (Finance) ; Justin .M uzioic h@treas ury.gov : Conchuratt, Sam (Finance) ; Conchuratt, Sam (Finance) Subject : RE: Treasury M eeting Request: Business Tax Reform Discussion Justin's calendar indicates that he's free at 3:00. From: Bailey, Bradley Sent: Friday, May 26, 2017 2:22 PM To: Stegmaier, Jason (Finance); Kowalski, Daniel ictor (Finance); Muzinich, Justin; Conchuratt, Sam (Finance); Conchuratt, Sam (Finance); o '.) Looping in reasury Meeting Request: Business Tax Reform Discussion l:mDIII and Sam. From : Stegmaier, Jason (Finance) [mailt o :Jason St egmajer@ fin ance.senate. goy] Sent: Friday, May 26, 2017 2:05 PM To : Kowalski, Daniel Cc: Bailey, Bradley : Fleischer, Victor (Finance) ; Muzinich, Justin ; Conchuratt, Sam (Finance) UST 000515 TREAS-17-0313-C-000105 Subject: Re: Treasury Meeting Request: Business Tax Reform Discussion Let me check on our end. I am out of pocket at the moment so please stand by. Sent from my iPhone On May 26, 2017, at 2:04 PM, " Daniel .Kowalski@treasury .gov " wrote: Could we do this at 3:00 on Wednesday instead? From: Stegmaier, Jason (Finance) [mailto:Jason Stegmaier@finance.senate.gov ] Sent: Friday, May 26, 2017 5:57 AM To: Bailey, Bradley Cc: Fleischer, Victor {Finance) ; Muzinich, Justin ; Kowalski, Daniel ; Conchuratt, Sam {Finance) Subject: Re: Treasury Meeting Request: Business Tax Reform Discussion Brad Would next Wednesday at 1 pm work for this meeting? Jason Sent from my iPhone On May 25, 2017, at 9:35 AM, Prater, Mark (Finance) wrote: Thanks, Brad. Am here all next week. Look forward to attending the meeting. From: Campbell, Chris {Finance) Sent: Thursday, May 25, 2017 9:14 AM To: Sheinkman, Joshua (Finance) ; Fleischer, Victor (Finance) ; Prater, Mark (Finance) ; Justin.Muzin ich@treasury .gov; Daniel .Kowalski@treasury.gov ; Conchuratt, Sam (Finance) ; Stegmaier, Jason (Finance) Subject: Re: Treasury Meeting Request: Business Tax Reform Discussion > And Jason has our schedules. Chris Campbell Staff Director U.S. Senate Finance Committee 219 Dirksen Senate Office Building Washington. DC 20510 W: (202) 224-3338 F: (202) 228-0554 E: chris campbell@finance.senate.gov UST 000516 TREAS-17-0313-C-000106 On May 25, 2017, at 9:11 AM , Sheinkman, Joshua (Finance) wrote: Brad, Thanks for your note. We would be happy to meet to discuss business tax reform early next week. My assistant Sam Conchuratt can work with you to find a time that works for the Wyden tax team. Look forward to getting together next week. Josh From : Brad ley .Bailey@treasury.gov (mail to :Brad ley .Bailey@treasury.gov ] Se nt : Thursday, May 25, 2017 9:05 AM To: Smith, Tiffany (Finance) ; Fleischer, Victor (Finance) ; Prater, Mark (Finance) Cc: Campbel l, Chris (Finance) ; Sheinkman, Joshua (Finance) ; Justin .Muzinich@treasury.gov ; Daniel.Kowa lski@treasury .gov Subje ct: T reasury Meeting Request: Business Tax Reform Discussio n M ark, Vic and Tiffany: Treasury would like to see if you'd be willing to have an informal discussion about business tax reform. Tiffany and Vic, we'd be especially interested in learning more about the business components of Senator Wyde n's tax reform proposa ls. If possib le, we'd try to f ind a time that works on Tuesday or Wednesday next week. We are happy to come to the Hill if t hat is easier. Thank you in advance. Brad Brad Bailey Deputy Assistant Secretary fo r Tax and Budget Office of Legislative Affai rs U.S. Department of the Treasury die . ai le UST 000517 TREAS-17-0313-C-000107 DRAFT - Tax Reform Princi als Meetin From: "Koenig, Andrew D. EOP/WHO" To: "Kowalski, Daniel" , "Muzinich , Justin" <'ustin.muzinich treasu . ov>, "Knight, Shahira E. EOP/WHO" >. "Dunn. Brendan (McConnell " < ren an_ unn mcconne .senate .gov> , "Katz, Jeremy" "Angus, Barbara" , "Ca as, eorge , mark_prater@finance.senate .gov Cc: "Swonger, Am H. EOP/WHO" EOP/WHO" Date: Attachments: Mon, 05 Jun 2017 14:47:43 -0400 >, >, "Meyer, Joyce Y. Tax Reform Meeting Agenda 6.6 .2017 .pptm (28.65 kB) All Please see below and attached for a draft agenda. Tomorrow's tax reform meeting with pr incipals is scheduled at 5:30 pm. This agenda is based on the conversation at the end of Thursday's meeting. Please let me know any edits or suggestions. Thanks! Tax Reform Meeting Agenda June 6, 2017 UST 000518 TREAS-17-0313-C-000108 RE: DRAFT - Tax Reform Princi als Meetin From: "Koenig, Andrew D. EOP/WHO" To: Cc: "Kowalski, Daniel" , "Muzinich, Justin" , "Dunn, Brendan (McConnell " . "Katz, Jeremy" "Angus, Barbara" , "Ca as, eorge I I I I v>, "Swonger, Amy H. EOP/WHO" >, "Meyer, Joyce Y. EOP/WHO" Date: Mon, 05 Jun 2017 15:49:01 -0400 Attachments: Tax Reform Meeting Agenda - 6.6.2017.pptm (28.42 kB) >, Updated and attached. From: Prater, Mark (Finance) [mailto:Mark_Prater@finance.senate.gov] Sent: Monday, June 5, 2017 3:09 PM To: Knight, Shahira E. EOP/WHO >; Koenig, Andrew D. EOP/WHO > Cc: Danie .Kowa s i treasury.gov; Justin .Muzinich@treasur y.gov; Dunn, Brendan (McConnel l) ; Katz, Jeremy L. EOP/WHO >; Angus, Barbara ; Callas, George ; Swonger, Amy H. EOP/WHO >; Meyer, Joyce Y. EOP/WHO > Subject: RE: DRAFT- Tax Reform Principals Meeting Agenda SFCagree with Shahira's edits. Sent from my Verizon, Samsung Galaxy smartphone -------- Origina l message -------From : "Knight, Shahira E. EOP/WHO" > Date: 6/5/17 3:05 PM (GMT-05:00) To: "Koenig, Andrew D. EOP/WHO" > Cc: Daniel.Kowalski@treasury.gov, Justin.Muzinich@tre asury.gov, "Dunn, Brendan (McConnell)" , "Katz, Jeremy L. EOP/WHO' "Angus, Barbara" , "Callas, George" , "Prater, Mark (Finance)" , "Swon er, Am H. EOP/WHO" >, "Meyer, Joyce Y. EOP/WHO" >, > Su ject : Re: DRAFT- Tax Re orm Princ ipals Meeting Agenda UST 000519 TREAS-17-0313-C-000109 b(5) On Jun 5, 2017, at 2:47 PM, Koenig, Andrew D. EOP/WHO > wrote: All Please see below and attached for a draft agenda. Tomorrow's tax reform meeting with principals is scheduled at 5:30 pm. This agenda is based on the conversation at the end of Thursday's meeting. Please let me know any edits or suggestions. Thanks! Tax Reform Meeting Agenda June 6, 2017 UST 000520 TREAS-17-0313-C-000110 RE: DRAFT - Tax Reform Princi als Meetin > From: "Koenig, Andrew D. EOP/WHO" To: "Callas, George" , "Muzinich , Justin" <'ustin.muzinich treasu . ov>, "Knight, Shahira E. EOP/WHO" >. mark_prater@finance.senate.gov Cc: s >, "Swonge r, Amy H. EOP/WHO" arbara" , >, Date : Attachments: Tax Reform Meeting Agenda - 6.6.2017.pptm (35.8 1 kB) Here's the last update for the agenda I will have. I reinserted the timeline that George originally put together for everyone's awareness. From: Callas, George [mailto:George.Callas@mail.house.gov) Sent: Monday, June 5, 2017 5:05 PM To: 'Justin.Muzinich@treasury.gov' ; Koenig, Andrew D. EOP/WHO >; Knight, Shahira E. EOP/WHO >; Mar _ Prater@ inance.senate.gov Cc: Katz, Jeremy L. EOP/WH Dan iel.Kawa s i@treasury.gov Subject: RE: DRAFT - Tax Reform Principals Meeting Agenda thanks From : Justi n.Muzin ich@treasury.gov [mailto:Justin.Muzinich@treasu Sent: Monday, June 05, 2017 5:02 PM To : Callas, George; ry.gov] Mark Prater@finance.senate. Cc: ov ; ; Angus, Barbara; ; Brendan_Dunn@mcconnell.senate.gov; Daniel.Kowalski@treasury.gov Subject: RE: DRAFT - Tax Reform Principals Meeting Agenda From: Callas, George Date: June 5, 2017 at 4:56:27 PM EDT To: ' Koenig, Andrew D. EOP/WHO' >, Knight, Shahira E. >, Prater, Mark (Finance) EOP/WHO Cc: Dunn, Brendan (McConne ll) , Kowalski, Daniel , Katz, Jerem >, Swonger, Amy H. EOP/WHO Subject: RE: DRAFT- Tax Re orm Principa s Meeting Agenda UST 000521 TREAS-17-0313-C-000111 Can someone rem ind me what the calendar conversation is about? Has something changed from the agreement at the last principals' meeting? From : Koenig, Andrew D. EOP/WHO [mailto Sent: Monday, June 05, 2017 3:49 PM To : Prater, Mark (Finance); Knight, Shahira E. EOP/WHO Cc: Daniel.Kowalski@treasury .gov : Justin .Muzinich@treasury .gov; Dunn, Brendan (McConnel l); Katz, Jeremy L. EOP/WHO; Angus, Barbara; Callas, George; Swonger, Amy H. EOP/WHO; M eyer, Joyce Y. EOP/WHO Subject : RE: DRAFT - Tax Reform Principals Meeting Agenda Updated and attached. From : Prat er, Mark (Finance) [mailto:Mark Sent: Monday, June 5, 2017 3:09 PM To: Knight, Shahira E. EOP/WHO Prater@finance.senate.gov ] >; Koenig, Andrew D. EOP/WHO > Su Ject: RE: DRAFT- Tax Re orm Principals Meeting Agenda SFCagree with Shahira's edits . Sent from my Verizon, Samsung Galaxy smartphone -------- Origina l message-------From: "Knight, Shahira E. EOP/WHO" > Date: 6/5/17 3:05 PM (GMT-05:00) To: "Koenig, Andrew D. EOP/WHO" Cc: Daniel.Kowalski@treasury .gov. Justin.Muzinich@treasury.gov . "Dunn, Brendan (McConnell)" , "Katz, Jeremy L. EDP/WHO" "Angus, Barbara" , "Callas, George" , "Prater, M ark (Finance)" , "Swonger , Amy H. EOP/WHO" >, "Meyer, Joyce Y. EOP/WHO" >, > Subject: Re: DRAFT- Tax Reform Principa ls Meeti ng Agenda I conferre d with Justin . o UST 000522 TREAS-17-0313-C-000112 On Jun 5, 2017, at 2:47 PM, Koenig, Andrew 0 . EOP/WHO > wrote: All Please see below and attached for a draft agenda. Tomorrow's tax reform meeting with principals is scheduled at 5:30 pm. This agenda is based on the conversation at the end of Thursday's meeti ng. Please let me know any edits or suggestions . Thanks! Tax Reform Meeting Agenda June 6, 2017 UST 000523 TREAS-17-0313-C-000113 RE: DRAFT - Tax Reform Princi als Meetin ... .... o To: . o . oo . . From: I o oo o oo >, "Muzinich, Justin" Cc: Date: - . oo o o .. o? oo o . oo .. o o . oo . oo This makes sense to me. b(5) From : Koenig, Andrew D. EOP/WHO [mailto Sent: Tuesday, June 06, 2017 11:52 AM To : Callas, George; 'Justin .Muzin ich@treasury.gov '; Knight, Shahira E. EOP/WHO; Ma rk_Prater@fi nan ce.sen ate .gov Cc: Katz, Jeremy L. EOP/WHO; Swonger, Amy H. EOP/WHO; Angus, Barbara; Meyer, Joyce Y. EOP/WHO; Brendan_Dunn@mcconnell.senate.gov; Daniel.Kowalski@treasury.gov Subject : RE: DRAFT- Tax Reform Principals Meeting Agenda Sorry all, we had one more edit. This is now final on our end. Thanks! From : Koenig, Andrew D. EOP/WHO Sent: Tuesday, June 6, 2017 9:16 AM To : 'Callas, George ' ; 'Justin .M uzinich@treasury .gov' >?J ; Knight, Shahira E. EOP/WHO Mark Prater@finance.senate.gov Cc: Katz, Jeremy L. EOP/WHO Swonger, Amy H. EOP/WHO >; n us, Barbara ; Meyer, Joyce Y. >; BrendanDunn@mccon nell.senate,gov; Daniel .Kowalski@treasury.gov Subject: RE: DRAFT- Tax Reform Principals Meeting Agenda Here's the last update for the agenda I will have. I reinserted the timeline that George originally put together for everyone's awareness. From : Callas, George [mailto:George .Callas@mai l.house .gov) Sent: Monday, June 5, 2017 5:05 PM To : 'Justin.Muzinich@treasury.gov' ; Koenig, Andrew D. EOP/WHO >; Knight, Shahira E. EOP/WHO >; Mark Prater@finance.senate.gov Cc: Katz, Jeremy L. EOP/WHO thanks From : Justi n.Muz in ich@treasu ry.gov [mailto: Justin.Muzinich@treasu Sent: Monday, June 05, 2017 5:02 PM To : Callas, George UST 000524 ry.gov] TREAS-17-0313-C-000114 ; Angus, Barbara; ; Brenda n Dunn @mcconnell.sena t e.gov ; Daniel.Kowalsk i@t reasury .gov Subject: RE: DRAFT- Tax Reform Principals Meeting Agenda I don't believe t here is a substantial change. Mostly to ensure all are still on same page.la b(5) From: Callas, George Date: June 5, 2017 at 4:56:27 PM EDT To: 'Koenig, Andrew D. EOP/WHO' >, Knight, Shahira E. EOP/WHO >, Prater, Mark (Finance ) Cc: Dunn, Brendan (McConnell) , Kowalski, Daniel , Katz, Jeremy >, Swonger, Amy H. EOP/WHO >, Angus, Barbara , Meyer, Joyce Y. EOP/WHO > Subject: RE: DRAFT- Tax Re orm Principa s Meeting Agenda Can someone rem ind me what the calendar conversation is about? Has something changed from the agreement at the last principals' meeting? From : Koenig, Andrew D. EOP/WHO Sent: Monday, June OS, 2017 3:49 PM To: Prater, Mark (Finance); Knight, Shahira E. EOP/WHO Cc: DanjeLKowa !skj@treasury. gov : Justjn .Muzioich@treasury. goy : Dunn, Brendan (McConnell); Katz, Jeremy L. EOP/WHO; Angus, Barbara; Callas, George; Swonger, Amy H. EOP/WHO; M eyer, Joyce Y. EOP/WHO Subject: RE: DRAFT- Tax Reform Principals Meeting Agenda Updated and attached. From : Prater, Mark (Finance) [mai lto:Mark Sent: Monday, June S, 2017 3:09 PM To: Kni ht, Shahira E. EOP/WHO Prater@finance .senate .goy ] >; Koenig, Andrew D. EOP/WHO > Subject: RE: DRAFT- Tax Reform Principals Meeting Agenda SFCagree with Shahira's ed its. Sent from my Verizon,Samsung Galaxy smartphone -------- Original message-------From: "Knight, Shahira E. EOP/WHO" Date: 6/5/17 3:05 PM (GMT-05:00) UST 000525 TREAS-17-0313-C-000115 To: "Koenig, Andrew D. EOP/WHO" > Cc: Daniel.Kowalski@treasury.gov . Justin.Muzinic @treasury.gov . Dunn, Brendan (McCon nell}" , "Katz, Jeremy L. EOP/WHO" "Angus, Barba ra" , "Callas, George" , "Prater , Mark (Finance}" , "Swonge r, Amy H. EOP/WHO" >, "Meyer, Joyce Y. EOP/WHO" > Subject: Re: DRAFT - Tax Reform Princ ipa ls Meeting Agenda On Jun 5, 2017, at 2 :47 PM, Koenig, Andrew D. EOP/WHO > wrote: All Please see below and attached for a draft agenda. Tomorrow's tax reform meeting with principals is scheduled at 5:30 pm. This agenda is based on the conversation at the end of Thursday's meeting. Please let me know any edits or suggestions. Thanks! Tax Reform Meet ing Agenda June 6, 2017 UST 000526 TREAS-17-0313-C-000116 RE: Tax Notes: Brady Touts Border Tax as GOP Meets on Unified Reform Plan From : To : "Prater. Mark (Finance)" Date : b(5) From : Justi n.M uzin ich@tre asury.gov [mailto :Justi n.M uzini ch@tre asu ry.gov] Sent: W ednesday, June 07, 2017 12:09 PM To ; Dunn, Brendan (M cConnell ) ; Prater , Mark (Finance) Subject : Re: Tax Not es: Brady Touts Borde r Tax as GOP M eet s on Un ifi ed Refo rm Plan b(5) From: Dunn, Brendan (M cConne ll) Date: June 7, 2017 at 11:58 :10 AM EDT To: Muzinich, Justin , Knight, Shahira E. EOP/WHO >, Prater , Mar k (Finance) Prater@ inance.se nate.gov > Subject: FW: Tax Notes: Brady Tout s Borde r Tax as GOP Meet s on Unified Reform Plan UST 000527 TREAS-17-0313-C-000117 Subject: Tax Notes: Brady Touts Border Tax as GOP Meets on Unified Reform Plan Brady Touts Border Tax as GOP Meets on Unified Reform Plan By Stephen K Cooper, Asha Glover and David van den Berg Posted June 7, 2017- Not for republication. (C)Tax Analysts House Ways and Means Committee Chair Kevin Brady, R-Texas, continued his push for passage of a unified GOP tax reform plan this year, tacitly acknowledging June 6 that Trump administration officials and Senate Republicans have not yet signed off on liis controversial border-adjustable tax proposal. "I think it's critically important that we unify around one tax reform plan, because that's how we'll achieve this in 2017," Brady told reporters ahead of a meeting on Capitol Hill with Senate Majority Leader Mitch McConnell, Senate Finance Committee Chair Orrin G. Hatch, R-Utah, House Speaker Paul D. Ryan, R-Wis., Treasury Secretary Steven Mnuchin, and National Economic Council Director Gary Cohn. Brady promised to "stay at the table" until he reaches common ground with White House officials and Senate Republicans on the best way to boost economic growth and prevent American companies from relocating jobs and research abroad. He said that "tax reform is a process," and that other ideas are being explored in addition to the border tax. However, after working through other tax reform J?roposalsin the past years, Brady said he is confident that the border-adjustable tax proposal mcluded in House Republicans' 'A Better Way" tax reform plan will bring investment and jobs back to the United States. ''I'm convinced that working with others - the White House and Senate - that we can design and transition it in a way that addresses the concerns that have been raised." Opponents of the tax maintain that the U.S. dollar will not appreciate quickly enough to shield consumers from the rising prices of imported goods, costs tliat some exrect ImJ?orters to pass on to customers. But Brady said advertisements voicing opposition to the borcler tax m his congressional district have been met with counter-advertising and that his constituents have been supportive. Republicans are committed to lowering taxes this year and bringing Americans a simpler way to file taxes, Brady said, adding that Republicans would deliver comprehensive tax reform in 2017 and not just legislation lowering taxes. Emerging from the Capitol Hill meeting with Mnuchin and Cohn Hatch called the meeting "typical" and said that lawmakers are working to advance tax reform legislation. "We all know that we need to move pretty q_uicklyduring the summer months," he added. "All I can say is that everybody was in sync there and we felt very good about what we talked about." Earlier in the day, House and Senate GOP leaders, including Ryan and McConnell, met with President Trump and Vice President Pence at the White House. According to press statements the "productive" meeting included a discussion of tax reform in the context of the legislative agenda. Support for Border-Adjustable Tax Not Settled While the border-adjustable tax accomplishes some important policy objectives, including dealing with the territorial treatment and "the base erosion side," Hatch hasn't decided on his position on the tax, according to Mark Prater, majority deputy staff director and chief tax counsel of the Senate Finance Committee. Hatch still has questions about the border tax plan regarding who will pay for it, whether it is consistent with mternational trade obligations, and ifit's adopted, what would need to be done for the business tax base to deal with collateral issues, Prater said at the 2017 OECD International Tax Conference hosted by the U.S. Council for International Business in Washington. Prater said that regardless of whether the Senate accepts the border-adjustable tax proposal, lawmakers should not neglect the policy objectives that the tax addresses. UST 000528 TREAS-17-0313-C-000118 Beyond considerin~ the House's plan, Prater said Hatch wants tax reform to be a bipartisan effort, but he added that Republicans are in a _positionwhere they also labor under the expectations that as the party with the White House and the congressional majority that they must produce." Meanwhile, Ways and Means ranking minority member Richard E. Neal, D-Mass., said June 6 that the landscape for tax reform seems uncertain, adding that there doesn't seem to be any traction for the border-adjustable tax. Hatch Committed to Bipartisan Reform Prater added that Hatch has made an effort to discuss tax reform with every Finance Committee member. According to Prater, Hatch took the viewpoints of both Democrats and Republicans on the committee, and they exchanged questions. "So we had 20 some-odd separate sessions at the start of the year and have followed up periodically" with Democrats and Republicans alike on questions, he added. "We've had staff discussions with staff to individual members, staff to staff, some bipartisan discussion, [and] some that are just Republican." Prater also said the committee staff has not stopped working on the corl)orate integration proposal that Hatch has signaled his intent to design. The proposal would be an alternative to anti-inversion efforts proposed oy the Obama administration and congressional Democrats. Hatch's plan would reportedly use a dividends paid deduction to allow corporate income to be taxed only once. "We continue to work on that. We see that as a valuable tool in the reform arena," Prater said_,, adding that the Joint Committee on Taxation found the provision to be revenue-neutral. "Ana it has some very good macroeconomic indicators. So that is one way to deal with things such as lockout or other barners," he said. Stephen K. Cooper Senior Reporter Tax Notes/Tax Notes Today Cell: 301-538-1215 Senate Periodical Gallery: 202-224-0265 Twitter: @ScoopOnTaxes www .taxnotes.com UST 000529 TREAS-17-0313-C-000119 Re: Reachin Out From: "Davis, William" To: Date: "Bailey, Bradley" Sat, 10 Jun 2017 23:36:42 -0400 Lunch works for me. Happy to meet wherever works for you. Best, Will Sent from my iPhone On Jun 9, 2017, at 8:59 PM, "Bradley.Bailey@treasury.gov " wrote: Hey Will, I'll be on the Hill at 1:30 so I was going to stop by at 2. But, interested in coming over here for lunch instead around noon? Brad From: Davis, William [mail t o :William.Davis@mail.house Sent: Friday, June 09, 2017 8:57 PM To: Bailey, Bradley Subject: Re: Reaching Out .gov ] Hi Brad, 2pm next Friday would work great. I'm happy to head over to you. Just let me know where to go. Best, Will Sent from my iPhone On Jun 9, 2017, at 8:14 PM, " Bradley .Bailey@t reasury .gov" wrote: Hey Will-hope all is well too. How about next Friday? 