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Camp, Grassley Question Whether Executive Branch is Again Bypassing Congress to Impose Tax Policy
Friday, July 23, 2010
Washington, DC – House Ways and Means Ranking Member Dave Camp (R-MI) and Senate Finance Ranking Member Chuck Grassley (R-IA) sent a letter to Treasury Secretary Timothy Geithner expressing concern that the Treasury Department might impose a tax policy change benefiting trial lawyers nationwide, bypassing Congress and the IRS’ own precedent in doing so.
The issue arose after Assistant Secretary for Tax Policy Michael F. Mundaca confirmed the Treasury Department is considering reversing its policy that trial lawyers may not deduct loans to clients as business expenses in certain contingency cases. While the Ninth Circuit Court of Appeals ruled such deductions are allowable fifteen years ago, the IRS has continued to enforce its rule disallowing such tax deductions in all other Circuits.
“We urge you not to make such changes in the government’s enforcement of the tax laws, absent a clear direction from Congress or to comply with court decisions,” wrote the senior Republicans on the House and Senate tax-writing committees.
Grassley and Camp said they are concerned that Treasury might be establishing a pattern of unilaterally making tax changes in contravention of congressional intent. In November 2008, Treasury and the IRS came under fire from Grassley and others for giving a tax break that allowed banks to acquire one another. The Treasury ruling helped to accommodate the sale of the Wachovia Corporation to Wells Fargo. Grassley questioned whether Treasury had the authority to bestow such a tax break independently of congressional action.
Regarding the legal expenses issue, Camp and Grassley noted:
In questioning the Administration’s decision to impose a tax policy benefiting a narrow group of taxpayers – a tax break that would cost the government $1.572 billion over 10 years -- Camp and Grassley requested the following:
The full letter can be read here. ###