[Senate Hearing 115-817]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 115-817
 
                   NOMINATIONS OF JUSTIN G. MUZINICH 
                         AND MICHAEL J. DESMOND

=======================================================================

                                HEARING

                               before the

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                                 on the

                             NOMINATIONS OF

JUSTIN G. MUZINICH, TO BE DEPUTY SECRETARY, DEPARTMENT OF THE TREASURY; 
AND MICHAEL J. DESMOND, TO BE CHIEF COUNSEL, INTERNAL REVENUE SERVICE, 
       AND ASSISTANT GENERAL COUNSEL, DEPARTMENT OF THE TREASURY

                               __________

                             JULY 26, 2018
                               __________
                               
                               
                               
                               
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                               
                               
                                     
                                     

            Printed for the use of the Committee on Finance
            
            
            
                            ______                


             U.S. GOVERNMENT PUBLISHING OFFICE 
 40-487--PDF           WASHINGTON : 2020 
             


                          COMMITTEE ON FINANCE

                     ORRIN G. HATCH, Utah, Chairman

CHUCK GRASSLEY, Iowa                 RON WYDEN, Oregon
MIKE CRAPO, Idaho                    DEBBIE STABENOW, Michigan
PAT ROBERTS, Kansas                  MARIA CANTWELL, Washington
MICHAEL B. ENZI, Wyoming             BILL NELSON, Florida
JOHN CORNYN, Texas                   ROBERT MENENDEZ, New Jersey
JOHN THUNE, South Dakota             THOMAS R. CARPER, Delaware
RICHARD BURR, North Carolina         BENJAMIN L. CARDIN, Maryland
JOHNNY ISAKSON, Georgia              SHERROD BROWN, Ohio
ROB PORTMAN, Ohio                    MICHAEL F. BENNET, Colorado
PATRICK J. TOOMEY, Pennsylvania      ROBERT P. CASEY, Jr., Pennsylvania
DEAN HELLER, Nevada                  MARK R. WARNER, Virginia
TIM SCOTT, South Carolina            CLAIRE McCASKILL, Missouri
BILL CASSIDY, Louisiana              SHELDON WHITEHOUSE, Rhode Island

           Jeffrey Wrase, Staff Director and Chief Economist

              Joshua Sheinkman, Democratic Staff Director

                                  (ii)


                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Grassley, Hon. Chuck, a U.S. Senator from Iowa...................     1
Wyden, Hon. Ron, a U.S. Senator from Oregon......................     2

                        ADMINISTRATION NOMINEES

Muzinich, Justin G., nominated to be Deputy Secretary, Department 
  of the Treasury, Washington, DC................................     5
Desmond, Michael J., nominated to be Chief Counsel, Internal 
  Revenue Service, and Assistant General Counsel, Department of 
  the Treasury, Washington, DC...................................     6

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Desmond, Michael J.:
    Testimony....................................................     6
    Prepared statement with attachments..........................    27
    Biographical information.....................................    31
    Responses to questions from committee members................    41
Grassley, Hon. Chuck:
    Opening statement............................................     1
Hatch, Hon. Orrin G.:
    Prepared statement...........................................    48
Muzinich, Justin G.:
    Testimony....................................................     5
    Prepared statement...........................................    49
    Biographical information.....................................    50
    Responses to questions from committee members................    54
Scott, Hon. Tim:
    Department of the Treasury 2017-2018 Priority Guidance Plan..    73
    Letter from Hon. Curtis M. Loftis, Jr. to Senator Scott, July 
      12, 2018...................................................    88
Wyden, Hon. Ron:
    Opening statement............................................     2
    Prepared statement...........................................    90
    ``Real Earnings--July 2018,'' Bureau of Labor Statistics, 
      Department of Labor, August 10, 2018.......................    92

                                 (iii)


                   NOMINATIONS OF JUSTIN G. MUZINICH,

                   TO BE DEPUTY SECRETARY, DEPARTMENT

                    OF THE TREASURY; AND MICHAEL J.

                     DESMOND, TO BE CHIEF COUNSEL,

                     INTERNAL REVENUE SERVICE, AND

                       ASSISTANT GENERAL COUNSEL,

                       DEPARTMENT OF THE TREASURY

                              ----------                              


                        THURSDAY, JULY 26, 2018

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 9:34 a.m., 
in room SD-215, Dirksen Senate Office Building, Hon. Orrin G. 
Hatch (chairman of the committee) presiding.
    Present: Senators Grassley, Thune, Portman, Toomey, 
Cassidy, Wyden, Cantwell, Menendez, Carper, Cardin, Bennet, 
Casey, and Whitehouse.
    Also present: Republican staff: Jeffrey Wrase, Staff 
Director and Chief Economist; Chris Armstrong, Chief Oversight 
Counsel; Becky Cole, Policy Director; and Nicholas Wyatt, Tax 
and Nominations Professional Staff Member. Democratic staff: 
Joshua Sheinkman, Staff Director; Michael Evans, General 
Counsel; Ian Nicholson, Investigator; Greta Peisch, 
International Trade Counsel; Tiffany Smith, Chief Tax Counsel; 
and Jayme White, Chief Advisor for International 
Competitiveness and Innovation.

           OPENING STATEMENT OF HON. CHUCK GRASSLEY, 
                    A U.S. SENATOR FROM IOWA

    Senator Grassley [presiding]. I am not Senator Hatch. He 
will be here shortly. He asked me if I would start the meeting.
    Welcome to today's hearing for the nominations of Justin 
Muzinich to be Deputy Secretary and Michael Desmond to be Chief 
Counsel for the IRS and Assistant General Counsel for the 
Department of Treasury.
    I am going to enter into the record for Senator Hatch an 
opening statement that he would make.
    [The prepared statement of Chairman Hatch appears in the 
appendix.]
    Senator Grassley. I would like to welcome everybody to this 
morning's hearing and especially extend a very special welcome 
to our nominees and to congratulate you. I thank both of you 
for your willingness to serve in the Treasury Department and 
Internal Revenue Service at a time of great importance for both 
positions.
    The President has nominated Mr. Muzinich to be a Deputy 
Secretary of Treasury where, if confirmed, he will have a key 
leadership role across the Department's activities.
    The President has nominated Mr. Desmond to be Chief Counsel 
for the IRS and Assistant General Counsel for the Treasury 
Department.
    As I have already done, I welcome you now a second time to 
this hearing.
    Senator Wyden?

             OPENING STATEMENT OF HON. RON WYDEN, 
                   A U.S. SENATOR FROM OREGON

    Senator Wyden. Mr. Chairman, thank you.
    Would you also, in our tradition, like to give our guests 
the opportunity to welcome their families?
    Senator Grassley. I am going to introduce them.
    Senator Wyden. Oh, I see. All right, after my opening 
statement?
    Senator Grassley. Yes.
    Senator Wyden. Okay, very good.
    I too would like to welcome our nominees. We are going to 
be considering the nomination of Justin Muzinich to be Deputy 
Secretary of the Treasury and Mr. Michael Desmond to be Chief 
Counsel at the Internal Revenue Service.
    Here is where I think things are now: the committee has 
faced unprecedented levels of stonewalling from the 
administration on letters and policy issues that I never 
expected I would see. We would get similar answers from the 
Treasury if we posed our questions to the statue of Alexander 
Hamilton outside the Department's headquarters.
    It does go back to Secretary Mnuchin's very first 
appearance before the committee. I asked then that he work with 
me to crack down on the abuse of shell companies, a magnet for 
all manner of shadowy, illicit conduct. Mr. Mnuchin told me 
that Treasury would get right on it. But a year and a half has 
passed, and it is business as usual at Treasury on shell 
companies.
    And let us be clear, this is not something that is a 
partisan issue. I have written bipartisan legislation on this 
matter with Senator Rubio, obviously an influential Republican.
    Today we are going to ask Mr. Muzinich what he is going to 
do to end the Treasury stonewalling if he is confirmed. Now I 
enjoyed our visit a few days ago, and I was particularly struck 
when you said that you saw yourself simply as being a 
``building manager'' as Deputy Secretary.
    And so I went and read the newspaper articles about you, 
these glowing articles praising your financial expertise, 
previewing your expansive role on tax policy, debt management, 
and more. It is clear that people ``in the building'' have a 
different perspective. Their accounts suggest to me that 
calling the nominee, Mr. Muzinich, the ``building manager'' is 
a little bit like saying an NBA all-star is going to be a nice 
role-player off the bench. It is clear to me that the nominee, 
if confirmed, would be the Secretary's right-hand man, and that 
is why we expect answers as to how he is going to fix these 
long-running problems.
    Bottom line on the stonewalling matter: committee members 
and I are not firing off nasty-grams demanding the resignation 
of everybody who has come within 25 feet of Paul Manafort. We 
are not asking for anybody's high school diaries. What we are 
trying to do is get information that is key to uncovering 
corruption and protecting our democracy from foreign 
interference.
    That includes working to determine the extent of the 
relationship between Alexander Torshin, a Russian national with 
close ties to Vladimir Putin, and the NRA. It includes a 
request for information that would help determine the extent of 
Michael Cohen's influence-peddling.
    And because the President refuses--even though all of his 
predecessors for a full 40 years did so--to release his tax 
returns, we have also had a request for information that would 
help shed light on questionable Trump real estate deals with 
Russian individuals. The list goes on from there.
    At some point, this ceases to be a case of the Treasury 
Department being slow to respond, and it looks more like 
actively abetting the cover-up of corruption and illegal 
activity.
    The committee also needs to know whether Mr. Muzinich 
agrees with the recent decision to open the floodgates for more 
dark money into American politics. This was a significant tax-
policy change, and our nominee says he is a tax-policy guy.
    So there may be an effort to downplay the significance of 
the decision. Maybe, again, we will hear it spun as a harmless 
policy update, but let us be real clear what this is going to 
mean. If your dark money policy gives oligarchs in Moscow 
reason to throw back celebratory vodkas, and if their friends 
at the NRA have a green light to flood the airwaves with even 
more election secrecy, you made the wrong call.
    Last Monday night, the Trump administration wrested even 
more control of our democracy from the hands of American 
people. Furthermore, if the Trump White House is ordering hasty 
changes to tax administration policies without public debate in 
ways that threaten the legitimacy of our elections, are those 
changes going to stand? After all Mr. Desmond, if confirmed as 
IRS Chief Counsel, is going to be responsible for carrying out 
this decision, and any proposed changes to IRS rules will have 
to go through him.
    Mr. Desmond must demonstrate to this committee that he will 
remain independent and unswayed by political pressure from the 
Trump White House on this and other issues.
    In closing, one final tax policy matter that I discussed 
with Mr. Muzinich. A year ago, members of this committee on 
this side of the aisle said loud and clear, our preference is 
to have a bipartisan tax reform bill. Every single member on 
this side of the dais said that was their preference. We put it 
in writing.
    As I mentioned to you, I wrote two full bipartisan bills--
one of them with a member of the Trump administration who used 
to sit right down there, Senator Dan Coats. But what we got 
from the administration is that they did not want to work on 
tax reform in a bipartisan way.
    People like Bill Bradley--who sat over here when he was in 
the Senate--flew all over the country trying to work with 
Republicans on a bipartisan bill. And in this case, a year ago, 
Republicans would not even walk down the hall to work with 
these Democrats who said that they wanted to have a bipartisan 
tax plan.
    Now we are hearing that there is a new effort for yet 
another tax bill that would once again be completely partisan. 
The House is working on it, apparently uninterested in learning 
from the consequences of strictly partisan tax policy.
    And you and I talked about that. You do it partisan, you do 
not get certainty. You do not get predictability, and it makes 
it harder for middle-class people to get those jobs that pay 
higher wages for the long term.
    The Trump tax law has been in place for months, and the 
quarterly numbers from the Bureau of Labor Statistics have 
shown that real wages fell over the first half of this year. So 
now it looks like we are just going to do a repeat of what was 
done last year, a big windfall for the high fliers, even more 
goodies for the most fortunate, while so many typical families 
are just trying to figure out how to get ahead.
    To me, it looks like once again the administration is 
taking the tax code and continuing to split it in two. People 
who work for a wage--no special deals for them. Their taxes 
come right out of their paycheck. If you are a high flier, you 
can almost figure out what you want to pay and when you want to 
pay it.
    So our view is, going down the partisan route is not the 
way to go, and once again, I think you are going to hear from 
my colleagues that their preference is to pursue serious tax 
policy in a bipartisan way. And as I told you, I put years and 
years of my own time into this cause. So this is an important 
hearing.
    Senator Grassley, acting chairman, I am glad you are going 
to have the introduction of our nominees, and we will get on 
with it.
    Senator Grassley. Okay.
    [The prepared statement of Senator Wyden appears in the 
appendix.]
    Senator Grassley. This is the way we will do it to start 
out. I am going to introduce our two nominees, and then they 
are going to be able to make their opening statements and 
introduce family and friends. And then I have the usual 
obligatory questions that we ask all nominees, and then I am 
going to give my time to Senator Portman, and then we will go 
to Senator Wyden.
    Before working at the Treasury Department, Mr. Muzinich 
served as president of a company named after him. It was an 
investment firm. While running his company, he also taught at 
the Columbia Business School. He earned his BA and MBA from 
Harvard and his J.D. from Yale, where he was an Olin fellow.
    In early 2017, he was appointed a Counselor to the 
Secretary at the Treasury, where he has advised Secretary 
Mnuchin on several policy issues, including the tax reform. We 
often saw our nominee up here last year alongside the Secretary 
as we worked to create a tax reform bill that would best help 
the American taxpayers. And we appreciate your help in that 
very historic piece of legislation.
    His work with the Treasury Department has shown him to be a 
quick learner and a good listener, skills that, if confirmed, 
will be an integral part of his new role.
    Mr. Desmond has run his own law firm focused on tax 
controversy matters in Santa Barbara, CA. Before that, he was a 
partner at the international law firm of Bingham McCutchen LLP.
    He earned his BA from the University of California, Santa 
Barbara, and his J.D. from Catholic University of America. Mr. 
Desmond served as a law clerk for a Federal judge in Los 
Angeles and then, as I mentioned earlier, went on to serve as a 
trial attorney with the Attorney General's honor program at the 
U.S. Department of Justice.
    Following this, Mr. Desmond worked at a law firm in 
Washington, DC, where he soon became partner. In 2005, Mr. 
Desmond returned to government service and served as Tax 
Legislative Counsel at the Treasury Department.
    He was a Senior Legal Advisor on several domestic tax 
issues and worked with the IRS Commissioner and the IRS Chief 
Counsel to implement a broad range of tax policy. Mr. Desmond's 
previous work in government service as well as his continued 
work representing individual businesses in the tax space will 
serve him well in his new position, should he be confirmed.
    So, Mr. Muzinich, go ahead.

    STATEMENT OF JUSTIN G. MUZINICH, NOMINATED TO BE DEPUTY 
     SECRETARY, DEPARTMENT OF THE TREASURY, WASHINGTON, DC

    Mr. Muzinich. Chairman Grassley, Ranking Member Wyden, and 
distinguished committee members, I am honored to appear before 
you today as the nominee to be Deputy Secretary of the 
Treasury. I am grateful to Secretary Mnuchin for his confidence 
and support in recommending me for this position.
    I would like to take a moment to introduce my wife Eloise 
who, on top of being a talented physician, is a wonderful 
mother to our two children.
    Senator Wyden. Where is your spouse?
    Oh, good morning. I could not see you.
    Mr. Muzinich. I would also like to acknowledge my parents, 
my sister Lauren, and my brother Adrian. Their love and support 
have made all the difference in my life.
    My own family fled communism for the liberty of this 
country, and my wife's family has a proud history of military 
service, including a grandfather who served as a General in the 
Air Force. So I sit before you today with a profound 
appreciation for the freedoms this country stands for and the 
sacrifice that has gone into protecting them.
    It has been a privilege to meet with many of you and your 
staffs over the past several months as a nominee, and over the 
past year and a half in my role as Counselor to the Secretary. 
I pledge that, if confirmed, I will be committed to dialogue 
and engagement with you, and I look forward to accomplishing 
more together.
    The Treasury Department is tasked with oversight of some of 
the most critical issues facing our country and the world. From 
safeguarding our financial system and implementing sanctions to 
driving economic growth and opportunity, administering the tax 
system, printing the Nation's currency, and managing the 
balance sheet of the U.S. Government--the role of the 
Department is vast.
    None of this work would be possible without Treasury's 
tremendously dedicated career staff. During my time at the 
Department, I have developed a deep respect for their expertise 
and commitment to moving the country forward--putting in long 
hours, making sacrifices, and seeking no recognition. They are 
the pillars of the building, and it is a privilege to serve 
side by side with them.
    If confirmed, I will assist Secretary Mnuchin in carrying 
out the Department's mission by bringing to bear my 
perspectives from working in finance and teaching, as well as a 
first-hand knowledge I have gained over the past year and a 
half serving as Counselor to the Secretary.
    My experience at Treasury has affirmed my long-held belief 
in the importance of public service, of actively participating 
in our great democratic debate, and giving back to the country. 
If confirmed, I will strive to live up to all that Treasury and 
this great country stand for.
    I look forward to your questions.
    Senator Grassley. Thank you.
    [The prepared statement of Mr. Muzinich appears in the 
appendix.]
    Senator Grassley. Now, Mr. Desmond.

STATEMENT OF MICHAEL J. DESMOND, NOMINATED TO BE CHIEF COUNSEL, 
   INTERNAL REVENUE SERVICE, AND ASSISTANT GENERAL COUNSEL, 
           DEPARTMENT OF THE TREASURY, WASHINGTON, DC

