Dear Mr. Solomon:
On Nov. 19, 2004, we introduced H.R. 5395 and S. 3019, the Tax Technical Corrections Actof 2004. We introduced that bill to provide guidance for time-sensitive technical corrections, such as those affecting companies that plan to invest their foreign earnings in the United States and those affecting employee benefit plans. We are writing to you today to reaffirm our intent to include the provisions of H.R. 5395 and S. 3019 in a pending technical corrections bill that will be introducedin the109th Congress.
We are particularly aware that certain technical corrections may be necessary to carry out the intentof section 965 of the Internal Revenue Code, which provides a temporary dividends receiveddeduction for a portion of the dividends received by a U.S. corporation from a controlled foreigncorporation. These technical corrections would, among other things:
1. Clarify that the disallowance of expenses in section 965(d)(2) applies only to expenses that are“directly allocable" to the deductible portion described in section 965(d)(1), and
2. Clarify that section 78 does not apply to any tax which is not allowable as a credit under section901 by reason of section 965(d).
We anticipate introducing a technical corrections bill at the earliest opportunity in the 109th Congress, and we reaffirm that the above two technical corrections will be included in that bill. We trust this letter provides sufficient clarification so that appropriate guidance may be issued reflecting our intention.
Sincerely,
William Thomas
Chairman, Committee on Ways & Means
Charles E Grassley, Jr.
Chairman, Committee on Finance
Max Baucus Ranking Member, Committee on Finance
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Source: Ranking Member’s News
