Congress appears to be moving toward a short-term continuing resolution (CR) to fund the Federal Government past the 16 December deadline and into early 2023, based on comments from Republican House and Senate leaders this week. While negotiations on an omnibus spending bill to be completed before the end of the year are continuing, that possibility is fading. Senate Minority Leader Mitch McConnell said on 6 December that a short-term CR to fund the Government may be necessary as omnibus talks failed to bear fruit.
The approach to government funding will affect whether a tax package and other items can be appended to the bill. There is speculation that passage of a stopgap CR instead of an omnibus spending package will adversely affect the possible enactment of tax provisions, such as the Internal Revenue Code1 Section 174 research and development and Section 163(j) interest deduction Tax Cuts and Jobs Act cliffs, tax extenders, as well as other items.
Also worth noting this week, Senator Raphael Warnock won the 6 December Georgia Senate runoff election, initially meaning that Democrats would hold a 51-49 advantage in the Senate next year and have majorities on committees. But in a surprise announcement on 8 December, Senator Kyrsten Sinema said that she will leave the Democratic Party and register as an independent. It is not clear at this time if Senator Sinema will caucus with Senate Democrats, and what if any implications the switch will have for the balance of power in the Senate.
The United States (US) Treasury this week announced the signing of a first-ever US-Croatia income tax treaty on 7 December. According to the Treasury press release, the proposed convention is based on the US Model Income Tax Treaty.
The OECD2 on 8 December issued a public consultation document (pdf) on the main design elements of Amount B under BEPS3 Pillar One relating to the simplification of transfer pricing rules. Public comments on various specific questions are due by 25 January 2023.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (United States), International Tax and Transaction Services, Washington, DC
- Arlene Fitzpatrick
- Joshua Ruland
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