    Mr. Desmond. Good morning, Senator Grassley, Ranking Member 
Wyden, and members of the committee. It is an honor for me to 
appear before you as the President's nominee to be Chief 
Counsel for the Internal Revenue Service.
    I would like to take a moment to introduce my wife, Kristen 
Desmond, and my parents, Walter and Ann Desmond, who are with 
me here today. Kristen has given me her unwavering support 
through more than 20 years of marriage, and without my parents' 
life-long commitment to public service and education, I would 
not be appearing before you here today.
    I have spent over 2 decades in positions involving tax 
enforcement, policy, and administration and working in private 
practice representing a broad range of taxpayers in disputes 
pending before the Internal Revenue Service and in litigation. 
In my first job as a tax lawyer at the Tax Division of the U.S. 
Department of Justice, I saw first-hand the challenges faced by 
taxpayers and the Internal Revenue Service alike when 
complexity and uncertainty in the law, combined with breakdowns 
in the audit and administrative appeals process, lead to time-
consuming and expensive litigation.
    That early experience helped shape my view of tax 
administration, recognizing that while litigation is sometimes 
inevitable, resolving disputes early in the process and taking 
steps to avoid those disputes in the first place should be of 
paramount importance.
    As Tax Legislative Counsel at the U.S. Department of the 
Treasury, I worked with a group of lawyers and accountants 
responsible for guidance on all aspects of the domestic tax 
law. I also worked closely with the staff of this and other 
congressional committees in formulating and implementing tax 
legislation, an important exercise that, if confirmed, I would 
bring to bear at the Office of Chief Counsel.
    Although the Tax Legislative Counsel position focuses on 
policy, my prior background in tax practice and procedure gave 
me the unique opportunity in that job to also work with the IRS 
on matters relating to tax administration. As one example, I 
served as the point person at the Treasury Department for 
implementing the disaster relief and recovery provisions that 
Congress enacted as part of the Gulf Opportunity Zone Act of 
2005.
    My current work focuses on representing individuals and 
small and mid-sized businesses in resolving tax disputes. My 
clients include sole proprietors with discrete reporting 
problems, individuals with complex domestic and cross-border 
compliance issues, and larger businesses that are under regular 
scrutiny from the IRS.
    I balance this work with active representation of pro bono 
clients and leadership roles in the Section of Taxation of the 
American Bar Association and the American College of Tax 
Counsel.
    My experience working in government and with clients of all 
sizes has shown me that complexity and uncertainty in the tax 
law create challenges for even the smallest taxpayers that can 
be as difficult to resolve as those faced by the largest 
businesses. Regardless of their size or level of 
sophistication, I firmly believe that for all taxpayers, the 
issuance of timely and accurate guidance is the best way to 
address those challenges, avoid disputes, and foster compliance 
with the tax law.
    The Office of Chief Counsel plays a central role in that 
effort, and, if confirmed, I look forward to doing my part to 
advance it.
    I am grateful for the opportunity to appear before you here 
this morning and look forward to answering your questions.
    [The prepared statement of Mr. Desmond appears in the 
appendix.]
    Senator Grassley. First, the obligatory questions.
    Is there anything that either of you are aware of in your 
background that might present a conflict of interest with the 
duties of the office to which you have been nominated?
    Mr. Muzinich. No.
    Mr. Desmond. No, Senator.
    Senator Grassley. Okay.
    Do either of you know of any reason, personal or otherwise, 
that would in any way prevent you from fully and honorably 
discharging the responsibilities of the office to which you 
have been nominated?
    Mr. Muzinich. No, Senator.
    Mr. Desmond. No.
    Senator Grassley. Do you agree without reservation to 
respond to any reasonable summons to appear and testify before 
any duly constituted committee of the Congress if you are 
confirmed?
    Mr. Muzinich. I do.
    Mr. Desmond. Yes.
    Senator Grassley. Okay.
    Finally, do you commit to provide a prompt response in 
writing to any questions addressed to you by any Senator of 
this committee?
    Mr. Muzinich. I do.
    Mr. Desmond. Yes, I do.
    Senator Grassley. On that last point, I know you are very 
sincere in your answer to the question. But I would like to 
suggest to you--having worked with dozens and dozens, or maybe 
hundreds and hundreds of people who have sat there and said the 
same thing and then not answered letters fully and sometimes 
not answered at all--that maybe your answer should have been 
``maybe.'' [Laughter.]
    Senator Portman?
    Senator Portman. Senator Grassley, thank you. Thank you for 
your indulgence, my friend. I appreciate it. I will be brief. I 
have another markup right now, a markup of my legislation I 
need to get to.
    First of all, both of you, thank you for your service. It 
is good to have people coming into these jobs who have the 
experience you have.
    Mr. Muzinich, in particular as Counselor, you went through 
tax reform. You saw what our attempt was here in Congress.
    My first question is, of course, about that. You have a lot 
of issues, but swift implementation and proper implementation 
of this historic tax law change is critical. We have already 
seen a lot of positive developments.
    CBO has just, as you know, said we are going to grow this 
year at 3.3 percent instead of 2 percent since the tax bill 
passed. Nonsupervisory wages are up 2.8 percent in the last 
year. That is the most in 9 years, which I am glad to see. 
Seventy-five percent of businesses in Ohio say they are hiring 
and they are optimistic this quarter. So it is making a 
difference. I have talked to dozens of small businesses back 
home who believe that.
    But there is some uncertainty about some of the delay we 
have had on some of the implementation, particularly on the 
international side. So can you commit today that you will work 
with us in a way that is timely to get some of these 
regulations out to fully implement this tax law?
    Mr. Muzinich. Absolutely, Senator.
    Senator Portman. The second question is also for you. It 
has to do with IRS reform.
    Senator Cardin and I are going to be at other hearings. I 
think he had to leave to get on to one of these hearings as 
well.
    But I appreciate the fact that Senator Wyden and Senator 
Hatch have allowed us and encouraged us to go forward on a 
hearing today on tax administration. But the Deputy Secretary 
typically plays a huge role at the IRS, specifically with 
Oversight Board membership, and is involved with day-to-day 
administration at the IRS.
    Will you commit today that you will try to make that 
Oversight Board more effective, and that you will indeed roll 
up your sleeves and get involved with day-to-day IRS 
administration issues?
    Mr. Muzinich. Absolutely. I look forward to it.
    Senator Portman. Thank you.
    I look forward to working with both of you.
    Thank you, Mr. Chairman.
    Senator Grassley. Senator Wyden?
    Senator Wyden. Thank you very much, Mr. Chairman.
    Mr. Muzinich, let us start with a couple of ``yes'' or 
``no'' questions. Do you believe that the Treasury Department 
has a role in preventing foreign actors from interfering in our 
elections?
    Mr. Muzinich. Senator, I believe we do not want foreign 
actors interfering in our relations.
    Senator Wyden. So that is a ``yes''? The Treasury 
Department has a role. Pretty simply question.
    Mr. Muzinich. Senator, I would have to look at Treasury's 
specific statutory authorities. But I certainly believe we do 
not want foreign actors in our elections.
    Senator Wyden. The answer is ``yes.''
    Last Monday, hours after a Russian national, Ms. Butina, 
was indicted for using a gun rights organization as a conduit 
to undermine our democracy, the Treasury Department announced 
that it would no longer require large, dark money political 
donor groups to tell the IRS where they get their money.
    ``Yes'' or ``no,'' do you believe last Monday's action is 
going to help the Treasury Department combat foreign influence 
in our elections?
    Mr. Muzinich. Senator, I believe the action you are 
referring to was a tax administration action. Unfortunately, I 
believe it has become very politicized over the last few weeks, 
but the intent was to further efficient tax administration.
    Senator Wyden. So is it going to help us combat foreign 
influence in our elections, ``yes'' or ``no''?
    Mr. Muzinich. Senator, the point of the action was to 
further efficient tax administration.
    Senator Wyden. Well, that just is not right.
    What this action has done is essentially blindfold 
intelligence officials and law enforcement folks who want to 
combat foreign election interference. And without this 
information--as far as I can tell--the IRS would have to 
randomly go out and try to figure out who to audit.
    And my view is, what has really changed here is the IRS is 
not going to get information about big donors. And that is 
going to make it harder than it already is to go after fraud 
and foreign influence.
    So one last question: how is it not in the public interest 
for both the IRS and the American people to have these large 
donations disclosed?
    Mr. Muzinich. Again, Senator, the action taken was to 
further efficient tax administration. It has become very 
politicized. It was an action also recommended by the IRS 
Commissioner under Preside Obama.
    He testified about it. So it has become very partisan, and 
that is unfortunate. But it was something which the Obama IRS 
recommended as well.
    I can walk through why I think it makes sense if that is 
helpful. But it really was meant to further efficient tax 
administration.
    Senator Wyden. I have not seen anything that the American 
people consider partisan about disclosure. And I have asked you 
three simple questions, and it sure looks like you are going to 
fit in really well down there with what we have seen over the 
last year and a half.
    So I am going to move on. But I would sure like to see if 
we could actually make some progress that would resemble being 
sensitive to the public interest.
    Now I mentioned Ms. Butina and the shell companies. When 
Secretary Mnuchin sat where you are a year and a half ago, he 
said he would tackle the issue of anonymous shell companies. 
Sixteen months later, he has yet to come to me or to the 
committee with any kind of concrete proposal to address the 
problem.
    So when will we hear from the Treasury Department on how 
the abuses of shell companies are going to be stopped? Now you 
could, for example, if you wanted to be responsive this 
morning, say, well, bipartisan bill in the Senate, Senator 
Rubio, Senator Wyden, bipartisan bill in the House, two senior 
members, what I would like to do is tell the Finance Committee 
on a bipartisan basis we are going to support those bills and 
make sure that the beneficial owners of the shell companies are 
known at the outset.
    So let me give you another chance to be responsive, rather 
than just giving us some answer about how everything you are 
doing is designed to promote efficiency.
    Mr. Muzinich. Senator, thanks. It is a very important 
question, a very important issue.
    As the Secretary recently testified, it is one we are 
committed to. We do think there are significant law enforcement 
benefits to solving beneficial ownership.
    We have not commented publicly on specific bills, but it is 
something we are committed to working with you very, very 
closely on and do want to solve.
    Senator Wyden. If you compare what you just said to what 
Secretary Mnuchin said a year and a half ago, it is almost 
identical. And what you have said, both with respect to 
protecting the American people from dark money and passing on 
an opportunity to come out this morning for actual action on 
shell companies, looks to me like more of the same that we have 
seen over the last year and a half.
    I am going to close by way of saying I noted Senator 
Grassley talking about all of the times that you were up on the 
Hill talking about tax reform and working with legislatures. My 
colleagues and I were not a part of that. And I think that is 
the heart of the problem.
    Thank you, Senator Grassley.
    And I see we have the return of our chairman, Senator 
Hatch.
    The Chairman. Thank you.
    Senator Grassley. Mr. Muzinich, as you just heard from the 
other side of this dais, making hay out of this 501(c)(3) 
nonprofits reporting or not reporting donor names and 
addresses--is it not true that this decision had also been 
under consideration during the Obama administration?
    Mr. Muzinich. Yes, absolutely.
    Senator Grassley. Was this decision not based on the 
determination that this information was unnecessary for tax 
administration purposes and imposed unnecessary costs on both 
the IRS and the taxpayers?
    Mr. Muzinich. Yes, that is right.
    Senator Grassley. Is it also not true that requiring these 
organizations to provide the IRS with this information 
needlessly put private taxpayer information at risk, resulting 
in at least 14 occasions since 2010 that this information was 
improperly disclosed to the public?
    Mr. Muzinich. That is right, Senator.
    Senator Grassley. Okay.
    And then also for you: President Trump has rightly made 
economic growth and job creation a focal point of domestic 
policy. Tax reform was obviously a big part of that agenda, and 
its positive effects are being felt, as we see in statistics 
coming out of the economy.
    As Deputy Treasury Secretary, you will have a seat at the 
table on many of the important economic policy decisions, 
including tax, trade, domestic and international finance, and 
addressing our growing national debt. What policy area or areas 
do you think deserve the most attention by Congress and the 
administration as we seek to build upon the economic success of 
the tax cuts?
    Mr. Muzinich. Thanks for the question, Senator.
    We will have a number of priorities going into next year 
and for the remainder of this year. Tax implementation is one 
of them. We would love to work closely with you on that, and we 
are coordinating. Certainly housing reform is another, and 
regulatory reform is another.
    Senator Grassley. Okay.
    For decades, tax regulations generally skipped the review 
process other agencies had to follow in submitting significant 
regulations to the Office of Information and Regulatory Affairs 
for a cost-
benefit analysis. However, this changed in April with a release 
of a memorandum of agreement between Treasury and OMB that puts 
in place that review process for tax regulations.
    Do you see this additional layer of review by OIRA for 
significant tax regulations as a positive or negative? And 
please explain your answer.
    Mr. Muzinich. Sure, Senator.
    We think the process is working. It is a matter of 
balancing speed with oversight of the regulatory process, and 
we feel like we have struck the right balance.
    Senator Grassley. Mr. Desmond, I did not direct it to you, 
but I would like to have your comment.
    Mr. Desmond. Thank you, Senator.
    I am familiar with the memorandum of understanding from 
reading about reports in the past few months. Certainly from my 
position as Tax Legislative Counsel when I was at the Treasury 
Department, I saw some problems with the regulatory review 
process.
    I do know from that experience that OMB and OIRA were 
involved. And I think that having them involved now in the 
memorandum of understanding certainly should not be an 
impediment to getting timely guidance out.
    I do think there is a lot of work that can be done to 
expedite the guidance process. And that starts from square one 
in the Office of Chief Counsel, where most guidance originates.
    Senator Grassley. Let me ask you, Mr. Desmond, something 
that you know I have played a leadership role in in getting the 
IRS whistleblower program as a means of addressing tax evasion. 
Over the years, I have had some concerns with the Chief 
Counsel's Office taking an overly narrow interpretation of the 
statute to the detriment of whistleblowers and the program 
generally. When there is detriment to whistleblowers, I think 
it means that we are not collecting all of the taxes we should.
    What, if any, experience do you have with the IRS 
whistleblower law or related laws such as the False Claims Act?
    Mr. Desmond. Thank you, Senator.
    I did have the privilege when I was at Treasury of working 
with your staff on changes to the whistleblower statute that 
this committee and this Congress passed back a number of years 
ago.
    Since that time, I have also represented several 
whistleblowers in private practice. And I have seen the 
benefits that can be achieved by having information come in 
from whistleblowers, and I have also seen the challenge that 
they face in getting that information to the IRS, making sure 
the IRS is effectively utilizing that information and 
collecting more tax, which I think is the goal of the 
provisions and your interest in that statute and changes in the 
statute.
    Senator Grassley. My time is up, but let me give you one 
bit of advice on that. What I have seen as one of the most 
frustrating parts of the whistleblower program is the IRS not 
keeping the whistleblowers actively up to date on the status of 
their whistleblowing and what is going through the IRS.
    Thank you, Mr. Chairman.
    The Chairman. Well, thank you.
    Senator Casey?
    Senator Casey. Thanks, Mr. Chairman.
    Mr. Muzinich and Mr. Desmond, we are grateful you are here, 
and grateful for your willingness to serve. And I know that you 
both have your families here. We are appreciative of that.
    I want to go back to the line of questioning that Senator 
Wyden was pursuing with regard to this change which alters a 
policy that, prior to the change, required organizations to 
report to the IRS the identity of any donor who contributed 
more than $5,000.
    I think if you are going to eliminate that disclosure 
requirement, it should be based upon a considered determination 
that such a change is in the public interest. I do not know how 
having less transparency, less sunlight, benefits the public. 
To use the old expression: sunlight is the best disinfectant, 
is among the best ways to prevent corruption.
    So, Mr. Muzinich, I will start with how the determination 
was made. And I would ask you this because you were a 
Counselor, so I assume you are familiar--and as I know you 
answered the earlier question, you seemed to be familiar with 
why this decision was made.
    The first question is: did Treasury consult with the 
Financial Crimes Enforcement Network, sometimes known as 
FinCEN, prior to making this decision?
    Mr. Muzinich. Senator, thanks for the question.
    Just for the record, I was not a decision-maker on this. I 
have familiarized myself with the issue because I knew it would 
be of interest to the committee. So I am happy to talk about 
the policy rational behind it, but cannot speak precisely to 
the decision-
making process.
    Senator Casey. So you do not know if anyone in Treasury 
consulted with the Financial Crimes Enforcement Network prior 
to the decision?
    Mr. Muzinich. That is right. I do not know.
    Senator Casey. Number two, did Treasury consult with the 
IRS's Criminal Investigation Division prior to making this 
decision?
    Mr. Muzinich. Again, I just cannot speak to the decision-
making process.
    Senator Casey. Well, I hope we will get some clarity on 
this, because I think if you are going to be concerned, as we 
all are, people in both parties, about dark money making its 
way into our system, corrupting our system, that that should be 
part of the inquiry.
    So I am hoping that we can get information about any 
consultation. If there was none, then that is troubling, 
obviously. If there was consultation, we would like to know 
what was the determination made by both FinCEN and the IRS's 
Criminal Investigation Division.
    I point by way of reference to one expert, among many I am 
sure who had this kind of a front row seat, Marv Friedlander, 
former IRS official with 40 years' experience at the IRS, 
including its tax-exempt organizations work. He talked about 
corruption, that he personally saw corruption up close.
    And then he said this, and it is interesting the way he 
phrased this. He said, ``The ability to begin by looking at 
large donations, whether tax-deductible or not, was a useful 
tool in pursuing the possibility of corruption.'' A useful 
tool--I am really at a loss to understand how changing that 
rule somehow advanced the policy on having more sunlight on 
dark money.
    I think people in both parties would agree that we have far 
too much dark, unaccountable money in our system already. So we 
just want to make sure that not only is there accountability 
and sunlight, we want to make sure that foreign agents are not 
part of that.
    I think there is a lot of evidence on the record that there 
has been far too much foreign involvement, not just in the 
election where the Russian Federation, at the direction of 
Vladimir Putin, was interfering in our election, but it goes 
below that level as well.
    I guess the other question, Mr. Muzinich, because you are a 
Counselor at the Treasury Department, is, why would you not be 
involved or consulted in this determination?
    Mr. Muzinich. Senator, I have been focused really on tax 
reform and tax implementation. This was a tax administration 
issue, not reform or implementation.
    After I was nominated for this role, just out of deference 
to this process and this committee, I just remained working 
only on what I was doing before, which was tax reform and tax 
implementation. I did not broaden my portfolio, just out of 
deference to the process.
    Senator Casey. So a complete examination of the record 
would reveal that there is--on this determination, with regard 
to your involvement, if any, we will not find any memos, any 
emails, any evidence of conversations where you were consulted 
on this?
    Mr. Muzinich. That is broadly right.
    We do meet with the Secretary about once a day on tax 
reform. The issue was raised in a meeting, but I was not 
driving the process or driving that----
    Senator Casey. I understand that, but you said ``broadly 
right.'' What do you----
    Mr. Muzinich. It would have been discussed in meetings 
where I was present, but----
    Senator Casey. Okay.
    Mr. Muzinich [continuing]. Other people were in the lead.
    Senator Casey. Well, that is significant.
    Thank you very much, Mr. Chairman.
    The Chairman. Senator Toomey?
    Senator Toomey. Thank you, Mr. Chairman.
    While we are on this topic, Mr. Muzinich, just by way of 
clarification, first of all this rule change that we have been 
discussing--and thanks for being here and for your willingness 
to serve.
    Is it true that this applied to certain tax-exempt 
organizations and that what we are talking about is not 
requiring that these organizations submit names and addresses 
of taxpayers who made donations, right? That is what we are 
talking about here.
    Mr. Muzinich. Exactly.
    Senator Toomey. Right.
    So these--and this category of organizations to which some 
people made donations, is it not true that those contributions 
are not tax-deductible?
    Mr. Muzinich. That is right.
    Senator Toomey. Right.
    So since the mission of the IRS is to determine what people 
owe in taxes, and since these contributions have nothing to do 
with what people owe in taxes, it is really not the business of 
the IRS to be trying to police who contributed what to these 
organizations in a series of contributions that have no tax 
consequences. Is that not fair to say?
    Mr. Muzinich. That is right, Senator.
    Senator Toomey. Right.
    Now it might be entirely appropriate for other enforcement 
organizations within this vast Federal Government to look into 
if there is a suspicious series of transactions, but I see no 
reason why that is the role of the IRS.
    Furthermore, is it not the case that if the IRS for some 
reason felt the need to audit one of these organizations, or 
the individuals contributing, that the information has to be 
retained and the IRS would discover the information upon 
auditing it. Is that true?
    Mr. Muzinich. That is true, Senator.
    Senator Toomey. That is what I thought. Thank you.
    Let me also thank you for your work on tax reform, because 
the evidence is just abundantly obvious. It has been enormously 
successful--tremendous economic growth, the extraordinary 
situation in which there are more job openings in America than 
there are people looking for work in America. I mean, it is 
just terrific.
    My colleague must have misspoken. I thought I heard him say 
that wages were somehow declining. The fact is, over the last 6 
months of this year, the first year in which this tax reform 
was in effect, wages are up. The average wages are up 2.8 
percent. Inflation is up by less than that. That means by 
definition there are gains. And that is an average of all wages 
when you take into account the fact that new entrants into the 
workforce typically come in at below-average wages, and new 
entrants have been coming in. That tells you that people who 
are continuously employed have been experiencing even higher 
wage gains.
    So I am very pleased we were able to get this done. And I 
thank you for your role in helping with it.
    There are a couple of outstanding issues that I hope we are 
going to be able to address. One of them I know you are 
familiar with. It is the qualified improvement property.
    There is a technical correction that I think is necessary 
here. And as a result of, frankly, a drafting error, there is 
the completely unintended consequence of stretching out the 
cost recovery period for improvements inside real estate. This 
is particularly problematic for restaurants and retailers who 
typically make substantial renovations when they take on a 
space.
    So I have introduced to the appropriations bill an 
amendment that would actually correct this. I trust my 
colleagues on both sides of the aisle, however you felt about 
the tax reform, would not want to visit this honest mistake 
upon a very important sector of our economy. I do not know what 
the outcome of this amendment vote will be, but I also think 
that there is some ambiguity that might be something the 
Treasury can resolve.
    So my question is, if you are confirmed, will you work with 
us to try to address these and other technical issues to ensure 
that, where there is ambiguity, the congressional intent is 
achieved through guidance and rulemaking?
    Mr. Muzinich. I will.
    Senator Toomey. Thank you.
    I also want to bring up something we did not touch in our 
tax reform, and that is the idea of indexing capital gains. As 
you know, as a matter of policy we define a gain on an asset 
that a taxpayer holds as the difference between the sale price 
and the purchase price. And then we force the person to pay a 
tax on that difference, when in fact, in the vast majority of 
cases, a portion of that difference, if it is a positive 
number, results from inflation. So the investor did not gain 
anything from the component of the price rise that was just a 
reflection of inflation. And yet we tax the person on that, 
despite the fact.
    So in fact, it routinely happens that people have a nominal 
gain that is nothing more, or in fact, less than even 
inflation. So they actually lost on their investment. And we 
tax them anyway.
    It is my view that the Treasury has the authority to 
redefine cost to include the real cost adjusted for inflation. 
And I would just ask you to work with us to see if we could not 
implement that at Treasury, where I think the authority lies.
    Mr. Muzinich. Yes, Senator, I would be very happy to work 
with you on it.
    Senator Toomey. Great. Thank you very much.
    Thanks, Mr. Chairman.
    The Chairman. Senator Thune is next.
    Senator Thune. Thank you, Mr. Chairman.
    Thank you to both of you for your willingness to serve, and 
for being here today along with your families. And we thank 
them for their commitment to public service as well. We know 
that they all contribute to the work that you all do.
    As a follow-up to Senator Toomey's questions, there were a 
couple of clear drafting errors on a couple of issues that are 
pretty important in the tax bill, which I hope we can get 
fixed. I also hope we can have bipartisan cooperation to fix 
both the qualified improvement property issue and a net 
operating loss issue, both of which are just straightforward 
drafting errors, and each of which has significant impacts that 
I hope we can get addressed.
    It was clearly congressional intent, as Senator Toomey 
pointed out, with respect to qualified improvement property, 
that businesses be able to take advantage of the shorter 
depreciation period. And whether the solution he has proposed 
as part of the appropriations process gets adopted or not, I 
hope that we can get the long-term fix in place as well.
    I also just want to say that the new tax law--like any 
major change in the tax code, requires guidance to implement 
the reforms across individual and family situations as well as 
the broad range of business types, industries, and 
