Schneider and Estes Introduce Section 965 Tax Code Fix

Statement

Congressman Brad Schneider (D-Illinois) and Congressman Ron Estes (R-Kansas) and introduced legislation today to amend Section 965 of the tax code to ensure the Internal Revenue Service (IRS) follows Congressional intent with regards to structured payments of corporate tax liabilities.

"It is important that we project clarity and certainty with our tax code to ensure businesses can plan for the future and ultimately grow our economy and create jobs," said Schneider. "The IRS's interpretation of Section 965 has strayed far from the original congressional intent and created confusion. Our bipartisan legislation is a fix to correct this inconsistency and clarify the rules surrounding taxes on repatriated earnings."

"This bipartisan legislation will ensure the IRS follows Congressional intent by allowing companies returning money to the U.S. to plan for the future and make structured payments on their tax liability," said Rep. Estes. "Providing certainty and fairness in our tax code is key to growing our economy."

Section 965 of the tax code allowed companies repatriating money in the U.S. from overseas to pay off the tax burden on that repatriation over eight years. However in recent years, the IRS has disregarded that eight-year span and sought to apply tax refunds and other payments owed to companies toward their outstanding liability.

The IRS Taxpayer Advocate Service on numerous occasions has publicly stated the need for an administrative fix to correct IRS implementation of Section 965 and the agency's inconsistent guidance provided to taxpayers. In one blog post, Nina E. Olson said the IRS was "administering the provision in a way that seemingly runs contrary to congressional intent."

This administrative fix to current tax law will ensure Congressional intent is followed by reaffirming the length of time and divergent nature of tax liabilities.

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