2pm? From: Davis, William [mailto :Will iam .Davis@mail.house .gov] Sent: Friday, June 09, 2017 4:55 PM To: Bailey, Bradley Subject: Reaching Out Hi Brad, I hope you are doing well. I just wanted to follow up and see if you have some time in the near future to meet to catch up and discuss some of my boss's priorities and projects for tax reform, which includes, I look forward to hearing from you soon. Best, UST 000530 TREAS-17-0313-C-000120 Will William R. Davis Tax Policy Counsel Congressman Tom Reed (NY-23} 2437 Rayburn House Office Building Washington, D.C. 20515 (202} 225-3161 UST 000531 TREAS-17-0313-C-000121 RE: Potential Hearin Question From : "Pfingstag, Lauren (King)" To: "Bailey, Bradley" Cc: "Kellogg, Matthew" Date : Mon, 12 Jun 2017 15:20: 17 -040 0 Attachments : PACE Act of 20 17 One-Page r.pdf (517 .61 kB); PAC E Act of 2017_ Dear Co lleag ue.pdf (537.06 kB) ; PAC E Act Text. pdf (30.01 kB) Thank you Brad. And - sorry to be a bother- but the other item we would be very interested in asking Secretary Mnuchin about is his thoughts on the King-Burr Promoting Affordable Childcare for Everyone (PACE)Act. We were encouraged to see a provision in the President's tax reform proposal (mirrored in his budget proposal) that would provide tax relief for American families struggling with child and dependent care expenses. Specifically, we would like to know the following: Lauren M. Pfingstag Legislative Assistant, Senator Angus S. King, Jr., Maine 133 Hart Senate Office B~ gton, D.C. 20510 Tel: 202-224-5344 I BB: limalllllllllll I lauren_pfingstag@king.senate.gov From : Brad ley.Bail ey@treasury.gov [ma ilto:Bradley.Ba i ley@treasury .gov] Sent: Mond ay, June 12, 2017 2:43 PM To : Pfingstag, Lauren (King) Cc: Matt hew.Kellogg@treasury.gov Subject : RE: Potential Heari ng Quest ion Hi Lauren, Thank you very much for reaching out. We are running the traps on this and will be in touch. Brad From : Pfingstag, Lauren (King) (mailto:Lauren Pfingstag@king.senate.gov ) Sent: Monday , June 12, 2017 2:33 PM To : Bailey, Bradley Subject : Potentia l Hearing Quest ion Hello Brad, My boss wi ll be at t endi ng the Senate Budget Committee hearing tomorrow . o oHate , King, and Ne son introduced t e bi I whic wou ld inc rease t e asset t to $5 billion) in late May, and Senator Perdue just joined as a cosponsor. http ://www. lexo logy.com/1 i bra ry/d eta i I.aspx?g=9d 18cd cc-ebb9-400d-a c45-c8e990452460 . Since UST 000532 TREAS-17-0313-C-000122 Treasury is expected to release a report today on banking regulations, I thought the bipartisan might be of interest to your boss at tomorrow's hearing- even if it is slightly off topic. My direct line is b(6) bill f you have any questions. Thank you! Lauren M. Pfingstag Legislative Assistant, Senator Angus S. King, Jr., Maine 133 Hart Senate Office Building, Washington, D.C. 20510 Tel: 202-224-5344 I BB: 202-412-9395 I lauren==12fingstag @king.senate .gov UST 000533 TREAS-17-0313-C-000123 The PACEActof2017 Senator Angus King (I-Maine) and Senator Richard Burr (R-NC) Background: For too many families, th e cost of childcare can make it difficult to maintain employment and make ends meet. In nearly half of the country, the annual cost of full-time childcare for a 4-year old is greater than the average cost of in-state tuition at a 4-year college or university .l Thos e pressures are felt most by low-wage workers who spend on average more than 30 percent of their income on childcare .z While the federal government provides two significant tax benefits to help offset childcare costs, the Child and Dependent Care Tax Credit (CDCTC)and Dependent Care Flexible Spending Accounts (FSAs), th ey are both in need of an update. Both, for example, have not kept pac e with inflation, meaning they have become less useful over time as the cost of childcare increases. The Promoting Affordabl e Childcar e for Every one (PACE) Act makes several changes to make both tax policies immediately more generous, but also ensures they evolve over time by ensuring annual updates to provide families with greater spending power when seeking care for their children. Because both tax provisions affect care for the elderly and individuals with disabilities, those enhanced benefits will extend to them as well. Bill Summary: The PACEAct makes several key updates to tax provisions that support care for children and other dependents. Specifically, the bill: 1. Modernizes the Child and Dependent Care Tax Credit by: o Making the credi t refundable in order to expand the credit's reach to low-income working parents. o Increasing th e value of the credit by raising the credit rate for families of all income levels, creating a new top rate of 50 percent that phases down to 35 percent for higher -income families. o Indexing the credit to inflation by ensuring that the credit's income phase-out, stepdown rate, and the eligible expenses a taxpayer claims all keep pace with rising childcare costs. 2. Enhances Dependent Care Flexible Spending Accounts (FSAs) by: o Increasing the amount of pre -tax dollars families can put into these accounts from $5,000 to $7,500 . This exclusion from gross income allows families to save money on income and FICAtaxes, and the PACEAct's increase means those savings will go even further than current law's. o Indexing the new cap to inflation so FSAs can keep pace with the cost of childcare. Because the current $5,000 cap is not indexed to inflation, families are falling further and further beh ind the rising cost of care. By rais ing the cap to $7,500, and indexing that amount to inflation, the PACEAct ensures FSAsare reliab ly updated to keep steady a parent's purchasing power for their child's care. 1 2 EconomicPolicyInstitute, ChildCare Costs in the United States, 2016. U.S.Census Bureau,Who'sMindio2theKjds?ChildCareArran~ements . 2013. UST 000534 TREAS-17-0313-C-000124 tinitcd~tatrs~cnatc WASHINGTON , DC 20510 May 15, 2017 Help Increase Access to Affordable Child Care Cosponsor S. 208, the Bipartisan Promoting Affordable Childcare for Everyone (PACE) Act Dear Colleague: Please join us in cosponsoring our bipartisan legislation to help make childcare more affordable for working families. For too many families, the cost of childcare can mak e it difficult to maintain employment and make ends meet . In nearly half of the country, the annual cost of full-time childcare for a 4-year old is greater than the average cos t of in -state tuition at a 4-year college or university. Those pressures are felt most by low-wage workers who spend on average more than 30 percent of their income on childcare . While the federal government provides two significant tax benefits to help offset childcare costs - the Child and D ependent Care T ax Credit (CDCTC) and Dep endent Care Flexible Spending Accounts (FSAs) - they are both in need of an update. For example, neither policies have kept pace with inflation, meaning they have become less useful over time as the cost of childcare increases. The PACE Act would enact several chan ges to make both tax policies immediatel y more generous and modify them to reflect the changing economic landscape by requiring an annual inflation adjustments that will provide working parents with greater purchasing power when seeking care for their children. Because both tax provisions affect care for the elder ly and individuals with disabilities, tho se enhanced benefits will extend to them as well. The PACE Act has been endorsed by the following organizations: Save the Children Action Network (SCAN) o President, Mark K. Shriver: "Any tax reform designed to make child care and early learning more accessible must focus on the poorest children who lack an equal opportunity to succeed . The PACE Act would do just that. Making the Child and Dependent Care Credit fully refundable and adding more value to it are critical steps in helping low -income families provide their children with a strong start in life." First Five Years Fund o Kris Perry, Ex ecutive Director of First Five Years: "The First Five Years Fund applauds and fully supports Senators Burr and King's efforts to update federal child care tax credits. Making these credits refundab le for low-income families, increasing the value of the credit , and indexing the credits to inflation are important steps to makin g our tax code work for working families." Child Care Aware o Lynette Fraga, Exec utive D irector, Child Care Aware(R) of America: "The PACE Act of 2017 takes a step towards tackling the unbearable costs of child care families face across the country. Making the Child and Dependent Care Tax Credit (CDC TC) refundabl e would go a long way toward supporting working families who rely on child care to work and go to schoo l. Since early care and education is so critical to the developm ent of children, it's on us to do as much as we can to support the families who need it - the PACE Act is a critical part of that." UST 000535 TREAS-17-0313-C-000125 First Focus Campaign for Children o Bruce Lesley, First Focus Campaign for Children: "Quality, affordable childcare is not a luxury for working families; it is a necessity that allows parents to work and provides children with a nurturing enviro nment that promo tes early learning. I applaud Senator King and Senator Burr for championing the PACE Act, a bjpartisan solution that helps make our tax code familyfriendly by making the child tax credits more generou s, indexed for inflation and fully refundable. The se updates will provide meaningful relief to working families who struggle to afford quality childcare." Early Care and Educ ation Consortium o Celia Sims, President of the Early Care and Educa tion Consortium: "Fo r most families today, child care is a necessity. Quality child care plays a crucial role in helping parent s obtain and retain employment, enabling parents to earn a Livingwhile their children are in a healthy and safe learning environment. While the cost of child care has increased , federal tax policies related to child care have not kept pace. The PACE Act will help make child care more affordable for families so that children can be in settings that promote their healthy developmen t while their parent s work. The Early Care and Education Consortium suppo rts and applauds Senators King and Burr for intr oducing tax policy reform legislation that helps meet the needs of today's working families." National Association for the Education of Young Children (NAEYC) o Rhian Evans Allvin, CEO ofNAEYC: "NAEYC supports policies that build on the significant body of research and science demo nstrating the benefits of investing in high-quality child care and early learning. The PACE Act of 2017, which strengthens the Child and D ependent Care Tax Credi t (CDCTC) and makes it refund able, is a goo d step towards helping more low- and middle-income familjes address the challenges of affordability, and should be supported as part of a solution for a broad and comprehensive financing strategy that delivers on the promise of early learning that is affordable, accessible and high-quality, for our nation's children, familjes and economy." Currentcosponsors: SenatorCollins and Senator Heller. The bill and a one-pager are attached. For additional information or to cospo nsor the bill, please contact Chris Toppings in Senator Burr's office (Christopher Toppings@burr.senate.gov) or Lauren Pfingscag in Senator King's office (Lauren Pfingstag@king.senate .gov). Sincerely, UST 000536 United States Senator TREAS-17-0313-C-000126 S.L .C. GAI170 85 s. 115TH CONGRESS 1ST SESSIO:\I To amend the Internal Revenue Code of 1986 to make the Child and D ep endent Care 'l'ax Credit fully refundab le, and for other purposes . IN THE SENATE OF THE UNI'TED STArrES Mr. KI NG (for him self and Mr. Bu1= m) intr oduced the followin g-bill; which was r ead twice a nd r eferr ed to th e Comm ittee on -------- A BILL rro amend the Int erna l Revenue Code of 1986 to make th e Child and Dependent Care Tax Credit fully refund able, and for other purpo ses. l B e it enacted by the Senate and I-louse of R epresenta- 2 tiv es of the United States of America in Congress assembled, 3 4 SECTION 1. SHORT TITLE. rrhis Act may be cited as the "Promoting Affordab le 5 Childcar e for Everyone Act" or th e "PACE Act" . 