circumstances. And each of you will have a role in that 
process.
    The tax code is unique in that Congress has provided broad 
regulatory authority in section 7805, which has existed for 
decades. A significant reason for this grant of authority is 
that the statutory rules in the tax area cannot always envision 
every particular circumstance in which they will need to be 
applied.
    And I can tell you, having just worked on the Tax Cuts and 
Jobs Act, that we specifically envisioned that the Treasury 
Department and the IRS will use that broad authority, as well 
as specific authority, where we wanted to stress particular 
issues to implement the new statutory rules for all taxpayers.
    So the question is, do you agree that this authority, along 
with specific authority provided to stress particular issues, 
should be used broadly to implement the tax law based on 
congressional intent in the statute and in the legislative 
history?
    Mr. Muzinich, or whomever would like to take this first. 
Mr. Desmond?
    Mr. Desmond. Thank you, Senator.
    I certainly am familiar with provisions in section 7805. 
When I was at Treasury, that was the statutory authority that 
we relied upon in many instances for issuing regulations.
    There are certain instances where the scope of the 
statutory authority is unclear. But I think it is certainly a 
tool that can be applied very broadly, and in my experience, 
has been applied broadly to interpret congressional intent and 
implement that through the regulatory process.
    Senator Thune. Mr. Muzinich?
    Mr. Muzinich. I agree with that.
    Certainly, we want to work to interpret the law in a manner 
consistent with the law, and in a manner consistent with 
congressional intent. And the Department and the Office of Tax 
Policies are working very, very hard to get regulations out.
    Senator Thune. Good.
    I know that, and I hope that they will continue to work 
aggressively to make sure that that guidance does get out. 
There are a lot of taxpayers across the country, businesses and 
individuals, who are very interested in that guidance.
    The Chief Counsel's Office makes legal determinations and 
provides legal advice across the agency in its various 
divisions, including the Office of Appeals. So the question is, 
from your experience as a practitioner, do you think that the 
relationship between Chief Counsel and Appeals is working 
appropriately and effectively, and does it affect the ability 
of the Office of Appeals to be an independent arbiter between 
taxpayers and the IRS auditors?
    Mr. Desmond. Thank you, Senator.
    I think the process can work more efficiently. All 
processes can work more efficiently in terms of getting Chief 
Counsel to advise Appeals and help move cases through Appeals 
and get them settled.
    There are issues in the relationship that people have noted 
over the years about the ex parte prohibition and ensuring the 
Chief Counsel is not inappropriately being used as a conduit 
for communication between examined appeals. That is an issue I 
have written about, that I am very aware of. I have certainly 
seen issues come up in representing my clients with ex parte 
communications.
    So I think that the system does work. I think that Appeals, 
in particular, and that ex parte rule--the most important part 
of that is the appearance of inappropriate influence from exam 
on settlement offices at Appeals. So it is very important, and 
I think there are some improvements that can always be made, 
and I look forward to working with the Office on that, the 
Office of Appeals.
    Senator Thune. Okay. All right.
    Mr. Chairman, my time has expired. Thank you.
    The Chairman. Senator Whitehouse is next.
    Senator Whitehouse. Thank you very much, Mr. Chairman.
    Mr. Desmond, it is a crime to make a material false 
statement to the government under 18 U.S.C. 1001. The 
Department of Justice has the practice of not prosecuting those 
cases unless there has been a referral from the IRS where it 
relates to materially false statements in tax filings.
    That gives the IRS a chokehold on those prosecutions. If 
you are confirmed, will you pledge to me that you will let me 
know what the number of those referrals has been in recent 
years and explain any policy related to those referrals?
    Mr. Desmond. Senator, yes.
    I am not familiar with the numbers or what----
    Senator Whitehouse. I am not asking you that now. I am 
asking you if you will get me the numbers once you are in, and 
if you will explain the policy behind--I suspect there are 
practically no referrals. And I am interested in the actual 
number and what the policy is that justifies whatever that 
number is.
    Mr. Desmond. Sure, Senator.
    I think that information is out there. I have seen that. 
And certainly, if I am confirmed and I have access to that--the 
only hesitation I have is if there is any prohibition on 
disclosure of that. But other than that----
    Senator Whitehouse. I am not asking for the referrals 
themselves, just the number.
    Mr. Desmond. Understood.
    Senator Whitehouse. Mr. Muzinich, shell corporations--in 
what context should we be looking at the proliferation of 
anonymous shell corporations? Is there a law enforcement 
context with respect to shell corporations that we should 
attend to?
    Mr. Muzinich. Yes, Senator.
    I mentioned earlier--perhaps before you arrived--that I do 
think it would be helpful for law enforcement purposes to fix 
the beneficial ownership issue you are referring to.
    Senator Whitehouse. And it is a serious problem in law 
enforcement.
    Mr. Muzinich. Senator, I have not seen law enforcement data 
myself, so I cannot speak to how serious it is.
    Senator Whitehouse. How about national security? Are there 
any national security ramifications to anonymous shell 
corporations operating in the United States?
    Mr. Muzinich. Again, Senator, I have not seen any national 
security data on that, so I cannot speak to it.
    Senator Whitehouse. Wow. Okay.
    How about dark money? The ability of unknown entities to 
plow money into our elections? Is there any law enforcement or 
national security concern that you would see to that going on?
    Mr. Muzinich. Again, Senator, I just have not seen any 
national security data. So I cannot speak to that.
    Senator Whitehouse. Well, just from a logical point of view 
as a human being, if we do not know the source of large amounts 
of money flowing into elections, what prevents that from being 
a foreign source, for instance?
    Mr. Muzinich. Senator, I certainly agree with you that we 
do not want foreign money in elections.
    Senator Whitehouse. And the Treasury has a role in 
facilitating the flow of dark money or trying to put some light 
onto that flow of dark money, does it not?
    Mr. Muzinich. Senator, that question was asked earlier. I 
am not familiar with Treasury statutory authorities on that 
point.
    Senator Whitehouse. Wow. Okay.
    So, last question: the IRS publishes information on tax 
returns. And it publishes these days the top .001 percent. It 
aggregates them. It is 1,400 returns for individuals.
    On average, those are individuals who make $152 million 
dollars per year. The IRS also reports that, on average that 
group pays a 24-percent overall tax rate, which is about what a 
registered nurse pays.
    We seem to have a very serious problem of the highest-
income earners paying considerably lower tax rates than many 
people who earn a tenth or even a hundredth of their income, 
which does not seem fair or efficient.
    My concern is that this data was before the big tax bill 
which many of us view as a huge handout to those very high-
income shareholders. And what I would ask both of you to pledge 
is that you will not stop the reporting of this aggregate tax 
return income if it should show that this tax bill has been a 
huge windfall for those .001-percent high-income earners.
    Will we continue to get those reports even if it shows the 
windfall?
    Mr. Muzinich. Senator, I do not know of any plans to stop 
reporting that data.
    Senator Whitehouse. Will you pledge to keep doing it? 
Having no plans to stop it allows you to stop it tomorrow.
    Mr. Muzinich. Senator, again, I would have to spend some 
time on the issue, but it seems reasonable to me.
    Senator Whitehouse. Okay. Thanks.
    Thanks, Mr. Chairman.
    The Chairman. Thank you.
    Senator Cassidy?
    Senator Cassidy. Hi, gentlemen.
    Either of you can answer this, because it seems like both 
of you have experience that may speak to it, but perhaps not.
    I am very interested in trade-based money laundering and 
the way by which transnational criminal organizations or 
terrorist organizations such as Hezbollah move dollars outside 
of the U.S. to wherever they wish to take them.
    Can you speak to the information sharing between the IRS 
and the Treasury Financial Crimes Enforcement Network, 
otherwise known as FinCEN, for identifying these illicit 
activities?
    Mr. Desmond. Senator, I cannot speak to that specifically. 
I am aware that there are both treaty provisions and 
information sharing agreements the United States has with other 
countries. I, in practice, have not had experience with those. 
But I do know those are out there.
    Senator Cassidy. In your previous experience in a previous 
administration, did you have any kind of involvement with this?
    Mr. Desmond. I did not, Senator. I was on the domestic side 
when I was at Treasury. There was an Office of International 
Tax Counsel that may have had experience, but I was on the 
domestic side at Treasury.
    Senator Cassidy. And you, Mr. Muzinich?
    Mr. Muzinich. Senator, I cannot speak directly to it, but I 
am happy to follow up.
    Senator Cassidy. Let me ask, because this may be something 
that, despite that, you could still speak to.
    Can you imagine that--and I am not arguing against them, 
but I am just asking--the tax privacy rules under the IRS code 
section 6103 prevent Treasury from further enhancing this 
information sharing?
    Mr. Desmond. My reaction to that question, Senator, is 
``no.'' In the treaty provisions that I am familiar with, the 
information sharing provisions, those are tax provisions. So 
sharing information under those provisions would be permissible 
because it is for tax enforcement purposes. And that would be 
permissible under the 6103 provisions.
    Senator Cassidy. Mr. Muzinich?
    Mr. Muzinich. Senator, I cannot speak to it.
    Senator Cassidy. And do either of you in your experience--
again going along with my concern regarding the trade-based 
money laundering--do you have any awareness of what steps 
Treasury is taking to better detect criminal and terrorist 
organizations and their activities in money laundering?
    Mr. Desmond. I am not familiar with those activities, 
Senator.
    Mr. Muzinich. I know it is something FinCEN is quite 
focused on. It has not been in my portfolio, but I know they 
are quite focused on trade-based money laundering.
    Senator Cassidy. Okay. The next question is on duty 
drawback.
    Mr. Muzinich, the Trade Facilitation and Trade Enforcement 
Act of 2015 was explicit that regulations be promulgated by 
February 24, 2018. But U.S. manufacturers still are waiting on 
guidance on the duty drawback, which is as you know--but for 
context--the refund of duties, taxes, and fees on imports when 
those items or like-kind items are exported. The refund process 
allows U.S. manufacturers to compete on a level playing field 
with foreign countries--pro-U.S. jobs, pro-manufacturing, pro-
export.
    I understand Treasury and CBP are continuing to process 
regulations in this area. But a simple question: if you are 
confirmed, will you support U.S. manufacturers by fulfilling 
the intent of the Trade Facilitation and Trade Enforcement Act 
with respect to duty drawback, which again, was supposed to be 
released by February 24th? And the absence of release is 
impacting the transition period.
    Mr. Muzinich. Yes, I can commit to that. The Treasury staff 
has made me aware it is important to you. And we are working 
very hard on it.
    Senator Cassidy. Yes.
    Thank you both, and thank you for offering your service.
    I yield back, Mr. Chairman.
    The Chairman. Thank you.
    Senator Bennet is going to yield to the ranking member for 
his next questions.
    Senator Wyden. Thank you very much, Mr. Chairman. I thank 
my colleague for doing this and for stepping in when I have to 
go to something else.
    First, Mr. Chairman, I would like to put into the record 
now a news release from the Bureau of Labor Statistics on wage 
growth. My colleagues on the Republican side have said several 
times that wages are up. This news release from the Bureau of 
Labor Statistics says that that is not the case; wages actually 
went down from June 2017 to June 2018. And the Pay Scale Index 
reports that wage growth for the second quarter is down.
    So I would ask unanimous consent that at least we correct 
the record.
    The Chairman. Without objection.
    [The document appears in the appendix on p. 92.]
    Senator Wyden. Thank you.
    Mr. Muzinich, I will tell you I am just stunned that you 
seem to be unaware of the enormous authority the Department has 
in terms of dealing with shell companies and national security. 
I asked that question. Senator Whitehouse asked the question.
    These are matters that are in the morning newspaper--
talking about Ms. Butina using a shell company. So I am just 
going to leave that there. And maybe you want to say something 
else. But to me, when I ask a question that is just a no-
brainer, where the Treasury Department has a role in preventing 
foreign actors from interfering in our elections, and you will 
not answer what is so obviously a ``yes,'' that does not 
demonstrate the kind of progress that I talked to you about.
    So let me ask you about Treasury and IRS priorities. Most 
of our Nation's businesses are small businesses. The 20-percent 
tax deduction could impact about 20 million people. The fact 
is, our small businesses are really in the dark about how these 
rules are going to apply.
    The IRS released a new postcard tax form. And I would like 
to hear what the discussions were, because this is a tax policy 
issue. You have said you are the tax policy guy.
    Why was so much effort put into this question of the 
postcard, the new postcard which was supposed to simplify 
taxes? In fact, it adds six new schedules to the calculation of 
taxes for many people. Why has the focus been on matters like 
that new form, rather than the IRS and Treasury getting out 
guidance to the millions of small businesses that have told me 
that because the guidance is not out, they cannot even do an 
estimate of their taxes?
    Why was that not put first, the needs of the small 
businesses that wanted the guidance, rather than all of this 
flurry of activity on the postcard, which I know was a campaign 
promise?
    Mr. Muzinich. Sure, Senator. Thanks for the questions.
    Just for the record, I am well-aware of Treasury's 
authorities in sort of what you call the ``shell companies'' 
and am delighted to follow up with you on that.
    On taxes----
    Senator Wyden. Well, that indicates we may have made a tiny 
bit of progress today. You would not take a position on the 
bipartisan bills to require disclosure of the beneficial 
ownership--the bill in the House, the bill in the Senate. You 
would not answer my question or Senator Whitehouse's question 
whether you all had a role in preventing foreign actors. But at 
least we have now got to the point where you will acknowledge 
that there is FinCEN. So that is, I guess, making some 
progress.
    Tell me now about the decision to go forward with the 
postcard, rather than getting the small business people the 
guidance they need on the pass-throughs.
    Mr. Muzinich. Senator, I would respond in two ways. First, 
we do think the postcard will simplify life for many Americans. 
A typical family just taking the standard deduction with simple 
tax filing will benefit from a very straightforward filing 
process with a postcard.
    In terms of time allocation--which is, I think what you are 
getting at--between the postcard and other priorities, we think 
they both are important. They are both led by the IRS, and they 
are led by different groups at the IRS. So working on the 
postcard is done by a different group than, for instance, 199A 
guidance, which is I think what you are referring to.
    On 199A guidance, we do hope to have that out very soon. 
And the team is working very hard on it.
    Senator Wyden. I am going to ask one other question, but 
the reality is, today we have something which is not simpler. 
In fact, I characterize it as ``simply complicated'' for many 
people with the six schedules. But we have not gotten answers 
for our small businesses. And I think that is a set of 
misplaced priorities.
    One last point that I talked to you about is, we have had 
essentially zero responsiveness in terms of our letters on the 
big issues: the question of documents, NRA and Russia, letters 
to FinCEN about Michael Cohen. The reality has been that, while 
the nominees come forward and say they are going to cooperate, 
we never get anything.
    So again, in the name of making some progress, what are you 
going to do to change things, if anything?
    Mr. Muzinich. Thanks, Senator.
    I would love to have a good dialogue with you. In terms of 
correspondence, as I mentioned when we met 2 days ago, that has 
not been within my portfolio, but I did talk to the team about 
it after our meeting, emphasized the importance of it. I 
believe we got one of your letters answered yesterday. So I 
hope that was helpful.
    And all I can give you is my good faith commitment to work 
with you on it.
    Senator Wyden. One last point: mention was made of the dark 
money rule at one point. My colleague Senator Casey asked a 
question about, were you ever aware of this, essentially. And 
you said you were in the room, but you did not have any 
involvement in it.
    I would like you to state in writing for the record what 
happened when it was brought up. And I would like you to state 
specifically whether you and Secretary Mnuchin ever talked 
about the change in the dark money rule that would make it 
harder for the IRS to run down fraud.
    I would like you to state in writing whether you and 
Secretary Mnuchin ever talked about it, and if so, when and 
what the circumstances were.
    Okay. Thank you, Mr. Chairman.
    The Chairman. Senator Bennet?
    Senator Bennet. Thank you. Thank you, Mr. Chairman.
    Thank you, gentlemen, for your willingness to serve. It is 
nice to see you.
    Mr. Muzinich, last year, as you know, Secretary Mnuchin 
predicted that not only would this tax plan pay for itself, but 
it would pay down our debt.
    Next year, we are going to have a trillion-dollar deficit, 
the largest deficit that we have ever had as a percentage of 
our GDP outside of war or a recession, since World War II. CBO 
projects that our debt will be more than 100 percent of GDP in 
the next 10 years.
    Do you still defend the Treasury Department's position that 
the tax cuts will pay for themselves despite every mainstream 
analysis predicting they will add massively to our deficit?
    Mr. Muzinich. Senator, I point you to CEA's 40-page 
analysis on this, sort of explaining why it will pay for 
itself, and also a letter signed by 130 economists agreeing 
with that.
    Senator Bennet. I am not asking what other economists say. 
I am asking you----
    Mr. Muzinich. I agree with that.
    Senator Bennet. Your position is that the tax cuts will pay 
for themselves and reduce our deficit? That is your position?
    Mr. Muzinich. Yes.
    Senator Bennet. Will you come back here and testify next 
year if that turns out not to be the case?
    Mr. Muzinich. I am happy to come back and testify.
    Senator Bennet. Good. We would like to have you.
    As you also know, because you have been at Treasury, it 
serves as a powerful stabilizing force for our country. And 
part of that stability is preserved by insulating Treasury from 
politics, which is central, I think, to the role of the Deputy 
Secretary.
    I would like to ask whether you agree that Treasury's work 
to combat illicit financial activity, impose sanctions, and 
conduct national security reviews through the CFIUS process 
should be free from political interference?
    Mr. Muzinich. Yes, I agree with that.
    Senator Bennet. And would you agree that that would be true 
even if a company or an individual is affiliated with President 
Trump, his closest associates, or family members?
    Mr. Muzinich. Yes.
    Senator Bennet. Do you believe the same is also true for 
tax administration and enforcement by the IRS?
    Mr. Muzinich. I believe administration should be free from 
politics, yes.
    Senator Bennet. Would you notify this committee, the 
chairman of the committee, if inappropriate political 
interference occurs in any of these areas?
    Mr. Muzinich. Senator, in principle yes, but before making 
a commitment, I just sort of want to make sure I----
    Senator Bennet. I appreciate that, and I appreciate the 
principle.
    Will you commit to standing up for the independence of 
monetary policy in the Federal Reserve from inappropriate 
meddling by the executive branch? Do you think that is 
important?
    Mr. Muzinich. I believe Fed independence is important, yes.
    Senator Bennet. Thank you.
    Mr. Muzinich, do you think that trade wars are easy to win? 
Do you think they are great and easy to win?
    Mr. Muzinich. Senator, I am not sure what you mean by 
``easy to win,'' but I think that through our tariffs we are 
trying to open markets. And I hope that leads toward free 
trade.
    Senator Bennet. I'm sorry?
    Mr. Muzinich. I hope that leads toward free trade.
    Senator Bennet. Do you believe these tariffs are consistent 
with free trade?
    Mr. Muzinich. I believe the point of the tariffs is to open 
markets.
    Senator Bennet. Eighty percent of the wheat in Colorado is 
exported. And all of the growth for our dairies, and our 
farmers, and our ranchers is trade. And when Ambassador 
Lighthizer was sitting there, he said that our farmers and 
ranchers had his sympathy because they would be the ones likely 
to be retaliated against in a trade war.
    Now we see the President defying the views of, I think, 
members of his own party, basically doling out $12 billion to 
make up for the disaster that has been caused to our farmers 
and ranchers as a result of these trade policies.
    Do you think these trade policies have helped open markets 
for our farmers and ranchers?
    Mr. Muzinich. Senator, I think it is an ongoing process.
    Senator Bennet. Do you think they have helped open markets 
for our farmers and ranchers?
    Mr. Muzinich. I was happy to see the EU opening up a bit 
yesterday.
    Senator Bennet. Let us hope that turns out to be true.
    Mr. Chairman, I will yield back 13 seconds.
    Thank you very much.
    The Chairman. Senator Menendez, you are the last one.
    Senator Menendez. Thank you, Mr. Chairman.
    To both of you, congratulations on your nominations.
    Mr. Muzinich and Mr. Desmond, as taxpayers attempt to 
navigate their way through the tax code, they need to be able 
to rely on a consistent and uniform interpretation of the 
Nation's tax law. They need to know that rulings made yesterday 
will still apply today and that a small business in Louisiana 
will be treated the same as one in New Jersey.
    Do you both pledge to adhere to longstanding precedents 
that have been established by the Treasury Department and the 
IRS?
    Mr. Desmond. Senator, with respect to published guidance, 
yes. Revenue rulings, regulations, those kinds of things are 
things that should be followed consistently unless they are 
changed going forward.
    Senator Menendez. Mr. Muzinich?
    Mr. Muzinich. I agree with that.
    Senator Menendez. Okay.
    Do you both pledge to give taxpayers the same fair 
treatment regardless of what State they are from?
    Mr. Desmond. Yes, I do.
    Mr. Muzinich. Yes.
    Senator Menendez. Good.
    So from my perspective, they were both the right answers. 
So let us apply this agreed-upon principle to an issue 
currently facing States like New Jersey.
    New Jersey recently joined 32 other States and the District 
of Columbia in offering local tax credits as an incentive for 
residents to donate to approved nonprofits. Many of the other 
32 States ran similar programs for years, which have been both 
blessed by the IRS and the United States Supreme Court.
    Indeed, in 2011 the IRS Chief Counsel released an advisory 
memo clarifying that State tax credits given in return for 
charitable contributions do not--I repeat do not--prohibit 
taxpayers from writing off the full value of their charitable 
donations. In other words, getting a tax break does not mean 
you earned more money, and thus you should not have to be taxed 
more as a result.
    The Supreme Court confirmed this interpretation with a 2011 
ruling that found that State tax credits given for charitable 
donations should not be considered a thing of value and instead 
are, to quote Justice Kennedy, ``the government declining to 
impose a tax.''
    This decision confirmed two things: (1) State tax benefits, 
even dollar-for-dollar credits, do not reduce the value of 
Federal charitable deductions; and (2) such donations do not 
constitute a satisfaction of tax liability.
    But in plain English, it is simply illogical, impractical, 
and fundamentally backwards to tax people on the value of a tax 
break that they receive. But despite 32 other States running 
similar programs for many years, despite these programs being 
specifically blessed by the IRS in 2011, and despite the U.S. 
Supreme Court further confirming this interpretation, the IRS 
is now threatening New Jersey taxpayers and others with 
potential consequences for participating.
    So can you commit to reversing course and stopping the IRS 
and Treasury Department from targeting taxpayers in States like 
New Jersey, and instead pledge to apply the law equally, 
regardless of what State a taxpayer is from?
    Mr. Desmond. Senator, I am certainly very familiar with the 
issue, being a resident of California. And I know that there 
are some authorities that you referenced, case law in 
particular, and also case-specific guidance that the IRS has 
issued in the past. Obviously, I was not a part of that.
    But I am familiar with that, some of the discussion that 
has been happening recently. So I do commit to looking into and 
understanding the issue more carefully. It is a complicated 
issue involving issues of donative intent. You had referenced 
the quid pro quo concepts that are also involved.
    So I do commit to looking into the issue and ensuring that 
I understand it.
    Senator Menendez. Well, can you point to me anywhere that 
the law has changed, either through an IRS guidance and memo, 
or through a Supreme Court decision?
    Mr. Desmond. Sitting here today, Senator, I cannot point to 
any change in the charitable donation laws in section 170. I 
think this issue is being driven currently in the States by 
changes to other provisions in the code dealing with the 
deductibility of State and local taxes.
    Senator Menendez. I challenge you to show me, for example, 
where in the Trump tax bill that passed into law did it 
prohibit State tax credit programs for charitable donations, 
because it is not there. I sit on this committee. I can tell 
you what is in it and what is not.
    So I read the bill, and nothing in it prevents the 32 
States that are already doing this from continuing to operate 
their programs, or additional States from developing new 
programs on their own.
    So here is what my problem is going to be, gentlemen: you 
either treat my State and States similarly situated the same as 
the 32 other States, or you take it away from the 32 States, 
which happen to be very red States. This is called the United 
States of America, not the red and blue States of America.
    So until I have a sense of satisfaction that that is where 
we are headed, and being treated fairly and not having the IRS 
weaponized against certain States, I will have a problem with 
these nominations--not in your competency, but on the question 
of the substance of how you will approach this.
    I have to understand that there is fairness here at the end 
of the day.
    Thank you, Mr. Chairman.
    The Chairman. All right. At the request of Senator Scott, I 
ask that the following two documents be printed in the record 
of this hearing: (1) October 2017 Priority Guidance Plan from 
the Treasury Department that makes reference to the FATCA 
reporting reforms, and (2) a letter from the South Carolina 
Treasurer regarding the claim of around $250 million in U.S. 
savings bonds belonging to South Carolinians.
    [The documents appear in the appendix beginning on p. 73.]
    The Chairman. With that, I would like to thank you all for 
your attendance today and participation.
    And I would like, once again, to thank Mr. Muzinich and Mr. 
Desmond for their patience and willingness to serve in these 
important roles.
    We here at the committee appreciate the new and large tasks 
that you are going to have before you, and should you be 
confirmed, we trust that you will serve your respective 
agencies well. Now, you are both excellent people and excellent 
choices as far as I am concerned.
    I ask that any member who wishes to submit questions for 
the record do so by close of business tomorrow, Friday, July 
27th.
    So with that, we are grateful to you folks for being here, 
and this hearing is adjourned.
    [Whereupon, at 10:55 a.m., the hearing was concluded.]

