Tax Executives Institute--Treasury Department Office of Tax Policy--liaison meeting agenda: February 27, 2013.

• Position: Calendar

1. Welcome and Introductions

2. 2013 Priorities

3. Tax Reform and TEI Guideposts TEI has a keen interest in both the process and substance of tax reform. We recently published Guideposts for Tax Reform II, which builds upon an earlier policy statement, Guideposts for Tax Reform I, published in October 2009. The policy statements outline the principles that we believe should inform a comprehensive examination of the U.S. tax code and assist policymakers as they confront the important challenge of business tax reform. (Copies of both policy statements are attached.)

   The prospects for comprehensive business tax reform are currently unsettled, owing to a number of factors. On March 1, the discretionary spending cuts imposed by the sequestration process enacted in the Budget Control Act of 2011 are scheduled to come into force, resulting in $86 billion in automatic reductions in government spending for fiscal 2013. On March 27, the continuing resolution currently funding the government is set to expire, and on May 19, the temporary suspension of the $16.4 trillion debt ceiling will expire. Finally, other pressing national priorities--from gun control to immigration reform--are competing for congressional attention, clouding the prospects for tax reform.

   The President recently advocated a piecemeal approach to the sequestration process and tax reform, stating his desire to eliminate certain undesignated tax preferences and deductions as part of a balanced replacement of the sequester's untargeted spending cuts. Some lawmakers have criticized the suggestion, arguing that the country needs comprehensive tax reform to make the system simpler and fairer and to put the nation on a path to more robust growth.

   With this background, we invite the Treasury Department's views on the prospects for comprehensive business tax reform in the near and long term. Is the Treasury Department currently developing comprehensive tax reform proposals for the Administration?

   TEI hopes to help inform the tax reform debate by leveraging its extensive industry knowledge to assess the administrative, compliance, and financial reporting implications of legislative proposals. Our members possess deep experience with the day-to-day consequences of the Internal Revenue Code and thus can serve as a valuable resource for legislators and regulators to understand and minimize the unintended consequences of legislative tax changes. If tax reform gains momentum and legislation is introduced, how can TEI assist the Treasury Department in the legislative process?

4. Budget Proposals

   The Administration has not yet released a fiscal 2014 budget, but we invite a discussion of the tax provisions included in the budget should it be released prior to the meeting.

5. Capitalization Issues

   1. liming and content of "tangible property" regulations

      Temporary and proposed regulations governing the deduction or capitalization of expenditures related to tangible property were issued in December 2012 and discussed during last year's meeting with the Office of Tax Policy. (1) TEI subsequently filed comments in respect of many aspects of the regulations. Notice 2012-732 alerted taxpayers that the IRS and Treasury Department expect to issue final "tangibles" regulations in 2013 with changes in certain identified areas. In addition, the regulations' effective date was delayed to tax years beginning on or after January 1, 2014, but taxpayers were afforded the option to adopt the rules early for years beginning on or after January 1, 2012. (3)

      We invite a discussion about the expected timing and content of the final regulations, especially how they may differ from the temporary regulations. Specifically, while TEI filed comments in respect of many aspects of the temporary regulations, we are most concerned about two important policy decisions. First, TEI urged the government to abandon the "ceiling rule" limiting the deduction for de minimis expenditures for tangible property. The rule will be extremely burdensome to implement and may ultimately prove unworkable because few taxpayers track the items that they expense under their applicable financial statement (AFS) policy. (4) Second, TEI urged the adoption of a routine maintenance safe harbor for buildings or, at a minimum, a safe harbor for routine maintenance of the new category of building systems. What are the prospects for policy changes in respect of these two recommendations? What other...