6 SEC . 2. REFUNDABILITY OF CHILD AND DEPENDENT CARE 7 8 TAX CREDIT . (a) IN GENEHAJ.., .- The Int ernal Revenue Code of 9 19 8 6 is amended - UST 000537 TREAS-17-0313-C-000127 S.L.C. GAI170 85 2 1 2 (1) by redesignating and 3 (2) by moving section 36C, as so redesignated, 4 from subpart A of part IV of subchapter A of chap - 5 ter 1 to the location immediately before section 37 6 in subpart C of part IV of subchapter A of chapter 7 1. 8 (b) TECHNICAL AMENDlVIEN'l'S. (1) Paragraph 9 - (1) of section 23(f) of the Inter- IO nal Revenue Code of 1986 is amended by striking 11 "2l(e)" and inserting "36C(e)". (2) Paragraph 12 13 1s amended 14 "36C(e)". 15 by (3) Paragraph (6) of section 35(g) of such Code striking "2l(e)" and inserting (1) of section 36C(a) of such 16 Code (as redesignated by subsection (a)) is amended 17 by striking "this chapter" 18 title". 19 (4) Subparagraph and inserting "this sub - (C) of section 129(a)(2) of 20 such Code is amended by striking "section 2l(e)" 21 and inserting "section 3 6 C (e)". 22 UST 000538 section 21 as section 36C, (5) Paragraph (2) of section 129(b) of such 23 Code is amended by striking "section 21(d)(2)" 24 inserting "section 36C(d)(2)". and TREAS-17-0313-C-000128 GAI170 85 S.L.C. 3 1 (6) ParagTaph (1) of section 129(c) of such 2 Code is amended by striking "section 2l(b)(2)" 3 inserting "section 36C(b)(2)". 4 and (7) Subsection (e) of section 213 of such Code 5 1s amended by striking "section 21" and inserting 6 "section 36C". 7 (8) Subparagraph (H) of section 6213(g)(2) of 8 such Code is amended by striking "section 21" and 9 inserting "section 36C". 10 (9) Subparagraph (L) of section 6213(g)(2) of 11 such Code is amended by striking "section 21, 24, 12 or 32," and inserting "section 24, 32, or 36C,". 13 (10) Paragraph 14 31, United 15 "36C," after "36B,". 16 States (2) of section 1324(b) of title Code, is amended by inserting (11) The table of sections for subpart C of part 17 IV of subchapter A of chapter 1 of the Internal Rev- 18 enue Code of 1986 is amended by inserting after the 19 item relating to section 36B the following: "Sec . 36C. Exp enses for household and dependent care services necessary for gainful employment. ". UST 000539 20 ( 12) The table of sections for subpart A of such 21 part IV is amended by striking the item relating to 22 section 21. TREAS-17-0313-C-000129 S.L.C. GAI170 85 4 1 (c) EFFEC'rIVE DA'l'E.-The amendments made by 2 this section shall apply to taxable years beginning after 3 December 31, 2017. 4 SEC. 3. ENHANCEMENT OF THE CHILD AND DEPENDENT 5 6 CARE TAX CREDIT. (a) IN GENERAL.-Section 36C of the Internal Rev- 7 enue Code of 1986, as redesignated by section 2 of this 8 Act, is amended9 ( 1) in paragraph 10 ing "35 percent reduced (but not below 20 percent)" 11 and inserting "50 percent reduced (but not below 35 12 percent)", 13 14 (2) by redesig11ating subsection (f) as sub- section (g), and 15 (3) by inserting 16 lowing new subsection: 17 "(f) 18 UST 000540 (1) of subsection (a), by strik- lNF'LATION after subsection (e) the fol- ADJUSTlVIENT.- "(1) IN GENERAL.-In the case of any taxable 19 year beginning after 201 7, each 20 amounts in subsections 21 creased by an amount equal to- of the dollar (a)(2) and (c) shall be in- 22 "(A) such dollar amount, multiplied by 23 "(B) 24 mined under 25 year in which the taxable year begins, deter- the cost-of-living adjustment deter- section 1 (f) (3) for the calendar TREAS-17-0313-C-000130 S.L.C. GAI170 85 5 1 mined by substituting 2 'calendar 3 thereof. 4 "(2) ROUNDING.-If year 'calendar year 2016' for 1992' in subparagraph any mcrease (B) determined (1) is not a multiple of $50, such 5 under paragraph 6 increase shall be rounded to the nearest multiple of 7 $50.". 8 (b) EI<'Io 'EC'l'IVE DA'rE .-The amendments made by 9 this section shall apply to taxable years beginning after 10 December 31, 2017. 11 SEC. 4. INCREASE IN EXCLUSION FOR EMPLOYER-PR012 13 VIDEO DEPENDENT CARE ASSISTANCE. (a) IN GENERAL.-Subparagraph (A) of section 14 129(a)(2) of the Internal Revenue Code of 1986 (relating 15 to dependent 16 striking care assistance "$5,000 ($2,500" programs) and inserting is amended by "$7,500 (half 17 such dollar amount''. 18 (b) INFLA'l'IONADJUS'l'lVIEN'l'.-Paragraph (2) of sec- 19 tion 129(a) of such Code is amended by redesignating sub20 paragraph UST 000541 (C) as subparagraph (D) and by inserting after 21 subparagraph (B) the following new subparagraph: 22 "(C) INFLA'l'ION ADJUSTlVIENT.-In the 23 case of any taxable year begi1ming in a calendar 24 year after 2018, the $7,500 amount in subpara- TREAS-17-0313-C-000131 S.L .C. GAI170 85 6 1 graph 2 equa l to- (A) sha ll be increased by an amount 3 "(i) such dollar amount, multiplied by 4 "(ii) the cost-of -living adjustment 5 termined under section l(f)(3) for the cal - 6 endar year in which the taxable year be- 7 gins , determined by substituting 8 year 20 17' for 'ca lendar year 199 2' in sub - 9 paragraph de- 'ca lendar (B) thereof. 10 Any increase determined 11 sentence sha ll be rounded to the nearest mu l- 12 tiple of $100.". 13 (c) EFFE CTIVE DATE.-The under the preceding amendments made by 14 this section shall apply to taxable years beginning after 15 December 31, 20 17 . UST 000542 TREAS-17-0313-C-000132 a enda for toda From: "Callas, George" To: >, "Meyer, Joyce Y. >, wonger, my . EOP/WHO" , oenig, Andrew D. EOP/WHO" >, "Muzinich, Justin" , owa s 1, arne < arne. owa ski@treasury.gov>, mark_prater@finance.senate.gov, "Dunn, Brendan (McConnell)" , "Angus, Barbara" Date: Tue, 13 Jun 2017 11 :20:07 -0400 Attachments: Tax working group agenda 06.13.17.docx (19.62 kB) "Knight, Shahira E. EOP/WHO" EOP/WHO" Trying to get back in the hab it of pro duc ing an "agenda" - whic h is intended to be more a guideline than a rule. Not suggesting we need to go through these line by line. Rather, I am flagging var ious issues that I th ink t he group needs to consider for us to have a thorough discussion. Per the attached b(5) b(5) George A. Callas Senior Tax Counsel Office of the Speaker UST 000543 TREAS-17-0313-C-000133 RE: IRS From : "Angus, Barbara" To: "Muzinich, Justin" Cc: "Kowalski, Daniel" , 'We st, Thomas" , "Mackie, James Ill" Date: Tue , 13 Jun 2017 12:22:19 -0400 That makes sense. Thanks very much. Barbara M. Angus Chief Tax Counsel Committee on Ways and Means 202.225.5522 From : Justin .Muzin ich@treasury.gov (ma ilto:Justin. Muzin ich@treasury.gov] Sent : June 13, 2017 9:12 AM To : Angus, Barbara Cc: Dani el. Kowalski@treasury.gov; Thomas.West@treasury.gov; Ja mes.Mackie@treasu ry.gov Subject: IRS Barbara - Hope you had a nice weekend. You mentioned to me in our last meet ing that UST 000544 TREAS-17-0313-C-000134 Re: Border stor From: "Knight, Shahira E. EOP/WHO" > To: "Angus, Barbara" Cc: "Muzinich, Justin" , "Kowalski, Daniel" , brendan_dunn@mcconnell.senate.gov, "Prater, Mark (Finance) (Mark_Prater@finance.senate .gov)" , "Callas, George" Date: Tue, 13 Jun 2017 13:22:20 -0400 Thanks for flagging . I was not concerned about the article. On Jun 13, 2017, at 12:03 PM, Angus, Barbara wrote: Wanted to flag this for you right away. o o The Chairman was simply explaining the current House position. Happy to discuss this further at our meeting this afternoon. And please call me if you'd like to talk sooner. or b(6) Thanks very much. Barbara M. Angus Chief Tax Counsel Committee on Ways and Means 202.225.5522 GOP LawmakerFloats 5-Year Phase-In of Border AdjustmentTax Proposal from Rep. Kevin Brady comes amid criticism of plan By Richard Rubin June 13, 2017 11:33 a.m. ET WASHINGTON-The top House Republican tax legislator floate d a five-year phase-in to his controversial "bo rder adjustment " idea on Tuesday in a bid to blunt mounting opposition to the concept. The phase-in offered by Rep. Kevin Brady (R., Texas ) is a resp o nse to critics who worry about the disruption that border adjustment could cause for companie s, supply chains and consumers. It is a sign that Mr. Brady continues to press ahead with border adjustment and refine details of that plan rather than drop the proposal as some Republ icans are urging. "This reflects really the input we 've gotten , the feedbac k we've gott en," Mr. Brady , the chairman of the 1-buse Ways and Means Committee, said at the annual meeting of The Wall Street Journa l's CFO Network. "A very gradual five-year phase in really resolves the major challenges. " Mr. Brady also said his plan would include targeted rules for the financial services, insurance, communications and d igital-services industries. "It's hard to determine where ... the border begins in the cloud," he said. Mr . Brady's propo sa l for a 20% top co rporate-tax rate includes bord er adjustment , which exempts exports from U.S. taxation but denies companies the ability to deduct import costs. UST 000545 TREAS-17-0313-C-000135 Under the phase-in suggested by Mr. Brady, only 20% of import costs would be nondeductible in the first year of the new tax system, stepping up steadily each year until it reaches 100% in the fifth year. The tax exemption for exports would phase in. It's not clear whether the phase-in will be enough to soften or halt the opposition to border adjustment. Opponents warn that taxing imports would drive up consumer prices and they doubt that currencies would adjust to offset the tax changes as quickly and smoothly as some economists project. The issue fractured the U.S. corporate world into competing coalitions with companies such as Eli Lilly & Co. and Oracle Corp. backing border adjustment and firms like Macy's Inc. and Best Buy Co. opposing it. The idea has steadily lost support since Mr. Brady first pitched it in June 2016. It now seems nearly impossible for border adjustment to pass the Senate, and there's even opposition from several Republicans on Mr. Brady's committee. But Mr. Brady and House Speaker Paul Ryan (R., Wis.) have clung to border adjustment for several reasons. First, it would generate up to $1 trillion over a decade to offset rate cuts, though the phased-in approach would lower that number. And second, border adjustment plays an important role in the way the