                            A P P E N D I X

              Additional Material Submitted for the Record

                              ----------                              


    Prepared Statement of Michael J. Desmond, Nominated to be Chief 
   Counsel, Internal Revenue Service, and Assistant General Counsel, 
                       Department of the Treasury
    Good morning, Chairman Hatch, Ranking Member Wyden, and members of 
the committee. It is an honor for me to appear before you as the 
President's nominee to be Chief Counsel for the Internal Revenue 
Service. I would like to take a moment to introduce my wife, Kristen 
Desmond, and my parents, Walter and Ann Desmond, who are with me here 
today. Kristen has given me her unwavering support through more than 20 
years of marriage, and without my parents' life-long commitment to 
public service and education, I would not be appearing before you here 
today.

    I have spent over 2 decades in positions involving tax enforcement, 
policy, and administration and working in private practice representing 
a broad range of taxpayers in disputes pending before the Internal 
Revenue Service and in litigation. In my first job as a tax lawyer at 
the Tax Division of the U.S. Department of Justice, I saw first-hand 
the challenges faced by taxpayers and the Internal Revenue Service 
alike when complexity and uncertainty in the law, combined with 
breakdowns in the audit and administrative appeals process, lead to 
time-consuming and expensive litigation. That early experience helped 
shape my view of tax administration, recognizing that while litigation 
is sometimes inevitable, resolving disputes early in the process and 
taking steps to avoid those disputes in the first place should be of 
paramount importance.

    As Tax Legislative Counsel at the U.S. Department of the Treasury, 
I worked with a group of lawyers and accountants responsible for 
guidance on all aspects of the domestic tax law. I also worked closely 
with the staff of this and other congressional committees in 
formulating and implementing tax legislation, an important experience 
that, if confirmed, I would bring to bear at the Office of Chief 
Counsel. Although the Tax Legislative Counsel position focuses on 
policy, my prior background in tax practice and procedure gave me the 
unique opportunity in that job to also work with the IRS on matters 
relating to tax administration. As one example, I served as the point 
person at the Treasury Department for implementing the disaster relief 
and recovery provisions that Congress enacted as part of the Gulf 
Opportunity Zone Act of 2005.

    My current work focuses on representing individuals and small and 
mid-sized businesses in resolving tax disputes. My clients include sole 
proprietors with discrete tax reporting problems, individuals with 
complex domestic and cross-border compliance issues, and larger 
businesses that are under regular scrutiny from the IRS. I balance this 
work with active representation of pro bono clients and leadership 
roles in the Section of Taxation of the American Bar Association and 
the American College of Tax Counsel.

    My experience working in government and with clients of all sizes 
has shown me that complexity and uncertainty in the tax law create 
challenges for even the smallest taxpayers that can be as difficult to 
resolve as those faced by the largest businesses.

    Regardless their size, I firmly believe that for all taxpayers, the 
issuance of timely and accurate guidance is the best way to address 
those challenges, avoid disputes, and foster compliance with the tax 
law. The Office of Chief Counsel plays a central role in that effort, 
and, if confirmed, I look forward to doing my part to advance it.

    I am grateful for the opportunity to appear before you here this 
morning and look forward to your questions.

                                 ______
                                 
                     Eversheds Sutherland (US) LLP

                  999 Peachtree St., N.E., Suite 2300

                         Atlanta, GA 30309-3996

                           D: +1 404-853-8038

                           F: +1 404-853-8806

                      www.eversheds-sutherland.com

                  [email protected]

                             April 5, 2018

The Honorable Senator Orrin Hatch
Dirksen Senate Office Building, Suite 219
Washington, DC 20510

The Honorable Senator Ron Wyden
Dirksen Senate Office Building, Suite 219
Washington, DC 20510

Dear Senator Hatch and Senator Wyden:

    I served as Chief Counsel for the Internal Revenue Service a number 
of years ago, and I have been in touch with nine other former Chief 
Counsels who would like their praise of the selection of Mike Desmond 
to serve in that capacity to be known and who would like his 
confirmation to be undertaken as soon as possible. The attached letter 
reflects those views. If there are any questions, please have them 
directed to me.

Sincerely,

N. Jerold Cohen

                                 ______
                                 

                             April 5, 2018

The Honorable Senator Orrin Hatch
Dirksen Senate Office Building, Suite 219
Washington, DC 20510

The Honorable Senator Ron Wyden
Dirksen Senate Office Building, Suite 219
Washington, DC 20510

Dear Senator Hatch and Senator Wyden:

    The undersigned are all former Chief Counsels or Acting Chief 
Counsels of the Internal Revenue Service, and we are writing to both 
applaud the nomination of Michael Desmond to be Chief Counsel and 
recommend that he be confirmed as quickly as possible.

    Mike is an excellent tax lawyer with the skills, understanding of 
the tax laws and tax practice, and background to be a superb Chief 
Counsel. He has been very active in the American Bar Association's Tax 
Section, has spoken throughout the country on numerous occasions, and 
has served as a trial lawyer with the Department of Justice's Tax 
Division and as the Treasury Department's Tax Legislative Counsel. The 
legal tax community was thrilled with his nomination and now hopes that 
he will assume the position shortly.

    Having served as Chief Counsel in the past, and being well aware of 
Mike's qualifications, we think his assuming the Chief Counsel position 
would be a great contribution to the Internal Revenue Service and the 
country at this critical time.

            Very truly yours,

B. John Williams                    William F. Nelson
William J. Wilkins                  Fred T. Goldberg
Abraham N.M. Shashy, Jr.            Lawrence B. Gibbs
Clarissa Potter                     Donald L. Korb
Emily A. Parker                     N. Jerold Cohen

                                 ______
                                 
                     Tax Executives Institute, Inc.

                      1200 G Street, NW, Suite 300

                       Washington, DC 20005-3814

                            P: 202-638-5601

                              www.tei.org

June 8, 2018

The Honorable Orrin Hatch           The Honorable Ronald Wyden
Chairman                            Ranking Member
U.S. Senate                         U.S. Senate
Committee on Finance                Committee on Finance
219 Dirksen Senate Office Building  219 Dirksen Senate Office Building
Washington, DC 20510-6200           Washington, DC 20510-6200

Re:  Nomination of Michael Desmond to serve as Chief Counsel, Internal 
Revenue Service

Dear Chairman Hatch and Ranking Member Wyden:

    As president of Tax Executives Institute, I write to convey TEI's 
unqualified support for the confirmation of Michael Desmond to serve as 
IRS Chief Counsel. Mike possesses the technical depth, policy 
experience, and interpersonal skills necessary to effectively lead the 
Office of Chief Counsel. TEI urges his swift confirmation.

    Over a 20-year career, Mike has developed sophisticated tax, 
policy, and litigation experience both inside and outside the Federal 
Government. His service as a trial attorney in the Tax Division of the 
Department of Justice, Tax Legislative Counsel in the Department of the 
Treasury, and partner in private practice has exposed him to the broad 
range of technical and administrative challenges that confront 
taxpayers, policymakers, and regulators. Notably, Mike recognizes the 
importance of listening to stakeholders, understanding diverse and 
often divergent points of view, and working faithfully to achieve 
reasonable and realistic solutions.

    TEI is a global membership organization founded in 1944 to support 
the educational, networking, and advocacy needs of the in-house tax 
professional community worldwide. Our membership is comprised of over 
7,000 individual members who work for over 3,200 companies, and is 
dedicated to the development and effective implementation of sound tax 
policy, to promoting the uniform and equitable enforcement of the tax 
laws, and to reducing the costs and burdens of administration and 
compliance on both taxpayers and the government.

    TEI had frequent opportunities to engage with Mike and his team 
during his tenure as Tax Legislative Counsel (2005-2008). In every 
instance, Mike demonstrated himself to be a thoughtful practitioner and 
a careful listener, capable of recognizing the many sides and nuances 
to a given issue or a proposed interpretation. And, as important, Mike 
always provided a fair hearing, no matter the policy decision or 
outcome.

    Since leaving the Treasury Department, Mike has practiced law as a 
tax controversy specialist and litigator, involved in tax matters at 
every stage of the tax controversy life cycle. While in private 
practice, Mike has been a regular speaker at TEI's educational 
conferences and programs, bringing his sophisticated expertise and 
practicality along with an open and engaging manner.

    At this critical juncture in U.S. tax administration, it is vital 
to have a tax lawyer of Mike's background and experience to lead the 
Office of Chief Counsel. He possesses the technical depth to 
effectively oversee the broad range of regulatory issues which will 
arise during the implementation of the Tax Cuts and Jobs Act, the 
judgment to recognize and embrace compromise and accommodation as 
essential elements of sound tax administration, and the personal manner 
to lead a diverse cadre of 1,400 attorneys assigned among the IRS 
National Office and various operating divisions. Mike is ideally suited 
to confront the duties and challenges that lay ahead, and, accordingly, 
TEI urges his swift confirmation.

    If you need additional information concerning TEI's experiences 
with Mike, please contact TEI's executive director, Eli J. Dicker, at 
202-464-8354 or [email protected].

            Respectfully submitted,

            Tax Executives Institute, Inc.

            By: Robert L. Howren
            International President

                                 ______
                                 
                        Federal Bar Association

                          Section on Taxation

                 1220 North Fillmore Street, Suite 444

                          Arlington, VA 22201

                     T 571-481-9090 F 571-481-9092

                          Email [email protected]

                             www.fedbar.org

April 11, 2018

The Honorable Orrin G. Hatch        The Honorable Ron Wyden
Chairman                            Ranking Member
U.S. Senate                         U.S. Senate
Committee on Finance                Committee on Finance
219 Dirksen Senate Office Building  219 Dirksen Senate Office Building
 Washington, DC 20510               Washington, DC 20510

Re:  Letter in Support of Michael J. Desmond, nominee for Chief Counsel 
of the Internal Revenue Service

Dear Chairman Hatch and Ranking Member Wyden:

The Federal Bar Association's Section on Taxation (the ``Tax Section'') 
writes to express its support \1\ for Michael J. Desmond for the 
position of Chief Counsel of the Internal Revenue Service (``IRS'') and 
urges the Senate Finance Committee to approve his nomination swiftly. 
Mike's broad experience in the practice of tax law, as an attorney in 
various roles in the government, and as a private practice lawyer, give 
him the necessary credentials to be the IRS's top legal advisor.
---------------------------------------------------------------------------
    \1\ This letter in support of Mr. Desmond's nomination is in the 
name of the Tax Section itself, and is not on behalf of the Federal Bar 
Association. This letter also may not reflect the views of all members 
of the Tax Section, its members' employers, or the Federal Bar 
Association.

The Tax Section is a nonpartisan organization, the primary goals of 
which are to promote the welfare, interests, education, and 
professional growth and developments of its members; promote high 
standards of professional competence and ethical conduct in the 
practice of Federal tax law; and to provide opportunities of 
interaction between tax practitioners in public service and the private 
---------------------------------------------------------------------------
sector.

The Chief Counsel is the chief law officer of the IRS and is an 
integral figure in determining and coordinating the litigation 
positions of the IRS as well as, among other things, promulgating 
regulations and other guidance. These responsibilities, as well as the 
others to which the Chief Counsel is obligated by statute, will require 
capable coordination with the Treasury Department, the Commissioner of 
Internal Revenue, and the Department of Justice (``DOJ'').

Mike is uniquely suited to the job of Chief Counsel. He has firsthand 
knowledge of the regulatory process, having served as Tax Legislative 
Counsel--the Treasury Department's top legal advisor on domestic tax 
issues--from 2005 to 2008. Mike's encyclopedic knowledge of the 
regulatory process has also benefited the broader tax bar, and by 
extension, taxpayers as well.\2\ Mike has deep litigation experience as 
a trial attorney for the DOJ Tax Division and as an attorney in private 
practice, having worked for mid-size and large law firms and, most 
recently, as a lawyer in a solo practice. This breadth of expertise is 
important and gives Mike a perspective of practitioner and client 
issues across a broad spectrum.
---------------------------------------------------------------------------
    \2\ Mike's remarks at a 2011 forum on the regulatory process, 
sponsored by Tax Analysts, were made into an article that is routinely 
referred to by practitioners. See Michael J. Desmond, ``Former Official 
Summarizes the Formal Guidance-Making Process,'' 132 Tax Notes 639 
(August 8, 2011).

Currently, the IRS is faced with the challenge of implementing the Tax 
Cuts and Jobs Act, while administering and enforcing the law. The Chief 
Counsel will need to work closely with the tax experts at the Treasury 
Department to promulgate regulations and other guidance for a new, 
complex law that is largely already in effect. The Chief Counsel will 
also need to ensure that the IRS's position is well-
---------------------------------------------------------------------------
represented in court.

The Tax Section believes that Michael J. Desmond's experience in 
government and in private practice gives him the necessary perspective 
to be an effective Chief Counsel that can give the IRS competent legal 
advice. We fully support Mike's nomination and urge the Committee on 
Finance to approve him swiftly.

Respectfully submitted,

Shamik Trivedi
Chair, Section on Taxation
Federal Bar Association

cc: Anne R. Gordon
     Chair Elect

                                 ______
                                 

                        SENATE FINANCE COMMITTEE

                  STATEMENT OF INFORMATION REQUESTED 
                               OF NOMINEE

                      A. BIOGRAPHICAL INFORMATION

 1.  Name (include any former names used): Michael Joseph Desmond.

 2.  Position to which nominated: IRS Chief Counsel and Assistant 
General Counsel, U.S. Department of the Treasury.

 3.  Date of nomination: March 6, 2018.

 4.  Address (list current residence, office, and mailing addresses):

 5.  Date and place of birth: July 28, 1968, Santa Monica, California.

 6.  Marital status (include maiden name of wife or husband's name):

 7.  Names and ages of children:

 8.  Education (list all secondary and higher education institutions, 
dates attended, degree received, and date degree granted):

        Georgetown University Law School (September 2000-August 2001). 
        Graduate coursework, no degree sought or received.

        Catholic University, Columbus School of Law (September 1991-May 
        1994). Juris Doctor, magna cum laude granted May 1994.

        New York University (June 1990-August 1990). Graduate 
        coursework, no degree sought or received.

        University of California, Santa Barbara (August 1986-June 
        1990). Bachelor of arts in political science and history 
        granted June 1990.

        Mesa Community College, San Diego, California (July 1989-August 
        1989). Undergraduate coursework, no degree sought or received.

        Point Loma High School, San Diego, California (September 1982-
        June 1986). High school diploma granted June 1986.

 9.  Employment record (list all jobs held since college, including the 
title or description of job, name of employer, location of work, and 
dates of employment for each job):

        January 2012 to present: founder and shareholder, Law Offices 
        of Michael J. Desmond, APC, Santa Barbara, California.

        March 2000 to December 2004 and June 2008 to January 2012: 
        partner and senior associate, Bingham McCutchen LLP and its 
        predecessor firm, McKee Nelson LLP; Washington, DC, New York, 
        New York and Los Angeles, California.

        January 2005 to May 2008: Tax Legislative Counsel, U.S. 
        Department of the Treasury, Office of Tax Policy, Washington, 
        DC.

        October 1995 to March 2000: Trial Attorney, U.S. Department of 
        Justice, Tax Division, Washington, DC.

        August 1994 to August 1995: Law Clerk, Hon. Ronald S.W. Lew, 
        U.S. District Court for the Central District of California, Los 
        Angeles, California.

        May 1992 to August 1992 and May 1993 to August 1993: summer law 
        clerk, Columbus Community Legal Services, Washington, DC.

        February 1991 to June 1991: Special Assistant to the Chief of 
        Staff, House Committee on Veterans' Affairs, Washington, DC.

        September 1990 to January 1991: Legislative Assistant, 
        Congressman Douglas H. Bosco, Washington, DC.

10.  Government experience (list any current and former advisory, 
consultative, honorary, or other part-time service or positions with 
Federal, State, or local governments held since college, including 
dates, other than those listed above):

        None, other than those listed above.

11.  Business relationships (list all current and former positions held 
as an officer, director, trustee, partner (e.g., limited partners, non-
voting, etc.), proprietor, agent, representative, or consultant of any 
corporation, company, firm, partnership, other business enterprise, or 
educational or other institution):

        Adjunct professor of law, Georgetown University Law Center 
        (2007-2014).

12.  Memberships (list all current and former memberships, as well as 
any current and former offices held in professional, fraternal, 
scholarly, civic, business, charitable, and other organizations dating 
back to college, including dates for these memberships and offices):

        American Bar Association, Section of Taxation (2000-present). 
        Council director (2017-present); chair and vice chair, 
        Standards of Tax Practice Committee (2012-2017); chair and vice 
        chair, Tax Shelters Committee (2008-2012).

        District of Columbia Bar Association, Tax Section (2000-2008). 
        Chair and vice chair, Tax Audits and Litigation Committee 
        (2001-2004).

        American College of Tax Counsel (2008-present). Regent (2016-
        present).

        University of California Santa Barbara Alumni Association 
        (1990-present). Member, board of directors (2017-present).

        Santa Barbara Athletic Association (2012-present). Treasurer 
        and member, board of directors (January 1, 2018-present).

        Santa Barbara Triathlon Club (2012-present).

13.  Political affiliations and activities:

        a.  List all public offices for which you have been a candidate 
        dating back to the age of 18.

       None.

        b.  List all memberships and offices held in and services 
        rendered to all political parties or election committees, 
        currently and during the last 10 years prior to the date of 
        your nomination.

       Informal tax and economic advisor to Neel Kashkari for Governor 
2014.

        c.  Itemize all political contributions to any individual, 
        campaign organization, political party, political action 
        committee, or similar entity of $50 or more for the past 10 
        years prior to the date of your nomination.

       Neel Kashkari for Governor 2014, $500 (January 2014).

       John McCain for President 2008, $1,000 (September 2008).

14.  Honors and awards (list all scholarships, fellowships, honorary 
degrees, honorary society memberships, military medals, and any other 
special recognitions for outstanding service or achievement received 
since the age of 18):

        Chambers USA: America's Leading Lawyers for Business, Tax, and 
        Tax Controversy.

        The Best Lawyers in America, Leading Lawyer in Tax Law.

        IRS Commissioner's Award (2008).

        IRS Chief Counsel's Award (2008).

        Treasury Secretary's Honor Award (2007).

        U.S. Department of Justice, Tax Division Award for Sustained 
        Superior Performance (1998).

15.  Published writings (list the titles, publishers, dates, and 
hyperlinks (as applicable) of all books, articles, reports, blog posts, 
or other published materials you have written):

        Author, Foreword to Jasper L. Cummings, Jr.'s, ``The Supreme 
        Court's Federal Tax Jurisprudence,'' American Bar Association 
        (2d ed. 2016).

        Principal drafter, American College of Tax Counsel Comments on 
        Recent Changes to IRS Appeals Conference and Settlement 
        Practices (October 2016).

        Contributing author, ABA Section of Taxation Comments on 
        Partnership Tax Audit and Litigation Regime Revisions (November 
        2015).

        Contributing author, ABA Section of Taxation Comments on 2014 
        Offshore Voluntary Disclosure Program and the Streamlined 
        Program (October 2015).

        Author, ``Legislative Authority to Regulate Paid Tax Return 
        Preparers: The Focus Turns to Congress to Act,'' Procedurally 
        Taxing Blog (Febuary 2015).

        Author, ``Is There a Future Role for Circular 230 in the IRS's 
        Efforts to Improve Tax Compliance?'', Procedurally Taxing Blog 
        (October 2014).

        Author, ``Final Circular 230 Written Tax Advice Regulations,'' 
        Procedurally Taxing Blog (June 2014).

        Author, ``The Continuing Evolution of Circular 230: Proposed 
        Regulations Repealing the `Covered Opinion' Standards, Imposing 
        General Competence Requirements and Expanding Existing 
        Procedures to Ensure Compliance,'' CCH Journal of Tax Practice 
        and Procedure (December 2013-January 2014).

        Principal drafter, ABA Section of Taxation Comments on Proposed 
        Regulations Relating to Practice Before the Internal Revenue 
        Service (November 2012).

        Contributing author, ABA Section of Taxation Comments on Notice 
        2011-62, Ex Parte Communications Between Appeals and Other 
        Internal Revenue Service Employees (August 2011).

        Contributing author, ABA Section of Taxation Comments on Notice 
        2010-62 Regarding Implementation of the Economic Substance 
        Legislation (January 2011).

        Author, ``Revisiting the Broad Definition of Return Preparer,'' 
        Tax Notes (January 2011).

        Contributing author, ABA Section of Taxation Comments on 
        Circular 230 Sections 10.2, 10.3, 10.4, 10.5, 10.6, 10.30, and 
        10.34 (December 2010).

        Co-author, ``Practical Considerations for Schedule UTP . . . an 
        Addendum,'' The Tax Executive (October 2010).

