TEI, Treasury Department, and Office of Tax Policy liaison meeting.

• Position: TECHNICAL SUBMISSIONS

On February 23-24, a delegation from Tax Executives Institute met with the Commissioner of Internal Revenue, John Koskinen, and senior officials of the Internal Revenue Service and with the Treasury Department's Assistant Secretary for Tax Policy, Mark Mazur, and senior officials of Treasury's Office of Tax Policy. The detailed agenda TEI submitted to the Office of Tax Policy is below.

TAX EXECUTIVES INSTITUTE -TREASURY DEPARTMENT--OFFICE OF TAX POLICY LIAISON MEETING February 24, 2016

AGENDA

1. Welcome and Introductions

2. 2016 Priorities and Challenges

   We invite discussion of the Office of Tax Policy's (OTP or Treasury) priorities, as well as the challenges OTP is facing in the current environment of declining budget and staffing resources.

3. OECD Base Erosion and Profit Shifting Project

   1. Proposed U.S. Country-by-Country (CbC) Reporting Regulations and BEPS Action 13

      The IRS and Treasury proposed regulations in December 2015 to implement CbC reporting under Action 13 of the OECD's BEPS Project. There are several differences between the proposed regulations and OECD's final report on Action 13.

      * Effective date: The proposed regulations would require collection of CbC data for taxable years beginning after the regulations are finalized (e.g., for calendar year taxpayers, not until 2017). The final Action 13 BEPS report recommended that data collection for CbC reporting purposes begin in 2016 for reporting in 2017, and many countries will expect U.S. headquartered multinationals to report this information for 2016. This raises the question of whether such multinationals must file the CbC report directly with those other countries absent a requirement to file it with the IRS. Filing the report directly with those countries means that the information will not be subject to the confidentiality and other protections provided by a treaty or TIEA. Will there be a mechanism for multinationals in this situation to apply the final CbC regulations to filings in 2017 for 2016 years, allowing the IRS to share the reports with other countries via proper, confidential channels? If not, would the IRS and Treasury refuse to share future CbC reports with countries that violate the data confidentiality protections in this one year period?

      * Filing Deadline: The proposed CbC regulations would require multinationals to file the CbC report with their U.S. federal income tax return (e.g., September 15 for a calendar year taxpayer at the latest). The final BEPS report, in contrast, recommends a filing deadline of one year from the end of the relevant fiscal year (e.g., December 31 for a calendar year taxpayer). Why did the IRS and Treasury choose a different filing deadline than that recommended by the OECD? Taxpayers that wish to use foreign statutory account or tax return data in the CbC report may find this deadline difficult to meet.

      * Counting Employees: The preamble to the proposed CbC regulations states, "[t]he number of full-time equivalent employees in a tax jurisdiction of residence should be determined by reference to the employees that perform their activities for the U.S. MNE group within such tax jurisdiction of residence." In contrast, the final OECD report provides that a multinational report employees of "all the Constituent Entities resident for tax purposes in the relevant tax jurisdiction." In other words, the U.S. regulations require (according to the...