General revenue offset provisions should be stricken from tax title of highway bill: June 7, 2005.

On June 7, 2005, TEI sent the following comments to the Conference Committee on the Highway Reauthorization Bill (H.R. 3). In its comments, TEI urges the committee to strike certain general revenue offset provisions included in the tax title of the Senate version of the bill.

The Senate and House of Representatives have passed bills (H.R. 3) to reauthorize the highway trust fund and renew the related excise tax provisions of the Internal Revenue Code. The tax title of the Senate version of the highway bill also includes general revenue offset provisions (Title V, Subtitle E, Part I) that are ill-advised, wholly extraneous to the purposes of the legislation, and significantly increase administrative and regulatory burdens on taxpayers.

As the preeminent association of in-house business tax professionals, Tax Executives Institute recommends the following provisions amending the Internal Revenue Code should be stricken from the highway bill:

* Reject the "Clarification" of the Economic Substance Doctrine. Codification of the economic substance doctrine is unnecessary, would potentially interfere with legitimate business transactions, and would engender unnecessary controversy and litigation. Similarly, the provision creating a new penalty for "noneconomic transactions" is unnecessary. The proposals should be rejected.

* Reject the CEO Declaration Requirement. The proposal to require a company's chief executive officer to sign a declaration concerning the federal income tax return would needlessly consume corporate resources without enhancing corporate accountability. Current law is sufficient: In addition to the existing requirement for a corporate officer to sign a tax return under penalties of perjury, the internal control requirements of the Sarbanes-Oxley Act over financial matters (which include the provision for taxes) as well as the enhanced tax return disclosure rules and penalties for non-disclosure advance the goal of transparency. This proposal would inject CEOs into the return preparation and approval process and distract them from activities (including corporate governance) where their professional expertise is best used. The provision should be excluded from the final legislation.

* Reject the Whistleblower Provision. The proposal to award a 15-to-30 percent bounty to individuals providing information on underpayments by corporate and other taxpayers and to establish an IRS "Whistleblower Office" is unnecessary and would...