        Co-author, ``Practical Considerations in Preparing for the 
        Impending Schedule UTP Filing Requirement,'' The Tax Executive 
        (September 2010).

        Author, ``Resolution of Financial Products Tax Controversies,'' 
        Practicing Law Institute (2009).

        Co-author, ``Improving Compliance Through Changes to the Return 
        Preparer Regulations,'' BNA (2008).

        Author, ``Opinion Standards for Tax Practitioners Under U.S. 
        Department of the Treasury Circular 230,'' Tax and Corporate 
        Governance (Wolfgang Schon ed.) (2008).

        Author, note, ``Limiting a Defendant's Peremptory Challenges,'' 
        42 Cath. U.L. Rev. 389 (1993).

16.  Speeches (list all formal speeches and presentations (e.g., 
PowerPoint) you have delivered during the past 5 years which are on 
topics relevant to the position for which you have been nominated, 
including dates):

        All speeches and presentations delivered in the past 5 years 
        are listed on Attachment A.


          Attachment A: Speeches and Presentations (2013-2018)
------------------------------------------------------------------------
                  Conference/
  Organization      Seminar        Date        Location        Topic
------------------------------------------------------------------------
ABA Section of   Third         January 16,   Teleconfere  Update on
 Taxation         Wednesday     2013          nce          Annual IRS
 (Administrativ   Series                                   Ruling
 e Practice                                                Guidance
 Committee)
------------------------------------------------------------------------
ABA Section of   Midyear       January 25-   Orlando, FL  (1) Circular
 Taxation         Meeting       26, 2013                   230 Redux:
                                                           What the
                                                           Changes Mean
                                                           for EO
                                                           Practitioners
                                                           ; (2) The
                                                           Proposed
                                                           Amendments to
                                                           Circular 230;
                                                           and (3)
                                                           Changes in
                                                           Opinion
                                                           Practice
                                                           After the
                                                           Amendments to
                                                           Circular 230
------------------------------------------------------------------------
Practising Law   Tax Planning  May 2, 2013   Chicago, IL  Economic
 Institute        for                                      Substance--Un
                  Domestic                                 derstanding
                  and Foreign                              the Limits
                  Partnership                              and Effects
                  s, LLCs,                                 of
                  Joint                                    Codification:
                  Ventures,                                Partnership
                  and Other                                Anti-Abuse
                  Strategic                                Rules and Tax
                  Alliances                                Shelters
------------------------------------------------------------------------
CalCPA Channel   Luncheon      August 27,    Santa        Circular 230
 Counties         Seminar       2013          Barbara,     and the
 Chapter                                      CA           Regulation of
                                                           Tax Advisors:
                                                           Expansion,
                                                           Pushback, and
                                                           Hot Topics
------------------------------------------------------------------------
ABA Section of   Midyear       September 19- San          Circular 230
 Taxation         Meeting       21, 2013      Francisco,   Prohibition
                                              CA           on Contingent
                                                           Fees
------------------------------------------------------------------------
American Law     Handling a    October 17-   Washington,  (1) Handling a
 Institute        Tax           18, 2013      DC           Tax
                  Controversy                              Controversy:
                  : Audit,                                 Audit,
                  Appeals,                                 Appeals,
                  Litigation,                              Litigation,
                  and                                      and
                  Collection                               Collection;
                                                           (2) Tax
                                                           Practice
                                                           Ethics for
                                                           Preparers and
                                                           Advisors
------------------------------------------------------------------------
UCLA School of   3rd Annual    October 22,   Beverly      The Continuing
 Continuing       Tax           2013          Hills, CA    Evolution of
 Education        Controversy                              Circular 230:
                  Institute                                Written Tax
                                                           Advice,
                                                           Competence,
                                                           and Other
                                                           Proposed
                                                           Changes to
                                                           the Rules
------------------------------------------------------------------------
ABA Section of   Third         November 20,  Teleconfere  IRS Priority
 Taxation         Wednesday     2013          nce          Guidance Plan
 (Administrativ   Series                                   Update
 e Practice
 Committee)
------------------------------------------------------------------------
ABA Section of   3rd Annual    December 11-  Las Vegas,   Ethical Issues
 Taxation         Institute     13, 2013      NV           in Tax
                  on Tax                                   Practice
                  Controversy
------------------------------------------------------------------------
ABA Section of   Midyear       January 23-   Phoenix, AZ  Ensuring
 Taxation         Meeting       24, 2014                   Compliance
                                                           With Circular
                                                           230:
                                                           Responsibilit
                                                           ies of Firm
                                                           Management
------------------------------------------------------------------------
USC Gould        Tax           January 28,   Los          Partnership
 School of Law    Institute     2014          Angeles,     Tax Ethics:
                                              CA           The Changing
                                                           Landscape
------------------------------------------------------------------------
Practising Law   Tax Planning  May 1, 2014   Chicago, IL  Economic
 Institute        for                                      Substance,
                  Domestic                                 Judicial
                  and Foreign                              Doctrines,
                  Partnership                              and Ethics
                  s, LLCs,
                  Joint
                  Ventures,
                  and Other
                  Strategic
                  Alliances
------------------------------------------------------------------------
American Law     Webcast       May 29, 2014  Webcast      Practical Tax
 Institute        Series                                   Opinions
------------------------------------------------------------------------
ABA Section of   Webcast       August 12,    Webcast      Everything Is
 Taxation         Series        2014                       Fine Until it
                                                           Isn't:
                                                           Ethical
                                                           Issues in a
                                                           Tax Practice
------------------------------------------------------------------------
ABA Section of   Annual        September     Denver, CO   What's Going
 Taxation         Meeting       19, 2014                   on With
                                                           Circular 230?
                                                           Recent
                                                           Regulatory
                                                           and
                                                           Litigation
                                                           Developments
                                                           and the
                                                           Question of
                                                           What's Next
------------------------------------------------------------------------
American Law     Handling a    October 17,   Washington,  Tax Court
 Institute        Tax           2014          DC           Procedures
                  Controversy
                  : Audit,
                  Appeals,
                  Litigation,
                  and
                  Collection
------------------------------------------------------------------------
Insurance Tax    39th Annual   November 14,  Chicago, IL  Standards of
 Institute        Insurance     2014                       Tax Practice
                  Tax                                      Update
                  Conference
------------------------------------------------------------------------
ABA Section of   Third         November 19,  Teleconfere  IRS Notice on
 Taxation         Wednesday     2014          nce          Codified
 (Administrativ   Series                                   Economic
 e Practice                                                Substance (no
 Committee)                                                outline)
------------------------------------------------------------------------
ABA Section of   4th Annual    December 10-  Las Vegas,   Civil
 Taxation         Institute     12, 2014      NV           Enforcement
                  on Tax                                   Priorities
                  Controversy
------------------------------------------------------------------------
ABA Section of   Midyear       January 30-   Houston, TX  (1) Litigating
 Taxation         Meeting       31, 2015                   Financial
                                                           Products
                                                           Cases; (2)
                                                           Special
                                                           Issues
                                                           Representing
                                                           Partners and
                                                           Partnerships;
                                                           and (3)
                                                           Presentation
                                                           to the
                                                           Plenary
                                                           Session on
                                                           Proposed
                                                           Statutory
                                                           Amendments
                                                           Relating to
                                                           the
                                                           Regulation of
                                                           Tax Return
                                                           Preparers (no
                                                           outline)
------------------------------------------------------------------------
University of    Tax Study     March 27,     Charlottesv  Reforming the
 Virginia         Group         2015          ille, VA     TEFRA
 School of Law                                             Partnership
                                                           Audit
                                                           Procedures
------------------------------------------------------------------------
Practising Law   Tax Planning  April 29,     Chicago, IL  Economic
 Institute        for           2015 and      and San      Substance,
                  Domestic      June 10,      Francisco,   Judicial
                  and Foreign   2015          CA           Doctrines,
                  Partnership                              and Ethics
                  s, LLCs,
                  Joint
                  Ventures,
                  and Other
                  Strategic
                  Alliances
------------------------------------------------------------------------
Tax Executives   Audits and    May 20, 2015  Chicago, IL  Document
 Institute        Appeals                                  Retention
                  Seminar
------------------------------------------------------------------------
United States    Judicial      May 20-22,    Durham, NC   (1) Privileges
 Tax Court        Conference    2015                       and Waivers;
                                                           and (2)
                                                           Conflicts and
                                                           Chaos: The
                                                           Importance of
                                                           Timely
                                                           Recognizing
                                                           and Managing
                                                           Conflicts of
                                                           Interest in
                                                           Tax
                                                           Litigation
------------------------------------------------------------------------
NYU School of    7th Annual    June 5, 2015  New York,    A Debate About
 Professional     Tax                         NY           the Future of
 Studies          Controversy                              Tax Ethics
                  Forum
------------------------------------------------------------------------
ABA Section of   Third         June 17,      Teleconfere  Exceptions to
 Taxation         Wednesday     2015          nce          the
 (Administrativ   Series                                   Assessment
 e Practice                                                Limitations
 Committee)                                                Period
------------------------------------------------------------------------
ABA Section of   Annual        September     Chicago, IL  Conflicts and
 Taxation         Meeting       18, 2015                   Chaos: The
                                                           Importance of
                                                           Timely
                                                           Recognizing
                                                           and Managing
                                                           Conflicts of
                                                           Interest in
                                                           Tax
                                                           Litigation
------------------------------------------------------------------------
American Law     Handling a    October 8-9,  Washington,  (1)
 Institute        Tax           2015          DC           Examinations
                  Controversy                              of TEFRA
                  : Audit,                                 Partnerships;
                  Appeals,                                 and (2) FOIA:
                  Litigation,                              From Request
                  and                                      to Litigation
                  Collection
------------------------------------------------------------------------
New York         74th          November 19,  San          Ethical Issues
 University       Institute     2015          Francisco,   for Tax
                  on Federal                  CA           Practitioners
                  Taxation                                 : Good Tax
                                                           Planning,
                                                           Aggressive
                                                           Tax Advice,
                                                           or Criminal
                                                           Tax Evasion?
------------------------------------------------------------------------
ABA Section of   5th Annual    December 10,  Las Vegas,   Conflicts and
 Taxation         Institute     2015          NV           Chaos: The
                  on Tax                                   Importance of
                  Controversy                              Timely
                                                           Recognizing
                                                           and Managing
                                                           Conflicts of
                                                           Interest in
                                                           Tax
                                                           Litigation
------------------------------------------------------------------------
USC Gould        2016 Tax      January 26,   Los          Tax
 School of Law    Institute     2016          Angeles,     Practitioner
                                              CA           Penalties--Se
                                                           ction 6694,
                                                           Circular 230,
                                                           and Beyond
------------------------------------------------------------------------
ABA Section of   Midyear       January 29,   Los          APA and the
 Taxation         Meeting       2016          Angeles,     Administrativ
                                              CA           e Process:
                                                           How Has
                                                           Altera
                                                           Altered the
                                                           Landscape?
------------------------------------------------------------------------
Tax Executives   IRS Audit     May 18, 2016  Santa        Is That What
 Institute        and Appeals                 Clara, CA    Your Appeals
                  Conference                               Protest Looks
                                                           Like?
------------------------------------------------------------------------
Practising Law   Tax Planning  May 28, 2016  Chicago, IL  Economic
 Institute        for           and June 9,   and San      Substance,
                  Domestic      2016          Francisco,   Judicial
                  and Foreign                 CA           Doctrines,
                  Partnership                              and Ethics
                  s, LLCs,
                  Joint
                  Ventures,
                  and Other
                  Strategic
                  Alliances
------------------------------------------------------------------------
New York         75th          November 17,  San Diego,   Ethical and
 University       Institute     2016          CA           Penalty
                  on Federal                               Issues for
                  Taxation                                 Tax
                                                           Practitioners
                                                           : When Good
                                                           Tax Planning
                                                           Turns Bad
------------------------------------------------------------------------
ABA Section of   6th Annual    December 8,   Las Vegas,   The New
 Taxation         Institute     2016          NV           Partnership
                  on Tax                                   Audit Rules
                  Controversy
------------------------------------------------------------------------
ABA Section of   Midyear       January 20,   Orlando, FL  (1)
 Taxation         Meeting       2017                       Implementatio
                                                           n of the New
                                                           BBA
                                                           Partnership
                                                           Audit Rules;
                                                           and (2) Form
                                                           1099
                                                           Information
                                                           Reporting
                                                           Issues
------------------------------------------------------------------------
USC Gould        2017 Tax      January 23,   Los          From IRS
 School of Law    Institute     2017          Angeles,     Contact to
                                              CA           Final
                                                           Judgment:
                                                           Preparing for
                                                           and Handling
                                                           a Tax Dispute
------------------------------------------------------------------------
Practising Law   Tax Planning  May 4, 2017   Chicago, IL  Economic
 Institute        for           and June 8,   and San      Substance,
                  Domestic      2017          Francisco,   Judicial
                  and Foreign                 CA           Doctrines,
                  Partnership                              and Ethics
                  s, LLCs,
                  Joint
                  Ventures,
                  and Other
                  Strategic
                  Alliances
------------------------------------------------------------------------
ABA Section of   May Meeting   May 12-13,    Washington,  (1)
 Taxation                       2017          DC           Unauthorized
                                                           Practice of
                                                           Law and the
                                                           Practice of
                                                           Benefits Law;
                                                           and (2)
                                                           Ethical
                                                           Issues in
                                                           Representing
                                                           Tax
                                                           Professionals
------------------------------------------------------------------------
ABA Section of   Webcast       September     Webcast      Unauthorized
 Taxation         Series        19, 2017                   Practice of
                                                           Law--Issues
                                                           for Employee
                                                           Benefit
                                                           Lawyers
------------------------------------------------------------------------
Practising Law   Tax           October 20,   New York,    Limits of the
 Institute        Strategies    2017          NY           Evolving
                  for                                      Economic
                  Corporate                                Substance and
                  Acquisition                              Business
                  s                                        Purpose
                                                           Doctrines and
                                                           Related
                                                           Ethical
                                                           Issues
------------------------------------------------------------------------
UCLA School of   Tax           October 24,   Beverly      Dealing With
 Continuing       Controversy   2017          Hills, CA    the ``New''
 Education        Institute                                IRS Appeals
------------------------------------------------------------------------
Cambridge        Forum on      November 8-   Surrey,      Recent
 Forums           Internation   10, 2017      U.K.         Developments
                  al Tax                                   in U.S. Tax
                  Disputes                                 Disputes
------------------------------------------------------------------------
Loyola Law       Tax Policy    November 13,  Los          Comments on
 School           Colloquium    2017          Angeles,     Structural
                                              CA           Inequities of
                                                           Exchange
                                                           Traded Funds
------------------------------------------------------------------------
ABA Section of   7th Annual    December 8,   Las Vegas,   Ask the
 Taxation         Institute     2017          NV           Judges: Trial
                  on Tax                                   Tips and
                  Controversy                              Traps
------------------------------------------------------------------------
ABA Section of   Midyear       February 9,   San Diego,   (1) A
 Taxation         Meeting       2018          CA           Comparison of
                                                           the
                                                           California
                                                           Rules of
                                                           Professional
                                                           Conduct and
                                                           the ABA Model
                                                           Rules; and
                                                           (2) Taxation
                                                           of Damages
                                                           Received
                                                           Pursuant to a
                                                           Settlement
------------------------------------------------------------------------


17.  Qualifications (state what, in your opinion, qualifies you to 
serve in the position to which you have been nominated):

        I have nearly 2 decades of experience working in positions of 
        tax enforcement, policy, and administration and working in 
        private practice representing a broad range of individual and 
        business taxpayers in disputes pending before the Internal 
        Revenue Service and in litigation.

        As a trial attorney at the Tax Division of the U.S. Department 
        of Justice, early in my career I saw the challenges faced by 
        taxpayers and the IRS alike when complexity and uncertainty in 
        the tax law, combined with breakdowns in the audit and 
        administrative appeals process, lead to litigation. While 
        litigation is one focus of the job of IRS Chief Counsel, 
        resolving disputes early in the process and taking steps to 
        avoid those disputes in the first instance should be of 
        paramount importance.

        At my current firm, my work focuses on representing individuals 
        and small and medium-sized businesses with pass-through income. 
        My clients range from low-income individuals and sole 
        proprietors with discrete tax reporting problems to high net 
        worth individuals with complex domestic and cross-border 
        compliance matters. I also represent a number of large 
        businesses on discrete procedural issues and tax disputes, 
        balancing that work with active pro bono representation, 
        including work with the Tax Court's calendar call program in 
        Los Angeles.

        In my prior work as a partner and senior associate at a global 
        law firm, my practice focused on corporate clients involved in 
        large-dollar tax disputes. Although that work gave me an 
        appreciation for a different client base, I fully understand 
        that the challenges faced by the largest businesses in 
        complying with the tax law are not unique. Working closely with 
        the IRS's taxpayer service, examination, and collection 
        functions, the IRS Office of Chief Counsel plays an important 
        role in mitigating these challenges, and my experience working 
        with taxpayers of all sizes and backgrounds qualifies me to 
        lead in that role.

        Although my early career in government and my work in private 
        practice have focused on resolution of tax controversies, those 
        experiences are complemented by my tenure as Tax Legislative 
        Counsel at the U.S. Department of the Treasury. In that role, I 
        supervised a group of lawyers and accountants responsible for 
        guidance on all aspects of the domestic tax law, working in 
        coordination with Treasury's International Tax Counsel and 
        Benefits Tax Counsel. In collaboration with the Assistant 
        Secretary (Tax Policy) and others in the administration, I also 
        worked with staff of the congressional tax writing committees 
        and the Joint Committee on Taxation on formulating tax 
        legislation, an experience that I would bring to bear in 
        working as Chief Counsel to implement and enforce the tax law.

        With a background in tax procedure, as Tax Legislative Counsel 
        I also worked closely with colleagues at the IRS on matters of 
        tax administration. As one example, I served as the point 
        person at the Treasury Department for implementation of the 
        disaster relief and recovery provisions enacted in the Gulf 
        Opportunity Zone Act of 2005. In that role, I worked with IRS 
        Small Business and Self-Employed Division personnel throughout 
        the country and was given the Treasury Secretary's Award for my 
        work. This and similar experiences working with the IRS to 
        implement and administer the law in a manner that achieves 
        policy objectives while taking practical enforcement challenges 
        into account give me a unique skill set for the IRS Chief 
        Counsel position. My experience working at the intersection of 
        tax policy and administration would also help to ensure that, 
        as Chief Counsel, my office would operate in a constructive and 
        collaborative manner to implement and enforce the law while 
        always keeping in mind congressional purpose in enacting that 
        law.

                   B. FUTURE EMPLOYMENT RELATIONSHIPS

 1.  Will you sever all connections (including participation in future 
benefit arrangements) with your present employers, business firms, 
associations, or organizations if you are confirmed by the Senate? If 
not, provide details.

        Yes.

 2.  Do you have any plans, commitments, or agreements to pursue 
outside employment, with or without compensation, during your service 
with the government? If so, provide details.

        No.

 3.  Has any person or entity made a commitment or agreement to employ 
your services in any capacity after you leave government service? If 
so, provide details.

        No.

 4.  If you are confirmed by the Senate, do you expect to serve out 
your full term or until the next presidential election, whichever is 
applicable? If not, explain.

        Yes.

                  C.  POTENTIAL CONFLICTS OF INTEREST

 1.  Indicate any current and former investments, obligations, 
liabilities, or other personal relationships, including spousal or 
family employment, which could involve potential conflicts of interest 
in the position to which you have been nominated.

        If confirmed by the Senate, I would terminate all client 
        relationships and, under applicable conflict rules, recuse 
        myself from any matters connected with past or current client 
        engagements. Outside of my work as an attorney representing 
        clients in disputes with the Internal Revenue Service and 
        subject to the divestitures set forth in my agreement with the 
        Office of Government Ethics, neither I nor my spouse have any 
        investments, obligations, liabilities, or other relationships 
        that could raise conflict of interest issues with the position 
        of IRS Chief Counsel.

 2.  Describe any business relationship, dealing, or financial 
transaction which you have had during the last 10 years (prior to the 
date of your nomination), whether for yourself, on behalf of a client, 
or acting as an agent, that could in any way constitute or result in a 
possible conflict of interest in the position to which you have been 
nominated.

        Over the past 10 years I have represented clients in IRS 
        audits, administrative appeals, and litigation. If confirmed by 
        the Senate, I would terminate all client relationships and, 
        under applicable conflict rules, recuse myself from any matters 
        that involve past client engagements.

 3.  Describe any activity during the past 10 years (prior to the date 
of your nomination) in which you have engaged for the purpose of 
directly or indirectly influencing the passage, defeat, or modification 
of any legislation or affecting the administration and execution of law 
or public policy. Activities performed as an employee of the Federal 
government need not be listed.

        As described in section A, paragraph 15, above, over the past 
        10 years I was the principal or a contributing author on 
        several comment letters submitted to the U.S. Congress or the 
        Internal Revenue Service on behalf of the ABA Section of 
        Taxation and the American College of Tax Counsel.

        In 2009 I was engaged, through my law firm, by a U.S. company 
        engaged in international shipping activities to submit a 
        comment letter to the U.S. Department of Treasury on 
        regulations relating to nonqualified deferred compensation 
        plans. The comment letter was made publicly available and 
        published in the tax press and is being provided.

        In 2011 I was engaged, through my law firm, by a company in the 
        financial services industry to submit a comment letter to the 
        U.S. Department of Treasury on regulations relating to the use 
        and reporting of identification numbers by tax return 
        preparers. The comment letter was made publicly available and 
        published in the tax press and is being provided.

 4.  Explain how you will resolve any potential conflict of interest, 
including any that are disclosed by your responses to the above items.

        If confirmed by the Senate, I would terminate all client 
        relationships and, in consultation with IRS ethics officials, 
        under applicable conflict rules, recuse myself from any matters 
        connected with past or current engagements.

 5.  Two copies of written opinions should be provided directly to the 
committee by the designated agency ethics officer of the agency to 
which you have been nominated and by the Office of Government Ethics 
concerning potential conflicts of interest or any legal impediments to 
your serving in this position.

