U.S. taxation of international operations and financial statement disclosure issues were the top two concerns of leading corporate tax executives, according to a new survey.
The law firm Miller & Chevalier polled a group of corporate tax executives on their opinions of government tax policy for the year ahead. Thirty-five percent cited U.S. taxation of international operations and 29 percent cited financial statement disclosure issues as their top business tax concerns in 2011.
Despite the stated interest in tax reform by the Obama administration and Congress, business leaders are cynical about whether it will happen this year, particularly due to the split in congressional control.
Respondents believe the split in congressional control means that there will be little to no tax legislation on the horizon this year (47 percent), although a significant number of respondents (37 percent) believe that some modest tax legislation, potentially with respect to extension of the tax “extenders” package and perhaps some targeted stimulus provisions, will be enacted this year.
“Expectations for significant tax legislation are low for the coming year,” said Miller & Chevalier member Marc Gerson, a former majority tax counsel to the House Ways and Means Committee. “The business community sees the split in congressional control, coupled with increased concern regarding the deficit and the anticipated focus on longer-term fundamental tax reform, as likely putting a significant damper on the tax legislative agenda for 2011.”
The leading sources to be tapped to fund congressional initiatives in 2011, according to the respondents, will be an increase in the U.S. taxation of international operations (62 percent), industry-specific taxes or fees (50 percent), and reductions in spending (48 percent).
Thirty percent of the respondents think the split in congressional control will have the most significant impact on tax policy in 2011, followed by the federal budget deficit (29 percent) and continued focus on the economic downturn (21 percent). Only 9 percent of respondents said the Obama administration priorities would be the biggest factor in tax policy changes.
Survey respondents believe that codification of the economic substance doctrine will not have an impact on their tax planning or their relationship with the IRS or their external auditors.
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