Pressure Grows On Senate to Pass Tax Treaties

by Bruce Givner on February 17, 2015

At a meeting in Houston of the American Bar Association Section of Taxation, the senior counsel in the Treasury’s Office of International Tax Counsel, Douglas Poms, urged taxpayers and those in the business community to ratchet up the pressure on their senators to start ratifying several tax treaties that have been held up.

“It would be too simplistic to say, ‘Well, call your congressperson, and ask them to put pressure on the right people to express your dissatisfaction,’” Poms said. “But it’s going to take some more meaningful pressure from the business community to go and explain to the right people how important it is for our treaties to be ratified in the Senate, and actually go into force, and how it’s hurting business that they’re not in force.”

Treaties that have been signed with Hungary, Chile, and Poland are currently awaiting ratification by the Senate, which hasn’t ratified a tax treaty agreement since one negotiated with Malta in 2010. The logjam in treaty ratification is largely attributable to Senator Rand Paul (R-Ky), who placed a procedural hold on all tax treaties due to his opposition to the Foreign Account Tax Compliance Act (FATCA) and his concerns about privacy. Although a procedural hold theoretically doesn’t prevent the ratification of tax treaties, it does make it considerably more difficult to bring the treaties up for a vote.

Paul has cited concerns for individual taxpayers in pending treaty protocols that deal with information sharing, but Poms says such worries are exaggerated. “We’ve made a lot of progress in terms of putting in protective measures, with respect to exchange of information, that makes us much more comfortable with sharing information than we’ve ever been in the past,” Poms said.

Although Poms added that the administration is looking for ways to change minds among the “right people,” he reiterated his call for groups such as the ABA to convey their frustrations within the business community in order to spur action.

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