        Copies have been provided.

                      D.  LEGAL AND OTHER MATTERS

 1.  Have you ever been the subject of a complaint or been 
investigated, disciplined, or otherwise cited for a breach of ethics 
for unprofessional conduct before any court, administrative agency 
(e.g., an Inspector General's office), professional association, 
disciplinary committee, or other ethics enforcement entity at any time? 
Have you ever been interviewed regarding your own conduct as part of 
any such inquiry or investigation? If so, provide details, regardless 
of the outcome.

        No.

 2.  Have you ever been investigated, arrested, charged, or held by any 
Federal, State, or other law enforcement authority for a violation of 
any Federal, State, county, or municipal law, regulation, or ordinance, 
other than a minor traffic offense? Have you ever been interviewed 
regarding your own conduct as part of any such inquiry or 
investigation? If so, provide details.

        No.

 3.  Have you ever been involved as a party in interest in any 
administrative agency proceeding or civil litigation? If so, provide 
details.

        While working as an associate at McKee Nelson LLP, I 
        represented the Ernst and Young LLP accounting firm in an IRS 
        audit of the firm's potential liability for civil tax 
        penalties. In December 2002, I was named as a defendant in a 
        civil lawsuit brought by clients of Ernst and Young--seeking 
        among other relief--to prevent the firm, and me as one of its 
        attorneys, from responding to a summons issued by the IRS that 
        sought the names of individuals who had participated in a 
        specified type of structured tax transaction (Camferdam v. 
        Ernst and Young LLP, et al., Case No 1:02-cv-10100-BSJ 
        (S.D.N.Y.)). The only relief sought against me in the case was 
        an injunction prohibiting a response to the IRS summons. I was 
        dismissed as a defendant in the case on June 10, 2003. The 
        Court never acted on the plaintiffs' request for injunctive 
        relief against me or my law firm.

 4.  Have you ever been convicted (including pleas of guilty or nolo 
contendere) of any criminal violation other than a minor traffic 
offense? If so, provide details.

        No.

 5.  Please advise the committee of any additional information, 
favorable or unfavorable, which you feel should be considered in 
connection with your nomination.

        None.

                     E. TESTIFYING BEFORE CONGRESS

 1.  If you are confirmed by the Senate, are you willing to appear and 
testify before any duly constituted committee of the Congress on such 
occasions as you may be reasonably requested to do so?

        Yes.

 2.  If you are confirmed by the Senate, are you willing to provide 
such information as is requested by such committees?

        Yes.

                                 ______
                                 
        Questions Submitted for the Record to Michael J. Desmond
                Questions Submitted by Hon. John Cornyn
    Question. Earlier this year, approximately 2,500 households in 
northwest Dallas were impacted by an emergency gas shutdown for the 
replacement of gas mains and service lines. The gas company provided 
direct financial assistance to these households in the amount of $250 a 
day, which was based on input from the Dallas Office of Emergency 
Management. In addition to direct financial assistance, the gas company 
repaired or replaced the in-home gas lines and equipment for those 
families whose homes did not meet the current code requirements so that 
service could be restored. I have been told that the total amount of 
assistance was over $15 million.

    In IRS Announcement 2016-25, the Obama administration explicitly 
excluded from income similar payments to displaced customers of the 
Southern California Gas Company (SoCal Gas). Like the residents in 
Announcement 2016-25, residents in northwest Dallas were displaced from 
their homes by a natural gas emergency and received reimbursement for 
their displacement. The payments made by the Dallas gas company were 
designed to cover lodging and food costs, which stands in stark 
contrast to tax-exempted payments by SoCal Gas, which included, inter 
alia, pet boarding, Internet service, interior and exterior air 
filtration and purification expenses, and vehicle detailing expenses.

    As of today, in stark contrast to the SoCal incident and absent IRS 
guidance, the financial assistance provided to my constituents could 
constitute income. Although the Dallas payments are analogous to 
qualified disaster relief payments, they are not clearly excludable 
under section 139 because it is uncertain whether the events 
precipitating the payments were a ``qualified disaster.''

    What are your views of the merits of explicitly exempting disaster 
relief payments under Announcement 2016-25, but not providing similar 
relief to my constituents?

    Answer. As a tax practitioner, I think that similar treatment of 
similarly situated taxpayers should be a basic principle of tax 
administration. From my experience at the Treasury Department assisting 
in the implementation of disaster relief legislation, I also think that 
it is important for the tax law be administered in a way that provides 
appropriate relief to those whose lives are impacted by disasters. If 
confirmed, I will work to ensure that the Office of Chief Counsel 
provides impartial and consistent guidance to your constituents and 
look forward to working with you on this issue.

    Question. Does a smaller scale of the displacement with respect to 
the number of displaced customers or length of displacement justify not 
issuing the same relief provided in the SoCal Gas situation?

    Answer. I am not aware of any provision in the tax law that would 
provide a different result based on the scope of the disaster. If 
confirmed, I will consult with subject matter experts in the Office of 
Chief Counsel to understand the issue and be sure that impartial and 
consistent guidance is provided to your constituents.

    Question. Will you commit to review this announcement exemption 
request, consider the merits, and make it a priority to issue guidance 
as soon as possible?

    Answer. Yes.

                                 ______
                                 
             Questions Submitted by Hon. Sheldon Whitehouse
    Question. What role does the IRS play in identifying, 
investigating, and preventing money laundering?

    Answer. It is my understanding that the IRS Criminal Investigation 
Division investigates money laundering related to tax crimes and 
coordinates with other law enforcement agencies when appropriate and 
authorized by law.

    Question. Is there a national security threat posed by foreign 
money entering U.S. elections? If so, please describe.

    Answer. I have not worked on this issue in my prior career in 
government or the private sector, but I am aware of public reports of 
this threat, which I believe should be taken seriously.

    Question. The IRS has said that collecting beneficial ownership 
information would ``ease tax examinations by enabling the IRS to look 
through artificial structures and more clearly determine if the tax 
payer was compliant with the tax laws as well as laws related to money 
laundering.''

    Do you agree the United States' lack of beneficial ownership 
collection presents a serious shortcoming in our anti-money laundering 
regime?

    Answer. As a practitioner, I am aware of certain beneficial 
ownership reporting requirements, particularly in the context of 
foreign entities. If confirmed, I will seek to better understand how 
this issue relates to the work of the IRS in investigating tax crimes 
relating to money laundering and consider how the Office of Chief 
Counsel can better assist in that work.

    Question. How can shell companies be used by criminals to avoid 
paying taxes?

    Answer. It is my understanding that by hiding beneficial ownership, 
criminals can more easily hide their ill-gotten gains and avoid 
associated tax liabilities.

    Question. Would having access to beneficial ownership information 
make it easier for the IRS to investigate tax evasion and other crimes?

    Answer. I believe so. If confirmed, I will work with the 
Commissioner to examine the impact that access to this information 
might have in practice and how the Office of Chief Counsel might 
provide assistance on this important issue.

                                 ______
                                 
                Questions Submitted by Hon. Bill Nelson
    Question. In your view, what sort of questions arising from the new 
tax law (Pub. L. 115-97) do you think you could help with?

    Answer. The Office of Chief Counsel plays a central role in the 
issuance of guidance to taxpayers. If confirmed, I would review the 
Priority Guidance Plan issued by the Department of Treasury and the IRS 
to ensure that wherever possible, questions arising under the new tax 
law are promptly answered, focusing in particular on questions that 
have an impact on the broadest number of taxpayers.

    Question. How will you work to stop corporations from using the new 
tax law (Pub. L. 115-97) to avoid paying their fair share?

    Answer. If confirmed, I will work to identify areas of non-
compliance with the new law and examine how to address them through 
additional guidance and appropriate enforcement efforts.

    Question. Recently, the Treasury Department and the IRS changed the 
rules for tax-exempt entities, removing the requirement for 501(c)(4) 
groups and other tax-exempt groups to share their major funding sources 
with the IRS. Given this change, how will you advise the IRS to ensure 
foreign actors are not using tax-
exempt groups to undermine our political process?

    Answer. The Federal Election Commission and the Department of 
Justice are charged with enforcing Federal election laws, while the IRS 
is charged with implementing the tax law. In making this change, I 
understand that the Treasury Department and the IRS explained that the 
IRS was previously making no systematic use of Schedule B donor 
information. If confirmed, I will seek to understand all of the factors 
that went into the decision to make the change.

                                 ______
                                 
              Questions Submitted by Hon. Michael B. Enzi
    Question. The Internal Revenue Service continues to experience 
significant challenges in updating its technology. For example, in 
2009, the IRS began developing the Customer Account Data Engine (CADE 
2) to replace the Individual Master File for managing taxpayer 
accounts. Since then, the agency has spent more than $1 billion on the 
project, but has only completed one phase, has significantly scaled 
back other phases, and has delayed CADE 2's estimated completion date.

    In your position at either Treasury or the IRS, how would expect 
your role to address these challenges?

    Answer. The management and development of IT systems is within the 
purview of the Commissioner. Over my career as a tax practitioner, I 
have seen the impact of these challenges on taxpayers. If confirmed, I 
will assist the Commissioner whenever possible to ensure that the IRS 
strengthens its IT systems while responsibly managing tax dollars.

    Question. A July 2017 Treasury Inspector General for Tax 
Administration report came to following conclusion. ``The IRS has not 
effectively updated or implemented hiring policies to fully consider 
past IRS conduct and performance issues prior to making a tentative 
decision to hire former employees, including those who were terminated 
or separated during an investigation of a substantiated conduct or 
performance issue.''

    In your position at either Treasury or the IRS, how would expect 
your role to address these challenges?

    Answer. If confirmed, I will assist the Commissioner in any way I 
can to ensure that the IRS maintains a talented and dedicated 
workforce.

                                 ______
                                 
            Question Submitted by Hon. Robert P. Casey, Jr.
    Question. As reflected in section 6103, the IRS currently provides 
the Social Security Administration with taxpayer data to facilitate the 
mailing of Social Security statements. These statements educate 
Americans about their earned Social Security benefits and provide 
information on deciding when to claim benefits. There is growing 
concern that Americans are not similarly and appropriately educated 
about their earned Medicare benefits and the program's enrollment 
rules. SSA is responsible for certain aspects of Medicare 
administration, specifically as it relates to eligibility. In your 
view, does the current statute and existing data-sharing agreements 
between SSA and IRS permit SSA to add additional content to the Social 
Security statements on Medicare enrollment rules and benefits? Would 
SSA be permitted to add a stand-alone Medicare notice to the Social 
Security statement mailings?

    Answer. If confirmed, I will examine all of the factors pertaining 
to this issue and work to ensure that the IRS coordinates with the 
Social Security Administration to better serve taxpayers while 
furthering tax administration.

                                 ______
                                 
               Questions Submitted by Hon. Maria Cantwell
    Question. Mr. Desmond, you have strong practice and Federal agency 
experience. You have represented individuals and small, medium, and 
large businesses before the IRS You have served as the Tax Legislative 
Counsel at the Treasury and as a trial attorney in the tax division at 
the Justice Department. The Treasury is about to undertake the largest 
regulatory project in a generation to put in place the regulations for 
the recently passed $1.5-trillion tax bill.

    What are your biggest concerns about implementing the tax bill 
regulations?

    Answer. As a practitioner, my biggest concern is avoiding expensive 
and time-
consuming disputes over how to apply the new tax law, particularly for 
individuals and small businesses who may not have the resources to 
handle those disputes. The tax reform legislation impacts every 
taxpayer. Consequently, all taxpayers must receive clear and 
expeditious guidance from the IRS and Treasury in order to comply with 
and benefit from the new provisions. I am aware that the IRS and 
Treasury are working to issue additional guidance. If confirmed, I will 
work with the IRS and Treasury to issue the guidance in as timely a 
manner as possible.

    Question. In many surveys, small business owners repeat that the 
new tax law is complicated, complex and takes time away from growing 
their business or hiring new employees. The new pass-through deduction 
has only added to the problems. Many of these pass-throughs are also 
small businesses which do not have tax departments and cannot afford to 
hire tax professionals to provide highly technical tax advice.

    Small business owners need clear guidance to be able to comply with 
the new law. For example, they need to be able to make sure their 
estimated tax payments reflect their tax liability so they don't 
overestimate their payments, which lowers their ability to invest or 
underestimate these payments and end up getting hit with a big tax bill 
and penalty the next year.

    Will the IRS provide detailed guidance so that these business 
owners have the tools they need to plan for the future while complying 
with the new tax law as they run their businesses today?

    Answer. If confirmed, I will make sure that all taxpayers, 
including small business owners, have the guidance they need to comply 
with the new law, including making appropriate and timely estimated tax 
payments.

    Question. While many of the ``pass-throughs'' are actually quite 
large businesses, what can we do to help the truly small business 
understand this new and complex system?

    Answer. Although the issuance of timely and accurate guidance is 
important for taxpayers of all sizes, for smaller businesses it is also 
important for that guidance to be widely distributed and explained 
through outreach to tax practitioners and others. This is particularly 
true for small businesses that can benefit from the deduction provided 
for under new section 199A. I understand that Treasury and the IRS are 
about to issue guidance on that statute. If confirmed, I will work to 
expedite the guidance process and disseminate guidance as broadly as 
possible once it is issued.

                                 ______
                                 
                 Questions Submitted by Hon. Ron Wyden
             syndicated conservation easement tax shelters
    Question. In December 2016, IRS issued Notice 2017-10 identifying 
certain conservation easement syndication transactions as abusive tax 
shelters and requiring participants to disclose their involvement to 
the IRS. On March 29, 2017, I wrote to IRS Commissioner John Koskinen 
about the growth in abusive tax shelters involving the syndication of 
conservation easements. I asked the IRS to provide a report on the 
nature and scope of this problem. From the IRS's responses, we know 
that more than 550 abusive tax shelters have been sold, involving 1,500 
promoters, 38 appraisers, and 15,000 investors. The IRS says that more 
than $20 billion in improper charitable deductions have been claimed 
which equates to the loss of $8 billion in tax revenue. I am concerned 
that promoters and participants continue to engage in these 
transactions despite IRS labeling them an abusive tax shelter.

    Will you commit to work with this committee to put an end to 
abusive conservation easement syndications described in Notice 2017-10?

    Answer. As a tax practitioner, former Treasury Department official, 
and former Justice Department trial lawyer, I am keenly aware of the 
threat that abusive tax shelters pose to the integrity of the tax law. 
If confirmed, I will make addressing and preventing tax shelters a high 
priority. I believe that the conservation easements provisions in the 
Internal Revenue Code provide an important incentive and should be 
protected. I share your concern that syndicated transactions could 
threaten the integrity of this incentive. You have my full commitment 
to working with you and the committee to address this problem.

    Question. Do you believe the IRS currently has the authority, 
tools, and resources necessary to put an end to these abusive 
transactions?

    Answer. I have not investigated these issues in detail but do know 
from experience in both government and the private sector the 
challenges the IRS can face when combating marketed tax strategies. If 
confirmed, I look forward to working with the committee on this issue.

    Question. If you find that the IRS does not have the authority, 
tools, or resources necessary to put an end to these abusive 
transactions, will you commit to providing the committee 
recommendations on legislative proposals to ensure the IRS has 
sufficient ability to prevent the abuse of this critical conservation 
tool?

    Answer. Yes.
           donor disclosure necessary for tax administration
    Question. You are viewed as an expert in the tax community, and, if 
confirmed as Chief Counsel of the IRS, you will be responsible for 
providing advice to the IRS Commissioner on all matters pertaining to 
the interpretation, administration, and enforcement of the Internal 
Revenue laws. Accordingly, I would like you to answer the following 
questions to clarify matters relating to tax-exempt donor disclosure 
requirements.

    Please indicate ``yes'' or ``no'' (in each case where I ask for a 
``yes'' or ``no'' answer, you are of course welcome to also provide a 
brief explanation): is the IRS responsible for enforcement of the 
prohibition on private inurement under IRC section 501(c)(4) and the 
rules under IRC section 4958 related to self-dealing?

    Answer. Yes. As part of its responsibility for tax enforcement, the 
IRS is responsible for enforcement of the prohibition on private 
inurement and the excise taxes related to self-dealing.

    Question. Please indicate ``yes'' or ``no'': is it true that IRC 
section 4958 and the regulations promulgated thereunder impose taxes on 
self-dealing transactions between 501(c)(4) organizations and 
``substantial contributors'' in certain cases?

    Answer. Yes. Although I am not an expert in this area of the tax 
law, I understand that section 4958 imposes an excise tax on excess 
benefit transactions between tax-exempt organizations (including 
501(c)(4) organizations) and certain disqualified persons, which can 
include major contributors to those organizations.

    Question. Please indicate ``yes'' or ``no'': isn't it true that 
without donor information provided on Schedule B of form 990, the IRS 
will have limited ability to identify substantial contributors who may 
have engaged in self-dealing, without subjecting the organization to an 
audit?

    Answer. No, not necessarily. In making the recent change, I 
understand that the Treasury Department and the IRS explained that the 
IRS was previously making no systematic use of Schedule B donor 
information in connection with its enforcement of code provisions 
dealing with excess benefit transactions or otherwise. I am also aware, 
however, that Schedule L of Form 990 requires reporting of the names of 
disqualified persons engaged in transactions with 501(c)(4) 
organizations, including excess benefit transactions with substantial 
contributors.
               proposed treasury action to index capital 
                 gains to inflation through regulation
    Question. One of your chief responsibilities is to advise the IRS 
Commissioner on all matters pertaining to the interpretation of 
internal revenue laws and related statutes. During your nomination 
hearing, Senator Toomey requested that Mr. Muzinich, in his role as 
Deputy Secretary of the Treasury, should he be confirmed, enlist 
Treasury to authorize indexing of capital gains to inflation through 
regulations. I would like to refer you to a May 24, 2018 letter to 
Treasury from eight Finance Committee Democratic members and myself, in 
which we argue that indexing capital gains to inflation requires 
legislative action and so exceeds Treasury's rule-making authority.

    If confirmed as IRS Chief Counsel, do you pledge to interpret our 
Nation's internal revenue laws faithfully, regardless of any policy and 
political directives made to you by the Secretary of the Treasury, the 
Deputy Secretary of the Treasury, the Treasury Assistant Secretary for 
Tax Policy, or the IRS Commissioner?

    Answer. If confirmed, I will work to apply the tax laws impartially 
and consistent with congressional intent.

    Question. In your faithful interpretation of U.S. internal revenue 
laws and related regulatory authority, has Congress granted Treasury 
the authority to write new rules that impose capital gains taxes only 
on real gains, and not nominal gains, as has been the law--and the 
interpretation, to our understanding--since the Revenue Act of 1918? If 
so, can you cite what IRC statute(s) extends such authority to 
Treasury?

    Answer. In section 7805 and other provisions of the Internal 
Revenue Code, Congress has authorized the Treasury Department to 
prescribe rules and regulations needed for the enforcement of the tax 
law. I have not had occasion to examine how that authority might apply 
in the context of recent suggestions that capital gains could, by 
regulation, be indexed for inflation.

    Question. Legal opinions written by the Treasury and Justice 
Departments in 1992 under President George H.W. Bush concluded that 
Congress intended the word ``cost'' to mean the price paid in nominal 
dollars without adjustment for inflation. That plain language 
definition of cost appears in IRC section 1012--Basis of Property. Can 
you explain then why the 1992 Treasury and DOJ legal opinions are 
wrong?

    Answer. I am aware of the legal opinions but have not had reason to 
evaluate them and do not have any view on, or explanation for, whether 
the conclusions they reach are correct or incorrect. If confirmed, I 
will consult with subject matter experts in the Office of Chief Counsel 
to better understand the issue.

    Question. Does the language of IRC section 1012 contain sufficient 
ambiguity to permit rule-making by Treasury that interprets basis to be 
measured in real terms as opposed to nominal terms?

    Answer. If confirmed, I will consult with subject matter experts in 
the Office of Chief Counsel to better understand the issue.

    Question. Finally, please supply the legal argument for why 
inflation indexing is explicitly provided in statute, such as with 
respect to income tax bracket amounts described in IRC sections 1 and 
11.

    If such indexing to inflation were absent, in your interpretation, 
would Treasury have rule-making authority to allow for such indexing?

    Answer. I am aware of arguments made by academics and other 
commentators on this issue, but have not examined them in detail and 
have not formed a view on the merits of those arguments. If confirmed, 
I will consult with subject matter experts in the Office of Chief 
Counsel to better understand the issue.

    Question. The new tax law passed at the end of last year changed 
the measure of inflation used to index individual income tax brackets 
and other tax provisions from CPI-U to chained CPI. In your faithful 
interpretation, did Treasury already possess sufficient rule-making 
authority to index provisions of the tax code to whatever measure of 
inflation it deemed fit, without congressional action?

    Answer. If confirmed, I will consult with subject matter experts in 
the Office of Chief Counsel to better understand the issue.

                                 ______
                                 
               Questions Submitted by Hon. Chuck Grassley
    Question. I have been particularly interested in how the IRS 
enforces its charitable hospital regulations to ensure companies are 
not gaming the system. A few years ago, I discovered one charitable 
hospital had incorrectly charged millions of dollars to low-income 
people. After a year of aggressive oversight, that charitable hospital 
eventually forgave almost $17 million worth of bills. That situation 
should have never happened in the first place.

    The IRS has provided wide latitude to charitable hospitals to 
determine what a ``community benefit'' is, which can include cash 
contributions to third party groups and hard to define ``community 
building'' activities. It seems the true test of a charitable hospital 
is how much free and discounted medical care they offer to patients 
with a legitimate need for it.

    Should the IRS take additional steps to ensure that charitable 
hospitals qualify more of their patients for actual charitable medical 
care?

    Answer. If confirmed, I would work to ensure that IRS enforcement 
efforts consistent with statutory law and regulation, including IRC 
section 501(r) and the regulations thereunder. I look forward to 
working with the committee to determine if there are additional areas 
of guidance in this area that should be developed.

