Continued Concern Over The Lack Of Proposed Efficient Dates – Tax

Miller & Chevalier Chartered

United States:

Continued Concern Over The Lack Of Proposed Effective Dates

06 May 2021

Miller & Chevalier Chartered

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As the Administration continues to roll out business and
individual tax increase proposals to fund its traditional and
“social” infrastructure goals, taxpayers are becoming
increasingly concerned with the lack of effective dates associated
with these proposals. The potential timing for enactment of an
infrastructure package (perhaps the end of September, at the
earliest) suggests that any tax increases would be effective for
2022. The determination of effective dates, however, is complicated
(particularly with respect to individual tax increases) and
dependent on a variety of factors. Among those factors

  • The importance of equity and fairness to taxpayers (including
    advance notice of any tax law changes)
  • Revenue considerations
  • Prevention of taxpayer avoidance or manipulation
  • The potential impact of tax law changes on the economy and
    capital markets

Thus, there is a delicate balance that policymakers would like
to maintain between providing taxpayers with certainty for tax
planning purposes and preventing tax avoidance and negative market
consequences (such as, for example, triggering a sell-off of stocks
in advance of a change in capital gains rates). Potentially
overtaking all of these concerns is the fiscal reality that
policymakers are in need of significant revenue to fund the
ambitious infrastructure proposals of the Biden Administration.
Effective dates (as well as any associated transition or
“grandfather”-type rules) are often the last to be
finalized in a piece of legislation and subject to change up until
the legislation is finally voted on and enacted.

While right now, signs point to a prospective effective date
starting in 2022 for any tax increases, it is important to monitor
introduced bills, press releases, the pending Treasury Department
“Greenbook,” and other statements of policymakers
indicating a receptivity to retroactive effective dates for these
tax increase proposals. #TaxTake

Upcoming Speaking Engagements and Events

On May 12, Loren will present Overlay of Potential International
Tax Reform and OECD Pillars I and II, a panel discussion at
the ABA Virtual 2021 May Tax Meeting.

Loren will speak at The Tax Council’s 2021 Annual Spring Tax
Policy Conference on May 13. She will participate in a
panel discussion titled IRS/Treasury Update: The Players, the
Policies, and Recent Developments.

In The News

Jorge commented on the likelihood Democrats
push through some version of President Biden’s proposed tax
increases to fund his infrastructure plan
in InvestmentNews. “You’re
definitely going to have one major tax bill passed, and it’s
going to include tax increases
,” Jorge said.

In Tax Notes, Loren discussed the Biden Administration’s
proposal to increase the GILTI tax rate to 21 percent saying the
rate increase is “overkill in terms of what we need
for a global minimum tax conversation

Marc discussed the legislative process
involved in completing President Biden’s infrastructure plan
in Bloomberg Law. Marc said an energy proposal
introduced by Senate Finance Chairman Ron Wyden (D-OR), which
builds on Biden’s energy plan, is an example of what is common
when presidents offer policy proposals: A White House
proposal is often very high-level, and members will either flesh it
out or offer their own version

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