U.S. taxes foreign income. Republicans and large corporations generally want what's known as a territorial system, in which the U.S. would stop taxing its companies' foreign income. But that has to be paired with some rule to prevent companies from shifting their U.S. profits to low-tax jurisdiction. Otherwise, much of the corporate tax base could flee. In the Ryan-Brady plan, border adjustment serves that function. That's because taxes are based not on where profits are earned, which is a definition that companies have learned to manipulate. Instead, taxes are based on the location of consumers, which is harder to move. Mr. Brady said he also hoped that border adjustment would encourage companies to shift their supply chains back to the U.S. UST 000546 TREAS-17-0313-C-000136 Tax Working Group Where: Treasury When : Thu Jun 15 16:00:00 2017 (America/New_York) Until: Thu Jun 15 18:00:00 2017 (America/New_York) Organiser : "Prater , Mark (Finance)" Required Attendees: "Prater, Mark (Finance)" "Cough lan , Tony (Finance)" "Rutledge , Preston (Finance)" "Acuna , Jennifer (Finance)" "Hanna , Christopher (Finance)" "Oman , Eric (Finance)" "Wyatt , Nick (Finance)" 'Wrase , Jeff (Finance)" Optional Attendee : "Muzinich, Justin" Please send our name as on id, date of bi(R)aJsocial security number, citizens hip, country of birth and city of residence too o treasu . ov orl:I! o @treasury.gov as soon as you can. You can also call o , 1 you prefer to not send this information over email . UST 000547 TREAS-17-0313-C-000137 ver From: 'Wr ase, Jeff (Finance)" To: "Muzinich , Justin" Date : Wed, 14 Jun 2017 11:40 :46 -0400 Attachments: Tax Reform Mot ivation v2 .docx (637 kB) Justin, as discussed, I've attac hed a docume nt with some initi al thoughts on motivating the need for tax refor m, guided by th e Goals for Tax Refo rm th at were put out in th e President's "2017 Tax Reform for Economi c Growth and American Jobs: The Biggest Individual and Business Tax Cut in American History ." (Goals reprod uced below ). The docume nt is rough, but contains some link s and rhetoric that are likely good resources to dr aw upon . o o o b(5) o Jeffrey Wrase Chief Ec onomi st Senate Finance Committee (202)-224-3476 j eff wrase @finance. senate. gov UST 000548 TREAS-17-0313-C-000138 Tax Working Group Where: 3120 Main Treasury When: Tue Jun 20 16:00:00 2017 (America/New_York) Until: Tue Jun 20 16:00:00 2017 (America/New _York) Organiser: "Kowalski , Daniel" <"/o=ustreasury/ou=exchange administrative group (fydibohf23spdlt)/cn=recipients/cn=cf6b4ee3710f422fbceecb0020766838-kowalski, dan"> Required Attendees: )" )" Optional Attendees: treasury.gov> treasury. gov> If you are on this invite, we have the information needed to clear you into the building . If this invite has been forwarded to you lease send clearance information to both @treasury .gov and o , treasu . ov (they work as a team). They will need your name as on id date of birth, social security num er, citizenship , country of birth and city of residence. You can also call o , if you prefer to not send this information over email. lffid Thanks . UST 000549 TREAS-17-0313-C-000139 FW: Thou hts on idea from Senate From: "Hanna, Christopher (Finance)" To: "Mackie, James Ill'' Cc: "Kowalski, Daniel" Date: Tue , 20 Jun 2017 12:34:31 -0400 Attachments: Deny Rate Reduction Benefit Attributable to Excess Depreciation (1985).pdf (407.88 kB) Jay, Do you have time to discuss this today or tomorrow. Thanks. Christopher H. Hanna Senior Policy Adv isor for Tax Reform U.S. Senate Finance Committee Repub lican Staff (202) 224-4515 Christop her_Han na@finance.senate.gov From: Daniel .Kowalski@treasury.gov [mai lto:Daniel.Kowalski@treasu ry.gov] Sent: Tuesday, June 13, 2017 7:44 PM To : James.Mack ie@t reasury. gov Cc: Hanna, Christopher (Finance) Subject: Thoughts on idea from Senate Christoph er handed this t ho ughts. o b(5) Let us know what you t hink on bot h counts. Thank s, Dan UST 000550 TREAS-17-0313-C-000140 The President's Tax Proposals to the Congress for Fairness, Growth, . and Simplicity May 1985 UST 000551 TREAS-17-0313-C-000141 j } DENY RATE REDUCTION BENEFIT ATTRIBUTAaLE TO EXCESS DEPRECIATION General Explanation Chapter Current 7.07 Law Accelerated depreciation deductions are allowed under both ?the Accelerated Cost Recovery system ("ACRS") and pre-ACRS depreciation schedules based on useful lives. With respect to property placed in service before 1981, a taxpayer could generally elect to use either the straight-line method or an accelerated method such as the declining-balance method or the sum-of-the-years-digits method applied over the useful life of the property or over the class life of the property under the Class Life Asset Depreciation Range system. For purposes of computing their earnings and profits, corporations are required to use the straight-line method over the same useful life or class life used to compute depreciation deductions. Generally, for property placed in service after 1980, ACRS prescribes accelerated depreciation deductions over specified recovery periods. However, for purposes of computing earnings and profits, corporate taxpayers must use the straight-line method over longer recovery periods. Thus, in the early years of an asset's life, accelerated depreciation deductions under both ACRS and pre-ACRS law exceed straight-line depreciation deductions used to calculate a corpt>ration's earnings and profits for tax purposes (E&P depreciation). Conversely, in the later years of an asset's life, accelerated depreciation deductions are less than E&P depreciation deductions; the year in which this first occurs may be referred to as the asset's "crossover point." . The top marginal rate for corporations was 48 percent for 1980 and 1981 and 46 percent for taxable years beginning after 1981. The top marginal tax rate for individuals was 70 percent for 1980 and 1981 and 50 percent for taxable years beginning after 1981. Reasons fat Change The effect of using an accelerated depreciation method is that, relative to a calculation based on the straight-line method, taxable income is reduced in the years in which accelerated depreciation exceeds straight-line depreciation (i.e., years before the crossover point) and taxable income is increased in later years in which straight-line depreciation exceeds accelerated depreciation (i.e., in years after the crossover point). Thus, accelerated depreciation methods produce a deferral of tax liability relative to the time profile of tax liability that would result from the straight-line deprec~ation method. - 192 - UST 000552 TREAS-17-0313-C-000142 As long as tax rates remain constant over the life of an asset, the amount of tax that is deferred as a result of accelerated depreciation is equal to the amount of tax that is repaid in later years. However, a reduction in tax rates for the later years produces an unexpected benefit for the taxpayer by reducing the t~x that must be repaid relative to the tax that was deferred. This unexpected is in addition to the intended benefit of intere$t-free benefit deferral of the tax liability inherent in the acceleration of deductions. The Administration proposals include a substantial reduction in tax rates effective on July 1, 1986. The top marginal rate would be reduced from 46 percent to 33 percent for corporations (a 13 and from 50 percent to 35 percent for ? percentage point reduction) indivitluals (a 15 percentage point reduction). Compared with the 48- percent and 70-percent rates in effect for corporations and individuals, respectively, prior to 1982, the rate reduction is even more substantial. Most taxpayers with substantial accelerated cost recovery deductions taken over the period 1980-85 will have been able to reduce tax at rates of 46 or 50 percent (48 or 70 percent for 1980-81). These taxpayers generally expected to repay their deferred tax liabilities attributable to accelerated depreciation at the 46 or 50 percent rate. However, because of the currently applicable proposed reduction in tax rates after July 1, 1986, the deferred tax liabilities of such taxpayers would generally be repaid at a 33-petcent rate instead of a 46-percent rate for corporations (at a 35-~ercent rate instead of a SO-percent rate for top~bracket individuals}. In the absence of a rule designed to recapture this of the reduction in rates, part of the deferred tax unexpected benefit liabilities attributable to accelerated depreciation d~ductions would effectively be forgiven. Taxpayers with deferred tax liabilities on windfall benefit, which had July 1, 1986, would obtain an unintended not been anticipated when investment decisions were made. Proposal In order to prevent taxpayers from obtaining the unexpected windfall benefit described above, 40 percent of a taxpayer's ''excess depreciation" taken between January 1, 1980, and July 1, 1986, would be included in income over a three-year period. The excess depreciation over such perlod would be the excess of cumulative depreciation or ambctization deductions over cumulative depreciation deductions that would have been allowed during such period using the straight-line method specified under current law for E&P depreciation (Code section 312(k)), For calendar-year taxpayers, 12 percent of the excess depreciation would be included in income for the 1986 taxable year, 12 percent in 1987, and 16 percent in 1988, Appropriate adjustments would be made to this schedule for fiscal-year taxpayers to put them on the same basis as ca l endar-year taxpayers. - 193 - UST 000553 TREAS-17-0313-C-000143 Taxpayers whose total depreciation deductions taken between January 1, 1980, and December 31, 1985, are less than $400,000 would not be subject to the rate-reduction recapture rule. such taxpayers would accordingly not have to make the excess depreciation calculation described above. Moreover, for those taxpayers who are subject to the would be exempt from rule, the first $300,000 of excess depreciation If the taxpayer were in existence the rate-reduction recapture rule. for only part of the 1980-85 period, the $400,000 threshold and $300,000 exemption would be adjusted accordingly. For purposes of the rate-reduction recapture rule, any excess depreciation would be reduced by any net operating losses carried forward by the taxpayer from a year before 1986 to a taxable year beginning after 1985. Tl1e reduction of excess depreciation by such net operating losses would not reduce the amount of such losses that could be offset against taxable income, The proposed rate-reduction recapture rule would be applied at the level of individual partners, or beneficiaries, not at the level shareholders in ans corporation, s corporation, or trust. Amounts included in income of a