                                 ______
                                 
               Questions Submitted by Hon. Orrin G. Hatch
    Question. You have been around Washington and have worked in the 
Treasury Department. If you are confirmed to this role, you will have 
broad authority and responsibilities, especially in providing public 
guidance as well as technical and legal advice to IRS personnel. What 
lessons have you drawn from your past experience, and what changes or 
improvements would you seek to accomplish, should you be confirmed?

    Answer. In my previous experience at Treasury, Justice, and in the 
private sector, I have seen the important role that the Office of Chief 
Counsel play in impartially interpreting tax law. This is the 
cornerstone of everything that the Office of Chief Counsel does, 
whether it is issuing guidance, advising the IRS or litigating tax 
cases. I believe that the most pressing goal is to issue guidance in as 
timely a manner as possible so that taxpayers can comply with the new 
tax law.

    Question. How will you ensure that guidance and information are 
made available in a reasonable time period to assist taxpayers in 
complying with the tax code?

    Answer. I understand that Treasury and the IRS are working 
expeditiously to issue guidance on tax reform. If confirmed, I will 
examine this process and will work with the IRS and Treasury to 
facilitate the issuance of the most significant guidance in as timely a 
manner as possible so that taxpayers can comply with the law.

    Question. One of the responsibilities of the Office of Chief 
Counsel is to deal with United States Tax Court litigation. Do you 
think you might be able to lessen your workload, and the workload of 
the Tax Court, through timely and thorough public guidance, which is 
another responsibility of the Office of Chief Counsel?

    Answer. I agree that published guidance helps to reduce tax 
controversy and litigation, however, it cannot eliminate it. If 
confirmed, I will work to find ways to address compliance issues 
earlier and more strategically.

                                 ______
                                 
             Questions Submitted by Hon. Benjamin L. Cardin
    Question. Under the Taxpayer Bill of Rights adopted by the IRS and 
codified at IRC section 7803(a)(3), the very first right is ``The Right 
to Be Informed.'' Historically, the IRS Office of Chief Counsel has 
often sought to keep its legal advice confidential under the 
``deliberative process'' or other exceptions from disclosure rules. 
While there are circumstances in which nondisclosure is justifiable, 
the public and Congress generally benefit from maximum transparency.

    In 2007, the IRS entered into a settlement agreement to resolve 
litigation with Tax Analysts. Under that agreement, the IRS committed 
to disclose certain categories of advice to National Office officials. 
The IRS initially released a significant number of Chief Counsel memos, 
but it has been releasing a declining number of advice memos in recent 
years. If confirmed, will you commit to reviewing the Office of Chief 
Counsel's disclosure guidelines and how they are implemented, in 
consultation with the National Taxpayer Advocate, and do so with a bias 
in favor of transparency?

    Answer. Although I believe that the issuance of published guidance 
that taxpayers can rely on in taking positions on their tax returns 
should be the highest priority, I also recognize the need for 
transparency consistent with the Freedom of Information Act and other 
public disclosure rules. If confirmed, I will work to ensure that I 
understand the disclosure guidelines and consult with the Taxpayer 
Advocate to be sure they draw an appropriate balance.

    Question. In 2006, the National Taxpayer Advocate requested that 
the Office of Chief Counsel provide a sample of unreleased legal memos 
so she could assess whether the public would benefit from their 
disclosure. The Chief Counsel at that time initially declined to 
provide access, and it was only after public criticism that the IRS 
reversed its position. The National Taxpayer Advocate's office has a 
statutory responsibility to assess IRS programs and report to Congress. 
If confirmed, will you commit to working with the National Taxpayer 
Advocate and ensuring she is given immediate access to Chief Counsel 
memos (with the understanding that the Advocate follows the IRS's 
determinations regarding public disclosure)?

    Answer. If confirmed, I will work with the Taxpayer Advocate's 
office to be sure that it has the information it needs from the Office 
of Chief Counsel to assess IRS programs and report to Congress.

             Questions Submitted By Hon. Michael F. Bennet
    Question. The IRS's stability and credibility is preserved by 
keeping it free from political influence.

    Do you agree that the IRS's work to administer and enforce the tax 
code should be free from political interference (even if--and 
especially if--a company or individual affiliated with President Trump, 
his close associates, or family members is involved)?

    Answer. Over the course of my career--both as a civil servant at 
the Departments of Justice and Treasury and as a tax practitioner--I 
have developed an appreciation for the need to insulate the IRS from 
improper political interference. The IRS must treat all taxpayers 
impartially.

    Question. Would you notify me and the bipartisan membership of the 
Finance Committee if inappropriate political interference occurs, from 
the White House, Treasury, or otherwise?

    Answer. It is unlawful for the President, Vice President, or any 
employee of the Executive Office of the President to take certain 
actions with respect to the operation of the IRS. If confirmed, I will 
work to uphold the law and take appropriate steps to address any 
violations.

                                 ______
                                 
              Prepared Statement of Hon. Orrin G. Hatch, 
                        a U.S. Senator From Utah
WASHINGTON--Senate Finance Committee Chairman Orrin Hatch (R-Utah) 
today offered the following opening statement at a Treasury nominations 
hearing.

    Today we will consider the nominations of Justin Muzinich, to be 
Deputy Secretary of the Treasury, and Michael Desmond, to be Chief 
Counsel for the IRS and Assistant General Counsel in the Department of 
the Treasury. I would like to extend a warm welcome to both of our 
nominees here today and thank you both for your willingness to serve in 
these important positions.

    Mr. Muzinich, should you be confirmed, the Treasury Department will 
not be an entirely new workplace for you. You have been serving at the 
Treasury Department as a Counselor to the Secretary, advising the 
Secretary on several domestic and international policy initiatives, 
including tax reform. As I know you are aware, this committee has a 
special interest in the new tax reform policies that have already 
started to improve the lives of many Americans through higher wages, 
bonuses, and increased business optimism.

    If confirmed as Deputy Secretary, you will be responsible for 
assisting Secretary Mnuchin with the administration of the Treasury 
Department, including implementing the recently passed tax reform law.

    Mr. Desmond, if confirmed, will serve as Chief Counsel for the IRS 
and Assistant General Counsel in the Department of the Treasury. In 
similarity to Mr. Muzinich, government service is not unfamiliar to 
you, Mr. Desmond. From 2005 to 2008, you worked at Treasury as a tax 
legislative counsel and, before that, you had worked in the Justice 
Department as a trial attorney.

    If confirmed, Mr. Desmond will be the chief legal advisor to the 
IRS Commissioner on all matters relating to interpretation, 
administration, and enforcement of the tax code. The chief counsel 
oversees an office responsible for providing IRS agents, and taxpayers, 
with guidance on how to comply with our tax laws. This is no easy task, 
but especially given Mr. Desmond's work in the Treasury Department, I 
believe he is a good candidate for the job. We thank you and look 
forward to having you back in government service again.

    Before we begin, I want to address something that I suspect my 
colleagues from across the aisle will bring up during today's hearing. 
Just a few weeks ago, the Treasury Department released new regulations 
which caused some dramatic responses from the Democratic members of 
this committee.

    Today, our Democratic colleagues may argue against these nominees 
on the basis of these recent policy changes, which were made to 
streamline information returns by certain tax-exempt organizations. As 
I explained on the Senate floor yesterday, what this regulatory change 
actually does is far different than the characterization coming from my 
colleagues.

    So, let me repeat myself and re-explain the facts behind this 
change. Earlier this month, the Treasury Department changed a Nixon 
administration regulation that required social welfare organizations, 
labor organizations, and Chambers of Commerce to report the names and 
addresses of their donors.

    This rule was a problem for several reasons. The IRS doesn't need 
this information for tax administration, since these donations aren't 
tax-deductible. If the IRS decides it does need the information, it is 
still available to them upon request.

    The Nixon-era rules required a lot of time and resources both at 
the IRS, which had to redact the information to protect it against 
improper disclosure, and at the tax-exempt organizations. The rules put 
taxpayer information at risk. Indeed, the IRS knows of at least 14 
instances where this information was improperly released since 2010.

    So while our Democratic friends will pretend this is some 
conspiracy theory to overthrow democracy or cloak the political world 
in so-called dark money, in reality this was a simple change to improve 
IRS efficiencies and protect taxpayer data. And, on the heels of IRS 
taxpayer-information abuses during the Obama administration, attention 
to taxpayer protection is a must.

    On top of that, the recent change in regulations isn't even really 
a newfound Republican idea. Under the Obama administration, the IRS 
sought to make an even more extensive change on Schedule B reporting.

    So let's keep that in mind when our Democratic colleagues inject 
politics into our nomination proceedings and into what is in reality a 
common-sense regulatory change.

                                 ______
                                 
       Prepared Statement of Justin G. Muzinich, Nominated to be 
              Deputy Secretary, Department of the Treasury
    Chairman Hatch, Ranking Member Wyden, and distinguished committee 
members, I am honored to appear before you today as the nominee to be 
Deputy Secretary of the Treasury. I am grateful to Secretary Mnuchin 
for his confidence and support in recommending me for this position.

    I would like to take a moment to introduce my wife Eloise who, on 
top of being a talented physician, is a wonderful mother to our two 
children. I would also like to acknowledge my parents, my sister 
Lauren, and my brother Adrian. Their love and support have made all the 
difference in my life.

    My own family fled communism for the liberty of this country, and 
my wife's family has a proud history of military service, including a 
grandfather who served as a General in the Air Force. So I sit before 
you today with a profound appreciation for the freedoms this country 
stands for and the sacrifice that has gone into protecting them.

    It has been a privilege to meet with many of you and your staffs 
over the past several months as a nominee, and over the past year and a 
half in my role as Counselor to the Secretary. I pledge that, if 
confirmed, I will be committed to dialogue and engagement with you, and 
look forward to accomplishing more together.

    The Treasury Department is tasked with oversight of some of the 
most critical issues facing our country and the world. From 
safeguarding our financial system and implementing sanctions to driving 
economic growth and opportunity, administering the tax system, printing 
the Nation's currency, and managing the balance sheet of the U.S. 
Government, the role of the Department is vast.

    None of this work would be possible without Treasury's tremendously 
dedicated career staff. During my time at the Department, I have 
developed a deep respect for their expertise and commitment to moving 
the country forward--putting in long hours, making sacrifices, and 
seeking no recognition. They are the pillars of the building, and it is 
a privilege to serve side-by-side with them.

    If confirmed, I will assist Secretary Mnuchin in carrying out the 
Department's mission by bringing to bear my perspectives from working 
in finance and teaching, as well as the first-hand knowledge I have 
gained over the past year and a half serving as Counselor to the 
Secretary.

    My experience at Treasury has affirmed my long-held belief in the 
importance of public service--of actively participating in our great 
democratic debate and giving back to the country. If confirmed, I will 
strive to live up to all that Treasury and this great country stand 
for.

    I look forward to your questions.

                                 ______
                                 

                        SENATE FINANCE COMMITTEE

                  STATEMENT OF INFORMATION REQUESTED 
                               OF NOMINEE

                      A. BIOGRAPHICAL INFORMATION

 1.  Name (include any former names used): Justin George Muzinich.

 2.  Position to which nominated: Deputy Secretary of the Treasury.

 3.  Date of nomination: April 10, 2018.

 4.  Address (list current residence, office, and mailing addresses):

 5.  Date and place of birth: November 5, 1977, Zurich, Switzerland.

 6.  Marital status (include maiden name of wife or husband's name):

 7.  Names and ages of children:

 8.  Education (list secondary and higher education institutions, dates 
attended, degree received, and date degree granted):

        Groton School, 1993-1996, high school diploma received in June 
        1996.

        Harvard College, 1996-2000, bachelor's degree received in June 
        2000.

        London School of Economics, 2000-2001, master's degree received 
        in May 2001.

        Harvard Business School, 2003-2007, M.B.A. received in May 
        2007.

        Yale Law School, 2004-2007, Juris Doctor degree received in May 
        2007.

 9.  Employment record (list all jobs held since college, including the 
title or description of job, name of employer, location of work, and 
dates of employment):

        U.S. Department of Treasury, Counselor to the Secretary, 
        Washington, DC, 2017-present.

        Muzinich and Co., president, New York, NY 2010-2017.

        Jeb 2016/Right to Rise, policy director, New York, NY, 2015-
        2016.

        Columbia Business School, adjunct professor, New York, NY 2014-
        2016.

        Romney Transition Team, Washington, DC, 2012 (2 months).

        Alta Investors, co-founder, New York, NY, 2010-2011.

        Lazio for Governor, policy director, New York, NY, 2010 (3 
        months).

        EMS Capital, managing director, New York NY, 2007-2010.

        CR Intrinsic Investors, intern/analyst, New York, NY, 2006-2007 
        (3 months full-time as analyst).

        Department of Defense, intern OGC, Arlington, VA, 2006 (2 
        months while grad student).

        Department of Defense, intern CT policy, Arlington, VA, 2005 (3 
        months while grad student).

        White House, intern NEC, Washington, DC, 2004 (3 months while 
        grad student).

        Senate Republican Policy Committee, intern, Washington, DC, 
        2003 (3 months).

        Morgan Stanley, analyst, New York, NY 2001-2003.

10.  Government experience (list any advisory, consultative, honorary, 
or other part-time service or positions with Federal, State, or local 
governments, other than those listed above):

        None, other than those listed above.

11.  Business relationships (list all positions held as an officer, 
director, trustee, partner, proprietor, agent, representative, or 
consultant of any corporation, company, firm, partnership, other 
business enterprise, or educational or other institution):

        The Buckley School, director.

        New York Presbyterian Hospital, trustee.

        2012 Stock Trust, trustee.

        Henry R. Breck 2016 Insurance Trust, trustee (resigned).

        2008 Muzinich Family Trust, trustee (resigned).

        Muzinich 2011 GST Exempt Family Trust, trustee (resigned).

        Muzinich and Co., director (resigned).

12.  Memberships (list all memberships and offices held in 
professional, fraternal, scholarly, civic, business, charitable, and 
other organizations):

        Council on Foreign Relations, member of a membership committee.

        Harvard Club, New York.

        Tuxedo Club, New York.

        Lyford Cay Club, Nassau.

        River Club, New York.

        Metropolitan Club, DC.

13.  Political affiliations and activities:

        a.  List all public offices for which you have been a 
        candidate.

       None.

        b.  List all memberships and offices held in and services 
        rendered to all political parties or election committees during 
        the last 10 years.

       Lazio for Governor, policy director, New York, NY, 2010.

       Romney Transition Team, Washington, DC, 2012.

       Jeb 2016/Right to Rise, policy director, 2015-2016.

        c.  Itemize all political contributions to any individual, 
        campaign organization, political party, political action 
        committee, or similar entity of $50 or more for the past 10 
        years.

------------------------------------------------------------------------
              Date                   Amount            Recipient
------------------------------------------------------------------------
October 17, 2016                    $2,700.00  Gallagher, Mike (R)
------------------------------------------------------------------------
June 13, 2016                       $2,700.00  Gallagher, Mike (R)
------------------------------------------------------------------------
May 23, 2016                        $2,700.00  Stefanik, Elise (R)
------------------------------------------------------------------------
March 24, 2016                      $1,000.00  Starrett, Grant (R)
------------------------------------------------------------------------
November 19, 2015                     $250.00  Zeldin, Lee (R)
------------------------------------------------------------------------
June 23, 2015                       $2,700.00  Bush, Jeb (R)
------------------------------------------------------------------------
January 16, 2015                      $500.00  Zeldin, Lee (R)
------------------------------------------------------------------------
January 9, 2015                     $5,000.00  Right To Rise PAC (R)
------------------------------------------------------------------------
November 3, 2014                      $500.00  Zeldin, Lee (R)
------------------------------------------------------------------------
November 2, 2014                    $1,000.00  Stefanik, Elise (R)
------------------------------------------------------------------------
June 6, 2014                        $2,600.00  Moll, Thomas (R)
------------------------------------------------------------------------
March 31, 2014                      $2,600.00  Cotton, Tom (R)
------------------------------------------------------------------------
March 31, 2014                      $2,600.00  Cotton, Tom (R)
------------------------------------------------------------------------
March 29, 2014                      $1,000.00  Zeldin, Lee (R)
------------------------------------------------------------------------
March 28, 2014                      $5,200.00  Cotton, Tom (R)
------------------------------------------------------------------------
March 26, 2014                      $2,600.00  McConnell, Mitch (R)
------------------------------------------------------------------------
December 30, 2013                   $2,600.00  Stefanik, Elise (R)
------------------------------------------------------------------------
August 18, 2013                     $2,600.00  Moll, Thomas (R)
------------------------------------------------------------------------
August 18, 2013                     $2,600.00  Moll, Thomas (R)
------------------------------------------------------------------------
October 19, 2012                    $2,500.00  Romney, Mitt (R)
------------------------------------------------------------------------

14.  Honors and awards (list all scholarships, fellowships, honorary 
degrees, honorary society memberships, military medals, and any other 
special recognitions for outstanding service or achievement):

        Phi Beta Kappa, Harvard College.

        Baker Scholar, Harvard Business School.

        Olin fellow in law, economics, and public policy, Yale Law 
        School.

15.  Published writings (list the titles, publishers, and dates of all 
books, articles, reports, or other published materials you have 
written):

        ``Sisyphus Just Needs a Hand,'' Foreign Policy, January 27, 
        2015 (with Admiral Jim Stavridis).

        ``Beware Regulatory Concentration Risk,'' American Banker, 
        February 25, 2014 (with Glenn Hubbard).

        ``A New Mandate for the Federal Reserve,'' Washington Post, 
        October 11, 2013 (with Glenn Hubbard).

        ``North Korea's Surprising Sense of Vulnerability and Hopes for 
        Change,'' Huffington Post (with Vishaka Desai).

        ``Credit Where Credit Is Due,'' Longitude, February 2013 (with 
        Richard Greco).

        ``The Nuke in the Cargo Hold,'' Hoover Policy Review, August 
        2010.

        ``Nuclear Free Seas,'' The New York Times, September 23, 2009 
        (with Thomas Lehrman).

        ``A Better Approach to Foreign Aid,'' Hoover Policy Review, 
        June 2008 (with Erik Werker).

        ``Global Tax Credit,'' The New York Times, October 20, 2007 
        (with Eric Werker).

16.  Speeches (list all formal speeches you have delivered during the 
past 5 years which are on topics relevant to the position for which you 
have been nominated):

        None.

17.  Qualifications (state what, in your opinion, qualifies you to 
serve in the position to which you have been nominated):

        If confirmed, I would bring to the job of Deputy Secretary a 
        unique combination of policy experience, an understanding of 
        domestic and international finance, and a working knowledge of 
        Treasury.

        I have been involved in complex public policy issues, including 
        at the State level, presidential level, and through writing 
        about policy, for over a decade. I have held leadership roles 
        directing policy for campaigns and managed teams responsible 
        for a broad range of policies in high-pressure environments.

        I have also worked in domestic and international finance for 
        much of my career, having held jobs on both the sell side 
        (advisory) and buy side (investing). I have managed global 
        teams and navigated numerous market and economic environments. 
        I have also created and taught a course on credit markets at 
        Columbia Business School. I believe my understanding of markets 
        and finance would allow me to bring a real-world perspective to 
        the Deputy role.

        In addition, should I be confirmed by the Senate, I will have 
        already been at Treasury for over a year and a half serving as 
        Counselor to the Secretary. I believe my relationships within 
        the building, including with the Secretary and the leadership 
        team, would allow me to be uniquely effective in the Deputy 
        role.

                   B. FUTURE EMPLOYMENT RELATIONSHIPS

 1.  Will you sever all connections with your present employers, 
business firms, associations, or organizations if you are confirmed by 
the Senate? If not, provide details.

        As I am currently employed by the Department of the Treasury, I 
        will continue my connection to my current employer.

 2.  Do you have any plans, commitments, or agreements to pursue 
outside employment, with or without compensation, during your service 
with the government? If so, provide details.

        No.

 3.  Has any person or entity made a commitment or agreement to employ 
your services in any capacity after you leave government service? If 
so, provide details.

        No.

 4.  If you are confirmed by the Senate, do you expect to serve out 
your full term or until the next presidential election, whichever is 
applicable? If not, explain.

        Yes.

                   C. POTENTIAL CONFLICTS OF INTEREST

 1.  Indicate any investments, obligations, liabilities, or other 
relationships which could involve potential conflicts of interest in 
the position to which you have been nominated.

        I have consulted with the Office of Government Ethics and the 
        Department of the Treasury's designated agency ethics official 
        to identify any potential conflicts of interest. All such 
        potential conflicts have been resolved in accordance with the 
        terms of my ethics agreement.

 2.  Describe any business relationship, dealing, or financial 
transaction which you have had during the last 10 years, whether for 
yourself, on behalf of a client, or acting as an agent, that could in 
any way constitute or result in a possible conflict of interest in the 
position to which you have been nominated.

        I have consulted with the Office of Government Ethics and the 
        Department of the Treasury's designated agency ethics official 
        to identify any potential conflicts of interest. All such 
        potential conflicts have been resolved in accordance with the 
        terms of my ethics agreement.

 3.  Describe any activity during the past 10 years in which you have 
engaged for the purpose of directly or indirectly influencing the 
passage, defeat, or modification of any legislation or affecting the 
administration and execution of law or public policy. Activities 
performed as an employee of the Federal government need not be listed.

        None, beyond the activities performed as an employee of the 
        Federal government.

 4.  Explain how you will resolve any potential conflict of interest, 
including any that may be disclosed by your responses to the above 
items.

        I have consulted with the Office of Government Ethics and the 
        Department of the Treasury's designated agency ethics official 
        to identify any potential conflicts of interest. All such 
        potential conflicts have been resolved in accordance with the 
        terms of my ethics agreement.

 5.  Two copies of written opinions should be provided directly to the 
committee by the designated agency ethics officer of the agency to 
which you have been nominated and by the Office of Government Ethics 
concerning potential conflicts of interest or any legal impediments to 
your serving in this position.

        Copies have been provided.

                       D. LEGAL AND OTHER MATTERS

 1.  Have you ever been the subject of a complaint or been 
investigated, disciplined, or otherwise cited for a breach of ethics 
for unprofessional conduct before any court, administrative agency, 
professional association, disciplinary committee, or other professional 
group? If so, provide details.

        No.

