As we go to press, it is not clear if House Democrats will vote today (5 November) on the Build Back Better (BBB) Act (H.R. 5376) budget reconciliation bill and/or the Infrastructure Framework (BIF).
House action on the budget reconciliation bill picked up steam this week, as Democrats realized a bicameral agreement at this stage appeared unrealistic. House Democratic leaders on 3 November released a manager’s amendment to the BBB Act that included modifications from the text released on 28 October. The final version of the reconciliation bill includes changes to the state and local tax deduction cap, the addition of four weeks of paid leave, rules relating to retirement plans, and drug pricing provisions, among other provisions. Many provisions that diverge from the 28 October version are add-backs from the original language reported by the House Ways & Means Committee in September. In regard to the international tax provisions, the manager’s amendment contains some technical changes and clarifications that could potentially be meaningful for some taxpayers.
The Joint Committee on Taxation on 4 November released its initial score estimate of the social spending bill, concluding it would raise an estimated US$1.48 trillion over 10 years, therefore not adding to the deficit.
The House and Senate are scheduled to be in recess next week, which, along with a congressional delegation to the climate summit in Glasgow that includes House Speaker Nancy Pelosi, provided further urgency to this week’s process. Senator Joe Manchin suggested major changes to the House bill are likely, saying earlier this week in an interview: “They’re [House Democrats] working off the House bill. That’s not going to be the bill I work off of.” Senator Manchin said senators would negotiate into next week and potentially be in position for Senate consideration the week of 15 November. Senate Majority Leader Chuck Schumer has targeted completion of the bill by Thanksgiving.
In a recently released Internal Revenue Service Chief Advice Memorandum, the Service concluded that where the extended six-year assessment period under Internal Revenue Code1 Section 6501(e)(1)(c) applies due to omitted subpart F income and Global Intangible Low-Taxed Income (GILTI), the extended assessment period applies to the entire tax liability (i.e., all items on the return), and not just the omitted subpart F and/or GILTI item(s). This is based on the prefatory language in Section 6501(e) – “any tax imposed by subtitle A” – and case law.
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.