partnership, under the rule that are attributable to foreign property would be treated as forei9n-source income o .Effective Date 12 percent of the excess depreciation For calendar-year taxpayers, would be included in income for the 1986 taxable year, 12 percent in i11 1988, Appropriate adjustments would be made 1987, and 16 percent to this schedule for fi$cal-year taxpayers to put them on the same basis as calendar-year taxpayers. Property subject to the rate-reduction recapture rule would include all property placed in service on or after January 1, 1980, and before January 1, 1986, for which depreciation or amortization deductions were allowable under current law for any part of the period January 1, 1980, through June 30, 1986. where Transfers of property before July 1, 1986, in transactions gain was not recognized would be disregarded in computing the under the rate-reduction recapture rule. transferor's liability Similar rules would be provided for transfers to related parties, with an appropriate adjustment foe income recognized on the transfer. It is anticipated that the tax writing committees will provide any other transition rules necessary to prevent avoidance of the rate-reduction recapture. Foe example, the committees may wish to develop special rules for dispositions of real property in transactions where the gain attributable to excess depreciation is not fully subject to recapture under current law. No dis~ositions of property aftet June 30, 1986, would relieve the taxpayer of liability under the recapture rule, since such liability would be calculated as of that date. - 194 - UST 000554 TREAS-17-0313-C-000144 Analysis The proposal would prevent an unexpected windfall that would by taking otherwise accrue to taxpayers who deferred tax liability accelerated depreciation deductions at relatively high pre-reform tax rates, but would repay this deferred tax liability at lower post-reform tax rates. To reduce administrative complexity, the Administration proposal only approximates the rules that would be needed to eliminate the windfall precisely. Ideally, the amount of the recapture tax on depreciable assets would be calculated as follows. The amount of excess depreciation on each asset placed in service prior to January 1, 1986, would be defined as the cumulative difference between accelerated and economic depreciation between the time the asset was placed in service and June 30, 1986. The tax would be equal to excess depreciation times the difference between the pre-reform and post-reform tax rates for the particular taxpayer, say, 13 percent. This tax would be assessed when the tax deferral associated with the accelerated deductions was repaid. That is, once the asset passed its crossover point, the taxpayer's annual tax burden would be increased by 13 percent of the amount of "deficient depreciation'' in that year -- the amount by which economic depreciation exceeds accelerated depreciation -- until the full amount of the recapture tax was paid. Such a rule would ensure that tax deferrals that reduced income under the high pre-reform rate structure would be repaid at the expected time and at the expected tax rate, rather than at significantly lower post-reform rates. The proposal contains a number of simplifying assumptions. E&P depreciation is used as a proxy for economic depreciation. This choice is made primarily for convenience, since most of the taxpayers subject to the proposal would be corporations that are currently In addition, no attempt is made required to compute E&P depreciation. to determine the appropriate tax differential for each taxpayer. Inatead, the tax is assessed by including in income 40 percent of the cumulative excess depreciation taken prior to June 30, 1986, on assets placed in service between January 1, 1980, and December 31, 1985. for large This implies an effective recapture tax rate of 13,2 percent corporations that will experience a rate reduction from 46 to 33 percent; this rate is slightly below the 15 percent rate which should apply to corporate deductions taken at a 48 percent rate. For top-bracket individuals, inclusion of excess depreciation in income at a 40 percent rate results in an effective recapture tax rate of 14 percent. This is slightly lower than the 15 percentage point reduction that would be appropriate for a top-bracket taxpaye ?r who will experience a rate reduction from 50 to 35 percent; it is considerably below the 35 percent rate that should apply to individual deductions taken at a 70 percent rate. Virtually all individuals subject to the tax will be top-bracket taxpayers. - 195 - UST 000555 TREAS-17-0313-C-000145 Similarly, no attempt is made to allocate the recapture liability across the years beyond the asset's crossover point as described above. Such a procedure would be exceedingly complex, as it would involve the calculation of the difference between accelerated and E&P depreciation for many years into the future for all assets subject to the rule. For certain assets, particularly long-lived property, determination of the amount of recapture liability with reference to the amount of excess depreciation taken prior to June 30, 1986, although correct in dollar terms, would overstate the liability in present value terms, since the additional tax liability would appropriately be assessed in later years. The proposed three year spread of the inclusion in income associated with the recapture rule would mitigate this problem, since it would reduce the present value of the rate-reduction recapture liability. The recapture rule could be applied to all existing assets that would benefit from deferring tax liability at high pre-reform rates and repaying the deferred liability at lower rates. The limited scope of the provision is intended to reduce complexity, recognizing, for tax liability with respect to example, that most or all of deferred older depreciable assets will hav~ been repaid by June 30, 1986. The de minimis rule which exempts corpornte and individual taxpayers with cumulative depreciation deductions over the 1980-1985 period of less than $400,000 from the rate reduction recapture rule would ensure that most taxpayers would not be subject to the rule and would not have to calculate their excess depreciation, Furthermore, taxpayers who may fall just above the $400,000 threshold would benefit from the exemption of $300,000 of excess depreciation from the ratereduction recapture rule. Only about 150,000 individuals and 10 percent of corporations would be subject to the rule. The recapture rule applies effect on the cost of capital only to old capital for new equipment. and thus it h~s no - 196 - UST 000556 TREAS-17-0313-C-000146 RE: Thou hts on idea from Senate From: "Mackie, James Ill" <"/o=ustreasury/ou=do/cn=recipients/cn=mackiej"> To: "Hanna, Christopher (Finance)" Cc: "Kowalski, Daniel" Date: Tue, 20 Jun 2017 14:41:07 -0400 l :30itis . My number is b(6) From: Hanna, Christopher (Finance) [mailto:Christopher_Hanna@finance.senate.gov] Sent: Tuesday, June 20, 2017 1:30 PM To: Mackie, James III Cc: Kowalski, Daniel Subject: RE: Thoughts on idea from Senate Would 130pm or 330pm tomorrow work. Thanks. From: James.Mackie@treasury.gov [mailto :James.Mackie@treasury .gov] Sent: Tuesday, June 20, 2017 1:26 PM To: Hanna, Christopher (Finance) Cc: Daniel .Kowalski@treasury .gov Subject: RE: Thoughts on idea from Senate Sure. How about tomorrow afternoon ? From: Hanna, Christopher (Finance) [mailto:Christopher Hanna@finance.senate.gov] Sent: Tuesday, June 20, 2017 12:35 PM To: Mackie, James III Cc: Kowalski, Daniel Subject: FW: Thoughts on idea from Senate Jay, Do you have time to discuss this today or tomorrow. Thanks . Christopher H. Hanna Senior Policy Advisor for Tax Reform U.S . Senate Finance Committee Republican Staff (202) 224-4515 Christopher Han na@finance.senate .gov From: Daniel .Kawa lski@treasury .gov [mailto:Daniel.Kowalski@treasu Sent: Tuesday, June 13, 2017 7:44 PM To: James.Mackie@treasury .gov Cc: Hanna, Christopher (Finance) Subject: Thoughts on idea from Senate Christopher handed this paper to me after our meeting today with a specific request to get your UST 000557 TREAS-17-0313-C-000147 Let us know what you think on both counts. Thank; Dan UST 000558 TREAS-17-0313-C-000148 RE: Tax Workin From: "Prater, Mark (Finance)" To: "Callas Geor e" < eor e.callas@mail.house.gov> , "Knight, Shahira E. EOP/WHO" > Cc: "Koenig, Andrew D. EOP/WHO" >, "Angus, Barbara" , owa s ,. anie < arne . owalski@treasury.gov>, "Dunn, Brendan (McConnell)" , 'Wrase, Jeff (Finance)" , "Muzinich, Justin" , "West, Thomas" "Mackie James Ill'' , "Swon er Am H. EOP/WHO" >, "Meyer, Joyce Y. EOP/WHO" Date: Wed, 21 Jun 2017 21:36:40 -0400 Thx, folks. Sent from my Verizon, Samsung Galaxy smartphone -------- Original message -------From: "Callas, George" Date: 6/21/17 9:06 PM (GMT-05:00 To: "Knight, Shahira E. EOP/WHO" Cc: "Koenig, Andrew D. EOP/WHO' >, "Prater, Mark (Finance)" : , g ,: g s@mail.house.gov>, Daniel.Kowalski@treasury .gov, "Dunn, Brendan (McConnell)" , "Wrase, Jeff (Finance)" , Justin.Muzinich@treasury.gov, Thomas.West treasu . ov James.Mackie@treasury.gov , "Swan er Am H. EOP/WHO" >, "Meyer, Joyce Y. EOP/WHO" > or rng roup . . . . Ditto On Jun 21, 2017, at 9:02 PM, Knight, Shahira E. EOP/WHO wrote: Works for me too. Thanks . On Jun 21, 2017, at 8:59 PM, Koenig, Andrew D. EOP/WHO wrote: Good for OLA. Thanks! On Jun 21, 2017, at 8:36 PM, Prater, Mark (Finance) wrote: Thanks, Barbara and Justin. From : An gus, Barbara [mailto :Barbara .Angus@mail.ho use.gov] Sent: Wednesday , June 21, 2017 8:31 PM UST 000559 TREAS-17-0313-C-000149 I .. .I I . I I o . t I . 'I . I ' . ! . . . I . I o I I. o. . I .. : I o I I I I I : I !o I . : I : I :o Subject: RE: Tax Wo rking Group Thanks, Mark . That works for Team W&M . Barbara M. Angus Chief Tax Counsel Committee on Ways and Means 202.225.5522 From: Prater, Mark (Finance) (mailto:Mark Prater@finance.senate.gov ] Sent : June 21, 2017 8:23 PM To : Call as, George ; 'Daniel.Kowalski@treasurv.gov ' ; Dunn, Brendan (McConnell) < Brendan Dunn@mcconnell.senate.gov >; Wrase, Jeff (Fin ance) ; Angus, Barba ra ; ; Justin.Muzinich@treasury.gov : ; Thomas.West treasur . ov? James.Mackie@treasurv.gov ; Hey Folks, I need to see if we can move Friday's meeting start time back to 10 a.m. Still looking for 90 minutes of discussion, so figure folks cou ld exit by 11:30 a.m. We are glad to host in S-124. From: Callas, George fmai lto :George .Callas@ma iLhouse .goyl Sent : Tuesday, June 20, 2017 4:25 PM To: 'Daniel.Kowalski@treasury.gov ' ; Prater, Mark (Finance) ; Dunn, Brendan (McConnell) ; Wrase, Jeff (Finance) ; Angus, Barbara ; ; Justin.Muzinich@treasury.gov : ; Thomas.West treasur . av ? James.Mackie@treasury.gov ; Subject: RE: Tax Working Group b(5) -----Origjna l Appointment----From: 1.