US Senators To Consider Revenue-Raising Tax Administration Bill

by Mike Godfrey, Tax-News.com, Washington

02 February 2004

US Senators are today due to consider a bill which aims to tighten up certain aspects of tax legislation, in addition to proposing a number of revenue-raising measures.

As part of a bill that seeks to overhaul IRS tax administration, the Tax Administration Good Government Act of 2004 will, if enacted, restrict the ability of firms to deduct certain fines, penalties and punitive damages. The measure has the backing of Senate Finance Committee Chairman Charles Grassley, and it is estimated that the proposal will raise around $573 million over the next nine years.

Another section of the IRS bill will compel chief executives to sign a firm’s tax return, certifying that it complies fully with the tax code. However, reports suggest that this proposal is likely to be opposed by many of America’s corporations.

The tax administration bill also contains a number of revenue raisers, including new and tougher penalties for failure to disclose tax shelters, and changes to the “substantial understatement penalty” for non-reportable transactions. It has been reported that the part of the bill relating to tax shelters will bring in $1.2 billion in additional revenues by 2013.

The Senate is also due to discuss a bill which will tighten the tax rules surrounding corporate-owned life insurance (COLI) schemes, in addition to examining the tax elements of an important highways bill.

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