#iijj oo @treasury.gov mailto: Daniel .Kowalski@treasury.gov Sent : Tuesday, June 20, 2017 10:40 AM To : Daniel.Kowalski@treasury.gov ; Mark Prater@Finance.senate.gov ; Brendan Dunn@mcconnell.senate.gov ; Jeff Wrase@finance.senate.gov ; Angus, Barbara; Callas, George; ; Just in.Muz inich@treasury.gov ; @treasury.gov : James.Mackie@treasury.gov : UST 000560 TREAS-17-0313-C-000150 When: Tuesday, June 20, 2017 4:30 PM-5:30 PM (UTC-05:00) Eastern Time (US & Canada). Where: 3120 Main Treasury -- conf call , o If you are on this invite, we have the information needed to clear you into the building. If this invite has been forwarded to ou, lease send clearance info rmation to both @treasury.gov and o o t reasur . ov (they wor k as a team). They wi l l need your name as on id, date of birth, social securit y number, citizensh ip, country of birth and city of residence. You can also call liilli if you prefer to not send this information over emai l. MM Thanks. UST 000561 TREAS-17-0313-C-000151 Re: Draft A enda From: "Callas, George" To: "Knight, Shahira E. EOP/WHO" Cc: "Kowalski, Daniel" , "Bailey, Bradley" "Koenig, Andrew D. EOP/WHO" >, "Muzinich, Justin" , "Angus , ar ara < ar ara.angus ma,. ouse.gov>, "Dunn, Brendan (McConnell)" Date: Thu , 22 Jun 2017 08:16:57 -0400 > , "Prater, Mark (Finance)" b(5) From: "Knight, Shahira E. EOP/WHO" Date: Thursday, June 22, 2017 at 6:56 AM To: " mark prater@finance.senate .gov " Cc: " Daoiel.Kowalski@treasury ,gov", " Bradley .Bailey@treasury .gov ", " Koenig, Andrew D. EOP/WHO", George, Justin Muzinich , "Angus, Barbara", Brendan Dunn Subject: Re: Draft Agenda b(5) On Jun 22, 2017, at 6:49 AM, Prater, Mark (Finance) wrote: Thanks, Shahira. Looks good . Thanks for putting it together . b(5) Sent from my Verizon, Samsung Galaxy smartphone b(5) Thanks Dan UST 000562 TREAS-17-0313-C-000152 on Jun 22, 20 17, at 6: 12 AM, "DaoieLKowalsk i@treasury.gov" wrot e: From : Knight, Shahira E. EOP/WHO Date: June 21, 2017 at 10:45:20 PM EDT To : Koenig, Andrew D. EOP/WHO > >, Callas, George , Angus, Barbara , Brendan M. Dunn /Brendan Dunn@mcconnell.senate.gov ) , Bailey, Bradley , Muzin ich, Justin . Kowalski, Daniel , mark prater@Finance .senate .gov Subje ct: Draft Agenda All, Based on today's meet ing, I put together a draft agenda for your review. Please let me know if you have any comments/edi t s/c hanges. Thanks UST 000563 TREAS-17-0313-C-000153 Revised Draft A enda From: "Knight, Shahira E. EOP/WHO" To: "Callas, George" , Cc: "Kowalski, Daniel" , "Bailey, Bradley" "Koenig , Andrew D. EOP/WHO" >, "Muzinich , Justin" ngus , a ara < ar ara.angus@mail.house .gov> , "Dunn , Brendan (McConnell)" Date: Thu , 22 Jun 2017 09:35 :30 -0400 Attachments: June 22 Draft Agenda.docx (13.19 kB) Let me know if there are other comments. "Prater, Mark (Finance)" , Thanks. June 22, 2017 4 :30 PM - 5:30 PM H-230 AGENDA DRAFT UST 000564 TREAS-17-0313-C-000154 RE: Revised Draft A enda From: "Knight, Shahira E. EOP/WHO" To: "Prater, Mark (Finance)" , "Angus , Barbara" , "Callas, George" Cc: "Kowalski, Da niel" , "Bailey, Bradley" "Koenig, Andrew D. EOP/WHO" >, "Muzinich , Justin" , < rendan_dunn@mcconnell.senate.gov> Date: Thu , 22 Jun 2017 11:58:10 -0400 Attachments: June 22 Draft Agenda.docx (13.29 kB) Final version attached. Only change reflects that b(S) b(5) June 22, 2017 4:30 PM - 5:30 PM H-230 AGENDA From: Prater, Mark (Finance) [mai lto :Mark_Prater@finance.senate .gov] Sent: Thursday , June 22, 2017 11:08 AM To : An us, Barbara ; Knight, Shahira E. EOP/WHO >; Callas, George Cc: Daniel.Kowa lski@t reasury.gov; Bradley.Bai ley@treasury.gov ; Koenig, Andrew D. EOP/WHO UST 000565 TREAS-17-0313-C-000155 >; Justin.Muzinich@treasury.gov; Subject : RE: Revised Draft Agenda Dunn , Brendan (McConnell} Ditto. Sent from my Verizon, SamsungGalaxysmartphone -------- Original message -------From: "Angus, Barbara" Date: 6/22/17 10:41 AM (GMT-05:00 To: "'Knight, Shahira E. EOP/WHO '" , "Callas , George" , "Prater, Mar (Fmance)" Cc : Danie l.Kowalski treasu . ov Brad le .Bailey@treasury.gov, "Koenig, Andrew D . EOP/WHO" , JustinMuzinich @treasury.gov, "Dunn, Brendan (Mc onne < ren an_ unn mcconnell.senate.gov > Subject: RE: Revised Draft Agenda I think this looks good. And it should make for a good discussion th is afternoon. Thanks very much. Barbara M. Angus Chief Tax Counsel Committee on Ways and Means 202.225.5522 From: Knight , Shah ira E. EOP/WHO [mai lto Sent : June 22, 2017 10:36 AM To : Call as, George ; Prater, Mark (Finance} < Ma rk_Prater@fi n a nee.senate .gov> Cc: Danie l. Kowalski@treasury.gov; Bradley.Bai ley@treasury.gov; Koenig, Andrew D. EOP/WHO >; Justin.Muz inich@t reasury.gov; Angus, Barbara ; Dunn, Brendan (McConne ll) Subject : RE: Revised Draft Agenda Revised June 22, 201 7 4 :30 PM - 5:30 PM H-230 AGENDA DRAFT UST 000566 TREAS-17-0313-C-000156 >; Prater, M ar k (Finance) b(5) From: Knight , Shahira E. EOP/WHO Sent: Thursday, June 22, 2017 9 :36 AM To : Call as, George; Prater, Mark (Finance) Cc: Daniel.Kowalski@treasury .gov : Bradley .Bailey@treasury .gov; Koenig, Andrew D. EOP/WHO; Justin.Muzinich@treasury.gov ; Angus, Barbara ; Dunn, Brendan (McConnell) Subject : Revised Draft Agenda Let me know if there are othe r comments. Thanks. June 22, 2017 4 :30 PM - 5:30 PM H-230 AGENDA DRAFT UST 000567 TREAS-17-0313-C-000157 UST 000568 TREAS-17-0313-C-000158 a enda for toda 's meetin From: "Callas, George" To: "Angus, Barbara" , mark_prater@finance.senate .gov, "Dunn, Brendan (McConnell)" , "Muzinich, Justin" . "Kowalski, Daniel " . "Bailey, Bradley" "Koeni Andrew D. EOP/WHO" Date: Mon, 10 Jul 2017 14:41:46 -0400 Attachments: Tax working group agenda 07 .10.17.docx (18.94 kB) b(5) George George A. Callas Senior Tax Counsel Office of the Speaker UST 000569 TREAS-17-0313-C-000159 FYI From: "Wrase , Jeff (Finance)" To: "Knight , Shahira E. EOP/WHO" Date: Mon, 10 Jul 2017 18:48:55 -0400 Attachments: The Goals for Tax Reform in President Trump's Framework-background (909 .82 kB) >, "Muzin ich , Justin" information.docx Jeffrey Wrase Chief Economist Senate Finance Committee (202)-224-3476 j eff wrase@finance.senate. gov UST 000570 TREAS-17-0313-C-000160 RE: FYI From: "Wrase, Jeff (Finance)" To: "Muzinich , Justin" , Date : Mon , 10 Jul 2017 20:39:41 -0400 Sounds great guys; many thanks . From: Justi n.Muz in ich@treasury.gov [mailto: Justin .Muz inich@treasu ry.gov] Sent: Monday, July 10, 2017 8:38 PM To : ; Wrase, Jeff (Finance) Subject: Re: FYI Yes thanks v much Jeff. Sorry to be slow on our report. Shahira and I are now reviewin g a draft. From: Knight, Shahira E. EOP/WHO Date: July 10, 2017 at 7:23:47 PM EDT To: Wrase, Jeff (Finance) Cc: M uzinich, Just in Subject: Re: FYI b(5) > On Jul 10, 2017, at 6:49 PM, Wrase , Jeff (Finance) wrote: > > > Jeffrey Wrase > Chief Economist > Senate Finance Comm ittee > (202)-224-3476 > jcff wrasc @financc .scnatc.gov > > UST 000571 TREAS-17-0313-C-000161 RE: to individual rate From: "Callas, George" To: "Muzinich, Justin" , Date: Tue, 11 Jul201710:30:16-0400 "Kowalski, Daniel" gracias From: Justi n.Muzin ich@treasury.gov [mailto:Justi n .Muzin ich@treasury.gov] Sent: Tuesday, July 11, 2017 10:15 AM To: Daniel.Kowalski@treasury.gov; Callas, George Subject: Re: top individual rate Yes. We can provide . From: Callas, George Date: July 11, 2017 at 10:14:02 AM EDT To: Muzinich, Justin , Kowalski, Daniel Subject: top individual rate b(5) George A. Callas Senior Tax Counsel Office of the Speaker UST 000572 TREAS-17-0313-C-000162 RE: Jul calendar From : "Muzinich, Justin" <"/o= ustreasury/ou=exchange administrative group (fyd ibohf23spdlt)/cn=recipients/en=3d2afce60d7 e464fbd30ff8d bedefecb-muzinich, j us"> To: Date : Tue, 11 Jul 20 17 11:54:33 -0400 From : Callas, George [mailto:George.Callas@mail.house.gov) Sent: Tuesday, July 11, 2017 11:50 AM To : Muzin ich, Justin ; Mark Prater@finance .senat e.gov; Brendan_Dunn@mcconnell.senate.gov; ; Kowalski, Daniel ; Angus, Barbara ; b(S) From : Justi n,Muz in ich@treasury ,gov [mai!to:Justin,Muzin ich@treasu ry,gov] Sent: Tuesday, July 11, 2017 11:34 AM r P f ? Brendan Dunn@mcconnell.senate ,goy; ; Callas, George; Daniel.Kowalski@treasury.gov ; Angus, Barbara; To : Subject: RE:July calendar If anyone feels we should not distribute at meeting or would like other changes please lmk. Otherwise we will distr ibute. Thx. From : Prater, Mark (Finance) (mai lto :Mark Prater@finance.senate.gov ] Sent : Tuesday, July 11, 2017 11:14 AM To : Dunn, Brendan (McConnell) ; 'Knight, Shahira E. EOP/WHO' >; Callas, George ; Kowalski, Daniel ; Muz inich, Justin ; Angus, Barbara ; Koenig, Andrew D. EOP/WHO > Subject: RE:July calendar Okie doke. From : Dunn, Brendan (McConnell) Sent: Tuesday, July 11, 2017 10:45 AM To : 'Knight, Shahira E. EOP/WHO' UST 000573 >; Prater, Mark (Finance) TREAS-17-0313-C-000163 ; Callas, George ; 'Daniel .Kowalski@treasury.gov' ; Justin .M uzinich@treasury.gov : Angus, Barbara ; Koenig, Andrew D. EOP/WHO > Subject: RE: July calendar Agreed Brendan M. Dunn Policy Advisor and Counsel Office of the Senate MajorityLeader From : Knight, Shahira E. EOP/WHO mailto Sent: Tuesday, July 11, 2017 10:41 AM To: Prater, Mark (Finance) ; Callas, George ; 'Daniel .Kawa lski@treasury.gov ' ; Justin.Muzinic h@treasury.gov : Angus, Barbara ; Dunn, Brendan (McConnell) ; Koenig, Andrew D. EOP/WHO > Subject : RE: July calendar Mark, My understanding from yesterday's meeting is: Please let me know if others disagree . From : Prater, Mark (Finance) (mailto:Mark Prater@finance .senate.gov ) Sent: Tuesday, July 11, 2017 10:05 AM To: Callas, George ; 'Daniel.Kowa lski@treasury.gov' ; Knight, Shahira E. EOP/WHO Justin.Muzinich@treasury.gov ; Angus, Barbara ; Dunn, Brendan (McConnell) ; Koenig, Andrew D. EDP/WHO Subject : RE: July calendar From : Callas, George [mailto:George .Callas@mail.house .gov) Sent: Tuesday, July 11, 2017 9:54 AM To : 'Danie l .Kowa lski@treasu ry.gov' ; Justin.Muzinich@treasury.gov ; Angus, Barbara ; Prater, Mark (Finance) ; Dunn, Brendan (McConnell) ; Subject: RE: July calendar b(5) UST 000574 TREAS-17-0313-C-000164 b(5) Subject : RE: July calendar From: Knight, Shahira E. EOP/WHO mailto Sent: Tuesday, July 11, 2017 9:47 AM To : Callas, George ; Muzinich, Justin ; Angus, Barbara ; Mark Prater@finance.senate.gov ; Brendan Dunn@mcconnel l.senate.gov : Koenig, And rew D. EOP/WHO > Cc: Kowalski, Daniel Subject: RE: July calendar principals From : Callas, George [mailto:George .Callas@mail.house .gov) Sent: Tuesday, July 11, 2017 9:42 AM To: Knight, Shahira E. EOP/WHO >; Justin.Muzinich@treasury.gov ; Angus, Barbara ; Mar Prater@finance.senate.gov : ~ ~ -gov: Koenig, Andrew D. EOP/WHO Cc: Daniel.Kowalski@treasury .gov Subject: RE: July calendar Is this for the staff meeting or principals' meeting? From : Knight, Shahira E. EOP/WHO mailto Sent: Tuesday, July 11, 2017 9:36 AM To: Justin .Muzinich@t reasury .gov; Callas, George; Angus, Barbara; Ma rk Prater@finance.senate .gov; B[endan_Duon@.rncco.noeJl.seo_ate.gov; Koenig, Andrew D. EOP/WHO Cc: Daniel.Kowa lski@treasury .gov Subject: RE: July calendar Draft agenda for today . Let me know if you have comments/changes/ From : Justia.Muzioicb@treasury.gov [mailto:Justjn .Muzioicb@treasury.gov] Sent: Tuesday, July 11, 2017 9:18 AM UST 000575 TREAS-17-0313-C-000165 To : Knight, Shahira E. EOP/WHO~> ; George.CaUas@mail,ho use.gov; Barbara .Angus@ma il.house .gov;~ v: Brendan Dunn@mcconne ll.senate.gov : Koenig, Andrew D. EOP/WHO > Cc: Daniel.Kowalski@treasury.gov Subject: July calendar Hi All -Attached is a very simple calendar for this month. Does everyone agree with it? If so, would it be useful to have it at the meeting to make the timeline more concrete? UST 000576 TREAS-17-0313-C-000166 RE: Jul calendar From: "Knight, Shahira E. EOP/WHO" > To: "Callas , George" , "Muzinich , Justin" , mark_prater@finance.senate .gov , brendan_dunn@mcconnel l.senate.gov, "Kowalsk i, Daniel" , "An us Barbara" , "Koenig , Andrew D. EOP/WHO" > Date : Tue , 11 Ju l 2017 12:13:55 -0400 b(5) From: Callas, George [mailto:George.Callas@mail.house.gov) Sent: Tuesday, July 11, 2017 11 :50 AM To: 'Justin. Muzin ich@treasury.gov' ; Ma rk_ Prater@finance.senate. ov; Brendan _ Dunn@mcconnell.senate.gov; Knight, Shahira E. EOP/WHO >; Daniel.Kowa lski@treasury.gov; Angus, Barbara ; Koenig, Andrew D. EOP/WHO Subject: RE: July calendar > b(5) From: Justi n.Muz in ich@treasury.gov [mailto:Justin.Muzinic h@t reasu ry.gov] Sent: Tuesday, July 11, 2017 11:34 AM To : Mark_Prater@fina nce.senate.gov; Brenda n_Dun n@mcconnell .sen ate.gov; ; Callas, George; Daniel.Kowalski@treasury.gov; Angus, Barbara; Subject: RE: July calendar Attached is revised calendar. b(5) o If anyone feels we should not distribute at meet ing or would like other changes please lmk. Otherwise we w ill distr ibute. Thx. From : Prater, Mark (Finance) (mailto:Mark Prater@finance .senate.gov ) Sent: Tuesday, July 11, 20 17 11:14 AM To : Dunn, Brendan (McConnell) ; 'Knight, Shahira E. EOP/WHO' >; Callas, George ; Kowalsk i, Daniel ; M u zin ich, Justin ; Angus, Bar bara ; Koenig, Andrew D. EOP/WHO > Okie doke . From : Dunn, Brendan (McConnell) Sent: Tuesday, July 11, 2017 10:45 AM To: 'Knight, Shahi ra E. EOP/WHO' >; Prater, Mark {Fina nce) ; Ca as, George ; 'Daniel .Kowa lski@treasury.gov' ; Justin .M uzinich@treasury.gov ; Angus, Barbara : Koenig, Andrew D. EOP/WHO > Subject: RE: July calendar UST 000577 TREAS-17-0313-C-000167 Agree d Brendan M. Dunn Policy Advisor and Counsel Office of the Senate Majority Leader From : Knight, Shahira E. EOP/WHO mailto Sent: Tuesday, July 11, 2017 10:41 AM To : Prater, Mark (Finance) ; Callas, George ; 'Daniel.Kawa lski@treasury.gov' ; Justin.Muzinich@treasury.gov ; Angus, Barbara ; Dunn, Brendan (McConnell) ; Koenig, Andrew D. EOP/WHO > Subject: RE: July calendar M ark, M y understanding fro m yesterday's meeting is: b(5) Please let me know if ot hers disagree. From: Prater, Mark (Finance) [mai lto:Mark Prater@finance .senate.gov ] Sent: Tuesday, July 11, 2017 10:05 AM To : Callas, George ; 'Daniel.Kowa lski@t reasury.gov' >?I ; Knight, Shahira E. EOP/WHO Justin.Muzinich@treasury.gov ; Angus, Barbara ; Dunn, Bren an (McConnell) ; Koenig, Andrew D. EOP/WHO Subject : RE: July calendar b(S) From: Callas, George [mailto:George .Callas@mai l.house .gov] Sent: Tuesday, July 11, 2017 9:54 AM To : 'Danie l .Kawa lski@treasury.gov ' ; Justin.Muzinich@treasury.gov ; Angus, Barbara ; Prater, Mark (Finance) ; Dunn, Brendan (McConnell) ; Subject : RE: July calendar b(5) From : Daniel.Kowalski@treasury.gov UST 000578 [mai lto:Dan iel.Kowalski@treasury.gov ] TREAS-17-0313-C-000168 Subject: RE: July calendar From : Knight, Shahira E. EOP/WHO Sent: Tuesday, July 11, 2017 9:47 AM To : Callas, George ; Muzinich, Justin ; Angus, Barbara ; Mark Prater@finance.senate.gov ; Brendan Dunn@mcconnell.senate.gov ; Koenig, Andrew D. EOP/WHO > Cc: Kowalski, Daniel Subject : RE: July calendar principals From : Callas, George [mailto :George ,Callas@mail ,house. gov] Sent: Tuesday, July 11, 2017 9:42 AM To : Knight, Shahira E. EOP/WHO >; Justin.Muzinich@treasu ry.gov ; Angus, Barbara ; Mark Prater@finance.senate .gov; Brendan Dunn@mcconne ll.senate.gov ; Koenig, Andrew D. EOP/WHO Cc: Daniel.Kowa lski@treasury .gov Subject: RE: July calendar Is this for the staff meeting or principals' meeting? From : Knight, Shahira E. EOP/WHO Sent: Tuesday, July 11, 2017 9:36 AM To : Justin.Muzinich@t reasury.gov : Callas, George; Angus, Barbara; Ma rk Prater@finance.senate.gov ; Brendan Dunn@mcconne ll.senate.gov : Koenig, Andrew D. EOP/WHO Cc: Daniel.Kowa lski@treasury.gov Subject : RE: July calendar Draft agenda for today. Let me know if you have comments/changes/ From : Justi n.Muz in ich@treasury.gov [mailto :Justi n.Muzin ich@treasury.gov ] Sent: Tuesday, July 11, 2017 9:18 AM To : Knight, Shahira E. EOP/WHO >; George.Callas@ma il.house.gov ; Barbara .Angus@mail.house.gov ; Mark Prate r@finance.senate.gov : Brendan Dunn@mcconne ll.senate.gov : Koenig, Andrew D. EOP/W HO > UST 000579 TREAS-17-0313-C-000169 Cc: Daniel.Kowalski@treasury.gov Subject: July calendar Hi All -Attached is a very simple calendar for this month. Does everyone agree with it? If so, would it be useful to have it at the meeting to make the timeline more concrete? UST 000580 TREAS-17-0313-C-000170 RE: Jul calendar From : "Muzinich, Justin" <"/o=us treasury/ou=exch ange admin istrative group (fyd ibohf23spd lt)/cn =recipients/en= 3d2afce60d7e464fbd30ff8d bedef ecb-m uzi nich, jus"> To: Date : Tue , 11 Jul 2017 13:2 1:17 -0400 Atta chments: Agenda 7.11 Final.docx (12.95 kB) Hi All - Spoke with Shahira. Please see revised agenda. Just flipped the order of items 1 and 2. No new content. Thanks. From: Angus, Barbara [ma ilto :Barbara .Angus@ma il.house.gov] Sent: Tuesday, July 11, 2017 1:05 PM To : Knight, Shahira E. EOP/WHO >; Callas, George ; Muzi nich, Just in ; Ma rk_ Prater@finance.senate .gov; Brendan _ Dunn@mccon nell .senate.gov; Kowals ki, Daniel ; Koen ig, And rew D. EOP/WHO Subject : Re: July calendar > Looks good. Thanks very much. Barbara M. Angus Chief Tax Counsel Committee on Ways and Means 202.225 .5522 From: "Knight, Shah ira E. EOP/WHO" > Date : Tuesday, July 11, 2017 at 12 :39 PM To : George Call as , "'Justin.Muzinich@treasury.gov '" , Mark Prater , " Brendan Dunn@mcconnell.senate.gov " , " Daniel.Kowalski@treasury.gov " , "Angus, Barbara " , "Koenig, Andrew D. EOP/WHO" Subject : RE: July calendar > Seeing that I've received no more comments, here is a final of the agenda for today. b(5) From: Justi n.Muzin ich@treasury.gov (mailto: Justin.Muzinich@treasu Sent: Tuesday, July 11, 2017 11:55 AM UST 000581 ry.gov ] TREAS-17-0313-C-000171 To : Callas, George; Mark Prater@finance.senate.gov ; Brendan Dunn@mcconnell.senate.gov ; DanieLKowalskj@treasury.gov ; Angus, Barbara; : From : Callas, George [mailto:George .Callas@mai l.house .gov ) Sent: Tuesday, July 11, 2017 11:50 AM To : M uzinich, Justin ; Mark Prater@finance .senat e.gov; Brendan Dunn@mcconne ll.senate.gov ; ; Kowalski, Daniel -; Angus, Barbara ; Subject : RE: July calendar b(S) Subject : RE: July calendar Attached is revised calendar. b(S) b(5) From : Prater, Mark (Finance) [mai lto:Mark Prater@finance.senate.gov ] Sent: Tuesday, July 11, 2017 11:14 AM To : Dunn, Brendan McConnel l ; 'Knight, Shahira E. EOP/WHO' >; Callas, George ; Kowalsk i, Daniel ; M uzinich, Justin ; Angus , Barbara ; Koenig, Andrew D. EOP/WHO > Okie doke . From: Dunn, Brend an (M cConnell) Sent: Tuesday, July 11, 2017 10:45 AM To : 'Knight , Shahir a E. EOP/WHO' >; Prater, M ark {Fina nce) ; Callas, George ; 'Daniel.Kowalski@ t reasury.gov ' ; Justin.Muzinich@treasury.gov Angus , Barbara ; Koenig, Andrew D. EOP/WHO ; > Subject: RE: July calend ar Agreed UST 000582 TREAS-17-0313-C-000172 Brendan M. Dunn Policy Advisor and Counsel Office of the Senate Majority Leader From : Knight, Shahira E. EOP/WHO Sent: Tuesday, July 11, 2017 10:41 AM To : Prater, Mark (Finance) ; Callas, George ; 'Daniel .Kawa lski@treasury .gov ' ; Justin .Muzinic h @treasury .gov ; Angus, Barbara ; Dunn, Brendan (McConnell) ; Koenig, And rew D. EOP/WHO > Subject: RE: July calendar Mark , M y understandi ng fr o m yeste rda y' s meet ing is: b(5) Please let me kno w if ot hers d isagree. From : Prater, Mark (Finance) [mai lto:Mark Prater@finance.senate .gov ] Sent: Tuesday, July 11, 2017 10:05 AM To: Callas, George ; 'Daniel.Kowa lski@treasury.gov ' ; Knight, Shahir a E. EOP/WHO >; Justin .Muzinic h @treasury .gov; Angus, Barbara ; Dunn, Brendan (McConnell) ; Koenig, And rew D. EOP/WHO > b(5) From : Call as, George [mailto:George.Cal las@mai l.house.gov ) Sent: Tuesday, July 11, 2017 9 :54 AM To: 'Danie l .Kowa lski@treasu ry.gov ' ; Justin .Muzinic h @treasury .gov; Angus, Barbara ; Prater, Mark (Finance) ; Dunn, Brendan (McConnel l) ; Subject: RE: July calendar b(5) From : Dan iel,Kowa lski@tre asury .gov [mailto: Daniel,Kow alski@tre asury. gov] Sent: Tuesday , July 11, 2017 9 :50 AM To : ; Callas, Geo rge; Justjn, Mu zjn jch@tr easury ,gov; Angus, Barbara; UST 000583 TREAS-17-0313-C-000173 Duoo@mccon oell .senate .gov: Subject : RE: July calendar From : Knight, Shahira E. EOP/WHO Sent: Tuesday, July 11, 2017 9:47 AM To : Callas, George ; Muzinich, Justin ; Angus, Barbara ; Mark Prater@finance .senate .gov: Brendan Dunn@mccon nell.senate .gov: Koenig, Andrew D. EOP/WHO > Cc: Kowalski, Daniel Subject: RE: July calendar principals From : Callas, George [mailto:George .Callas@mai l.house .gov) Sent : Tuesday, July 11, 2017 9:42 AM To : Knight, Shahira E. EOP/WHO >; Just jn .Mu zioicb@ t reasurv .gov; Angus, Barbara ; Mar Prater@finance.senate.gov : Brendan Dunn@mcconne ll.senate.gov ; Koenig, Andrew D. EOP/WHO > Cc: Daniel.Kowalski@treasurv.gov Subject: RE: July calendar Is this for the staff meeting or principals' meeting? From : Knight, Shahira E. EOP/WHO Sent: Tuesday, July 11, 2017 9:36 AM To: Justin.Muzinich@t reasurv.gov ; Callas, George; Angus, Barbara; Ma rk Prater@finance.senate.gov ; Brendon Dunn@mcconne ll.sent:1te.gov; Koenig, Andrew D. EOP/WHO Cc: Daniel.Kowa lski@treasury .gov Subject: RE: July calendar Draft agenda for today. Let me know if you have comments/changes/ > Cc: Daniel.Kowa lski@treasury.gov Subject: July calendar UST 000584 TREAS-17-0313-C-000174 Hi All -Attached is a very simple calendar for this month. Does everyone agree with it? If so, would it be useful to have it at the meeting to make the timeline more concrete? UST 000585 TREAS-17-0313-C-000175