 2.  Have you ever been investigated, arrested, charged, or held by any 
Federal, State, or other law enforcement authority for a violation of 
any Federal, State, county, or municipal law, regulation, or ordinance, 
other than a minor traffic offense? If so, provide details.

        No.

 3.  Have you ever been involved as a party in interest in any 
administrative agency proceeding or civil litigation? If so, provide 
details.

        No.

 4.  Have you ever been convicted (including pleas of guilty or nolo 
contendere) of any criminal violation other than a minor traffic 
offense? If so, provide details.

        No.

 5.  Please advise the committee of any additional information, 
favorable or unfavorable, which you feel should be considered in 
connection with your nomination.

        None.

                     E. TESTIFYING BEFORE CONGRESS

 1.  If you are confirmed by the Senate, are you willing to appear and 
testify before any duly constituted committee of the Congress on such 
occasions as you may be reasonably requested to do so?

        Yes.

 2.  If you are confirmed by the Senate, are you willing to provide 
such information as is requested by such committees?

        Yes.

                                 ______
                                 
        Questions Submitted for the Record to Justin G. Muzinich
               Questions Submitted by Hon. Maria Cantwell
                                 trade
    Question. In your role as Deputy Secretary, your portfolio is 
broader than it was as Counselor. As the number two person at the 
Treasury Department, you will have a role not limited to tax policy, 
but also in domestic finance, terrorism and illicit finance, financial 
sanctions, and international economic policy, including the 
administration of U.S. trade and economic sanctions.

    The administration's end game to resolve trade issues with China, 
like concerns about intellectual property protection, remains unclear. 
The President's tariffs have resulted in Chinese retaliation that is 
hurting Washington State exporters. The Comprehensive Economic Dialogue 
(formerly called the Strategic Economic Dialogue) remains frozen and 
appears unlikely to be revived by this administration.

    Why are there no ongoing dialogues on economic and commercial 
issues between the United States and China?

    Answer. To the extent that China is prepared to make serious 
efforts to make structural changes to end unfair trade practices, the 
Treasury Department and the administration are available to discuss 
those. Large formal dialogues such as the Strategic Economic Dialogue 
and Strategic and Economic Dialogue, however, have not been effective 
in addressing unfair Chinese trade and investment practices.

    Question. What role is the U.S. Treasury Department going to be 
playing in getting China back to the table to resolve economic and 
trade disputes?

    Answer. Secretary Mnuchin has played, and will continue to play, a 
leadership role alongside Ambassador Lighthizer and Secretary Ross in 
our economic discussions with China.
                           affordable housing
    Question. We have a lack of affordable housing in my State of 
Washington and across the country. We know that there is a shortage of 
7.2 million affordable rental homes nationwide for extremely low income 
renters. Only 35 affordable and available rental homes exist for every 
100 extremely low income renter households on a national basis. The 
solution to this crisis is the Low-Income Housing Tax Credit, which is 
a partnership between the Federal and State governments and the private 
sector that provides incentive to build more affordable housing.

    The Low-Income Housing Tax Credit is a cost-effective program that 
creates jobs. This bipartisan program was enacted as a part of the 1986 
Tax Reform Act. It is responsible for 90 percent of the affordable 
housing built in this country.

    I am working with Chairman Hatch and many of my colleagues on a 
bill that would provide a permanent 50-percent increase in the Low-
Income Housing Tax Credit, fix the 4-percent floor, and make numerous 
other important reforms, such as helping homeless students, and 
building more affordable housing in Indian Country and in rural areas.

    If confirmed, will you work with me and this committee to address 
the affordable housing crisis in this country?

    Answer. Thank you for your leadership on this issue. Yes, I 
certainly agree about the importance of affordable housing. I 
congratulate you on the progress made in the Consolidated 
Appropriations Act of 2018. I look forward to working with you on this 
issue, including to better understand the Cantwell-Hatch legislation 
discussed in your question.

    Question. Would you support Congress taking action on pressing tax 
priorities, including energy and housing, before the end of the year?

    Answer. Yes, if confirmed as Deputy Secretary, I will work to 
ensure the Department provides technical assistance and other feedback 
as you and your colleagues draft legislation related to these and other 
committee priorities.
               dodd-frank oversight and the role of fsoc
    Question. In the wake of one of the most damaging financial crises 
in our history, Congress passed the Dodd-Frank Wall Street Reform and 
Consumer Protection Act, (Dodd-Frank) to address the abuses which 
caused that crisis and put in place a framework to protect against 
future financial sector crises.The Dodd-Frank Act established the 
Financial Stability Oversight Council (FSOC) to bring together all the 
prudential financial regulators and help protect the safety and 
soundness of our financial system. I support the work that the FSOC 
does.

    Your experience at EMS Capital was right in the middle of the 
crisis. This experience should give you a perspective on many of the 
issues addressed at the FSOC, including risk tolerance, over-
leveraging, and capital requirements.

    Since the 2008 market crisis, the interconnectedness in the 
financial services sector has increased. Additionally, recently there 
have been several changes that I believe increase risk in our financial 
system, including changes to the Volker rule, capital requirements, and 
a loosening of the prudential regulatory standards for financial 
institutions with assets between $100 billion and $250 billion for 
example.

    How will you approach evaluating and managing the systemic risk as 
a part of the role that Treasury plays on the FSOC?

    Answer. I support Secretary Mnuchin's view that the convening 
authority of FSOC is valuable in coordinating the activities of our key 
prudential and market regulators to increase communication, identify 
and decrease unnecessary regulatory overlap and burden, and take steps 
to ensure the safety and soundness of the financial system. FSOC plays 
a particularly important role in monitoring financial stability and 
cross-sector issues that may arise from time to time. I support the 
policy of the administration, reflected in the recently passed 
bipartisan banking bill, of promoting effective and efficient 
regulation and oversight and appropriate tailoring of regulatory 
requirements.

    Question. What kinds of risk do you see as posing potential 
systemic risk to our financial system?

    Answer. The U.S. banking system is well-positioned to serve the 
needs of consumers and businesses, which is critical to supporting 
economic growth. Regulatory enhancements since the financial crisis 
have significantly improved the quantity and quality of both capital 
and liquidity in the banking system. Disciplines imposed by the 
regulators, such as stress testing and resolution planning, have 
improved both the readiness of the system to absorb shocks as well as 
promoted a significant increase in transparency. As the business cycle 
matures, it is critical that the regulators continue to be vigilant in 
monitoring the credit and counterparty risk profile of the banking 
system, as I believe they are.

    A risk that we are very focused on at Treasury is cybersecurity and 
the potential vulnerabilities of our financial institutions and 
financial markets. While significant gains have been made as a result 
of government and industry working together, the financial system 
increasingly relies on technology and mobile communication, which 
presents ever-changing scenarios to consider. Treasury is approaching 
this challenge by advocating for increased collaboration among 
regulators, leveraging FBIIC, which the Secretary chairs, and improving 
international coordination with our G7 and G20 partners. Advancing 
real-time information sharing and the development of a common lexicon 
are just two components that can decrease vulnerabilities. If 
confirmed, I look forward to assisting the Secretary in engaging with 
all FBIIC members to improve the cybersecurity of the U.S. financial 
system.

    Question. How can you accurately assess systemic risk or the 
riskiness of any one financial institution given all the changing 
variables?

    Answer. I support the use of transmission channels assessment 
adopted by FSOC in determining the extent to which the material 
distress of an individual firm could pose a threat to U.S. financial 
stability, namely counterparty exposure, implication of asset 
liquidations and the inability to provide critical functions or 
services for which there are no ready substitutes. I also believe that 
the approach adopted by the Federal Reserve to calculate the overall 
measure of systemic importance, linked to 12 financial indicators, 
provides a regular and useful update to look at systemic risk across a 
broad set of U.S. banking institutions. These indicators cover several 
categories including asset size, interconnectedness, substitutability, 
complexity, and cross-jurisdictional activity. Since the financial 
crisis, this has been an area of active research, and that research 
continues at the FSOC as well as at the Federal Reserve, the IMF and in 
academia with many scholars publishing research through the Bureau of 
Economic Research.
                                 cdfis
    Question. The Community Development Financial Institution (CDFI) 
Fund promotes economic revitalization and community development in low-
income communities and helps build affordable housing. I was very 
disappointed to see the President's budgets for fiscal years 2018 and 
2019 eliminate funding for the CDFI program entirely. Last year, across 
the country, CDFI participants made over 120,000 loans or investments 
worth over $5 billion to more than 12,000 small businesses. CDFIs also 
financed nearly 28,000 affordable housing units last year. In my State 
of Washington, there are 25 CDFIs which have made 6,068 loans, worth 
$425 million, 120 New Markets projects, leveraging $556 million in 
investments, and the Native American CDFI Assistance Program has 
provided $10.6 million in loans and assistance.

    CDFIs are an incredibly effective economic development tool for 
rural and urban communities across the country. If confirmed, will you 
support full funding for this program as a part of next year's budget?

    Answer. CDFIs do important work. The CDFI Fund will continue to 
certify financial institutions. Not only does certification make an 
entity eligible for multiple programs at the CDFI Fund, it also serves 
as a qualifier for other Federal government programs such as the Small 
Business Administration's Community Advantage Program and Federal Home 
Loan Bank membership.

    In addition, the budget provides funding for the CDFI Fund to 
continue to operate the non-grant programs, such as the New Markets Tax 
Credit Program, which provide support for CDFIs and other community 
organizations lending and investing in economically distressed 
communities across the country. Since 2001, the New Markets Tax Credit 
Program has allocated $54 billion in tax credit allocations in urban 
and rural areas. The budget also proposes to reauthorize the Bond 
Guarantee Program to allow $500 million in new guarantees in FY 2019. 
This program provides capital to CDFIs at no cost to the taxpayer. 
Effectively managing those resources will ensure that CDFIs have access 
to capital to continue to support urban and rural distressed 
communities.

    Question. I have also heard concerns from local Community 
Development Enterprises (CDEs) in my State that are concerned that 
locally based CDEs are losing out to national CDEs for New Markets 
allocations.

    If confirmed, will you commit to working with local CDEs to ensure 
that they can compete against the national CDEs, and will you make the 
CDFI staff available to review applications if the CDE does not get an 
award?

    Answer. If confirmed, I will commit to exploring this issue and the 
process around CDFI award procedures and communications to ensure that 
they are consistently fair and transparent.

                                 ______
                                 
            Questions Submitted by Hon. Robert P. Casey, Jr.
    Question. The IRS plays a critical role in identifying and 
investigating suspicious financial activities. Do you agree?

    Answer. The mission of the IRS is to administer and enforce the 
Federal tax laws. If in the course of its examination activities the 
IRS discovers evidence of a possible violation of Federal criminal law 
outside its jurisdiction, on a case by case basis, the IRS may refer 
the matter to ``the appropriate Federal agency charged with the 
responsibility of enforcing such law'' (26 U.S.C. Sec. 6103).

    Question. If an individual or organization were receiving large 
amounts of money--including from foreign sources--that the IRS found 
suspicious, the IRS should investigate the matter or refer the matter 
to another authority for investigation, as appropriate. Do you agree?

    Answer. Yes, the IRS should refer evidence of serious potential 
violations of Federal criminal law to ``the appropriate Federal agency 
charged with the responsibility of enforcing such law'' (26 U.S.C. 
Sec. 6103).

    Question. There may be instances where suspicious tax returns raise 
red flags with the IRS about the violation of non-tax laws; for 
example, suspicious tax returns may suggest to the IRS that an 
individual is involved in money laundering, terrorist financing, or 
drug trafficking, in violation of U.S. laws governing fraud, 
importation, terrorism, or controlled substances. Do you agree?

    Answer. Yes, the IRS should refer evidence of serious potential 
violations of Federal criminal law to ``the appropriate Federal agency 
charged with the responsibility of enforcing such law'' (26 U.S.C. 
Sec. 6103).

    Question. If the IRS plays a key role in identifying suspicious 
activity that may be related to money laundering, terrorist financing, 
or drug trafficking, the IRS may also play a key role in identifying 
suspicious financial activity that could be related to violation of our 
election laws. Do you agree?

    Answer. The Federal Election Commission and the Department of 
Justice are charged with enforcing Federal election laws. If in the 
course of its examination activities the IRS finds evidence of serious 
potential violations of Federal criminal law, it should refer that 
evidence on a case by case basis to ``the appropriate Federal agency 
charged with the responsibility of enforcing such law'' (26 U.S.C. 
Sec. 6103).

    Question. Without automatically receiving the names of large-scale 
donors, will it be more difficult for the IRS to determine if a single 
donor or group of related donors has made suspicious contributions to 
multiple tax-exempt organizations?

    Answer. The mission of the IRS is to administer and enforce the 
Federal tax laws, including whether a donor claiming a charitable tax 
deduction under section 170 of the Internal Revenue Code qualifies for 
such a deduction, or whether an organization claiming tax-exempt status 
is operated for exempt purposes. There is no limitation under the 
Federal tax laws preventing a donor or group of related donors from 
making contributions to multiple tax-exempt organizations, although 
there are limitations on whether such contributions may be deductible 
under the Internal Revenue Code. If in the course of its examination 
activities the IRS finds evidence of serious potential violations of 
Federal criminal law, it should refer that evidence on a case by case 
basis to ``the appropriate Federal agency charged with the 
responsibility of enforcing such law'' (26 U.S.C. Sec. 6103).

    Question. Do you agree with Secretary Mnuchin and IRS Acting 
Commissioner Kautter's decision to roll back donor transparency 
requirements for certain tax-
exempt entities?

    Answer. Tax-exempt entities should not be required to report on 
their annual returns to the IRS information that the IRS does not need 
in that form to administer or enforce the Federal tax laws. The new 
policy announced by the IRS will protect taxpayers by reducing the risk 
of inadvertent disclosure or misuse of confidential information and 
will save both taxpayer and government resources. It is worth noting 
that the Schedule B modifications resulted in no change to data that is 
disclosed publicly, and the IRS retains its ability to access all data 
it had before.

                                 ______
                                 
              Questions Submitted by Hon. Claire McCaskill
    Question. China is still the world's largest steel producer and 
accounts for half of all global steel output. Steel overcapacity is 
still a global concern.

    What steps should the Treasury Department pursue to address the 
global steel overcapacity problem?

    Answer. The Treasury Department, along with the rest of the 
administration, supports the need for effective policy solutions that 
enhance market functions and reduce excess capacity. The administration 
is actively engaged with steel producing nations, including China, to 
address the systemic issues that led to the creation of steel excess 
capacity, particularly government subsidies and other support measures. 
The administration is working to coordinate efforts with like-minded 
trading partners, including the European Union, Japan, Mexico, and 
Canada, to reduce or eliminate subsidies and other government supports 
for steel and to support other measures that will improve the 
functioning of market mechanisms in the steel sector. The 
administration also supports bilateral and multilateral engagement on 
solutions to the excess capacity problem and is working with trading 
partners to address its root causes, for example in the Global Forum on 
Steel Excess Capacity.

    Question. Will you commit to addressing steel overcapacity through 
multilateral or bilateral negotiations? If yes, please specify what 
timeline you recommend for these negotiations.

    Answer. China's and other countries' market-distorting practices 
hurt firms around the world. Many like-minded countries have long 
shared these concerns about excess capacity, which leads to excess 
production, as well as subsidies and dumping. As noted above, the 
administration supports bilateral and multilateral engagement on 
solutions, and is working to address the excess capacity problem 
through the Global Forum on Steel Excess Capacity. It is time for all 
countries to take concrete action to fight market distortions in steel 
and aluminum at its source. Continued international efforts to combat 
global excess capacity and overproduction are welcome.

    Question. The administration's tariffs on imported steel and 
aluminum are devastating to Missouri's manufacturers. Is there a 
particular goal or other trigger point for the U.S. economy before the 
administration will turn off the tariffs that are so disruptive to 
downstream manufacturing?

    Answer. Global excess production and resulting excessive imports in 
the steel and aluminum industries have already harmed the U.S. economy. 
To address impacts on industries that rely on imports, the Department 
of Commerce has put in place a product exclusion process. The 
administration is also working with countries to address the underlying 
problem.

    Question. Treasury officials repeatedly promised that the 2017 tax 
law would pay for itself. Just months later, the Congressional Budget 
Office projects the deficit will be $804 billion in fiscal year 2018, a 
21-percent increase to the $655-billion deficit at the end of fiscal 
year 2017.

    What assumptions or rationale did the Congressional Budget Office 
get wrong in order to arrive at a dramatically different conclusion 
regarding the fiscal impact of tax law?

    Answer. I do not know the assumptions underlying the CBO estimate. 
I do agree with the analysis of the Council of Economic Advisors, which 
suggests that the Tax Cuts and Jobs Act and other policies of this 
administration will lead to increased investment, growth, and tax 
revenue. In addition, other outside analyses have found that the 
proposals that underpinned the tax bill will produce significant 
economic responses including higher wages for the average American 
household (e.g., Laurence Kotlikoff of Boston University and others).

    Question. Data released by the Bureau of Labor Statistics concluded 
that real average hourly earnings for all workers were unchanged, from 
June 2017 to June 2018.

    What policy changes do you recommend to generate a positive trend 
in wage growth?

    Answer. The policies that were just enacted in the Tax Cuts and 
Jobs Act are expected to increase capital investment, thereby 
increasing labor productivity and resulting in wage growth. If 
confirmed, I look forward to working with you on additional tax and 
other reforms to increase productivity and wages.

                                 ______
                                 
              Questions Submitted by Hon. Michael B. Enzi
    Question. The Internal Revenue Service continues to experience 
significant challenges in updating its technology. For example, in 
2009, the IRS began developing the Customer Account Data Engine (CADE 
2) to replace the Individual Master File for managing taxpayer 
accounts. Since then, the agency has spent more than $1 billion on the 
project, but has only completed one phase, has significantly scaled 
back other phases, and has delayed CADE 2's estimated completion date.

    In your position at either Treasury or the IRS, how would you 
expect your role to address these challenges?

    Answer. IRS IT modernization is a complex and challenging issue. 
Secretary Mnuchin has made this a priority. He and his senior staff 
meet regularly on the subject with the Department's CIO and IRS 
officials. As he has mentioned in recent testimony, he has directed the 
IRS to develop a 5-year plan to modernize its core systems, including 
completing CADE II. IRS is working on this 5-year plan with help from 
the Department's CIO. If confirmed as Deputy Secretary, part of my role 
would be to assist the Secretary in the management and oversight of the 
Department's programs including IRS IT.

    Question. A July 2017 Treasury Inspector General for Tax 
Administration report came to the following conclusion: ``The IRS has 
not effectively updated or implemented hiring policies to fully 
consider past IRS conduct and performance issues prior to making a 
tentative decision to hire former employees, including those who were 
terminated or separated during an investigation of a substantiated 
conduct or performance issue.''

    In your position at either Treasury or the IRS, how would you 
expect your role to address these challenges?

    Answer. If confirmed, I would be happy to discuss this with the IRS 
and to work with your office to help address these challenges.

                                 ______
                                 
                Questions Submitted by Hon. Bill Nelson
    Question. In your view, what sort of questions arising from the new 
tax law (Pub. L. 115-97) do you think you could help with?

    Answer. I expect to continue to work closely with the Office of Tax 
Policy to implement various provisions of the Tax Cuts and Jobs Act. As 
questions arise with implementation, I will help manage Treasury to 
ensure the best possible outcome.

    Question. Do you have any concerns about how the new tax law (Pub. 
L. 115-97) impacts the Nation's debt? If not, why not?

    Answer. The Nation's debt is something that we must all take very 
seriously. I support the administration's position that the Tax Cuts 
and Jobs Act and other policies of this administration will lead to 
increased investment, incomes and tax revenue. The Council of Economic 
Advisors has published a white paper explaining this economic reasoning 
in depth.

    Question. How will you work to stop corporations from using the new 
tax law (Pub. L. 115-97) to avoid paying their fair share?

    Answer. The Tax Cuts and Jobs Act lowered tax rates on American 
taxpayers, including American corporations, which will reduce the 
incentives to engage in tax-planning and instead encourage increased 
investment in the United States. In addition, the new tax law also 
contains provisions that will significantly reduce base erosion 
associated with international tax planning. The need to address this 
was at the forefront of concerns from the last administration as well.

    Question. Do you believe tax-exempt groups could be used by Russia 
or other adversaries to interfere with our elections? If not, why not?

    Answer. I have not seen data regarding tax-exempt groups and 
foreign money in elections. As I understand it, Treasury does not track 
this type of data. I would refer you to the Federal Election 
Commission, the independent regulatory agency charged with 
administering and enforcing the Federal campaign finance law.

    Question. Recently, the Treasury Department and the IRS changed the 
rules for tax-exempt entities, removing the requirement for 501(c)(4) 
groups and other tax-
exempt groups to share their major funding sources with the IRS. Do you 
think it makes sense to hamstring the IRS's ability to ensure 501(c)(4) 
groups and other tax-exempt groups are not being used by foreign states 
to undermine our democracy? If so, please explain why.

    Answer. The mission of the IRS is to administer and enforce the 
Federal tax laws. The Federal Election Commission and the Department of 
Justice, not the IRS, are charged with enforcing Federal election laws. 
Nevertheless, it is worth noting that the Revenue Procedure resulted in 
no change to data that is disclosed publicly, and the IRS retains its 
ability to access all data it had before.

    Question. What metrics should we use to judge the performance of 
the administration's trade policies?

    Answer. The administration is working to ensure balanced trading 
relationships in which U.S. firms and workers are protected against 
unfair foreign trade practices. Our firms and workers should be able to 
compete on a fair and level playing field globally. It is in this 
context that trade policy actions should be viewed.

    Question. What are the top three lessons you learned from the 2008 
financial crisis?

    Answer. While it is difficult to rank the many important lessons 
from the financial crisis, here are three that I think are key. First, 
make sure that our largest financial institutions have adequate 
quantity and quality of both capital and liquidity that can be assessed 
by the regulators and the market continually on a very transparent 
basis. Second, promote market regulation that encourages transparency, 
efficiency, and the orderly flow of capital and effective management of 
counterparty risk through central clearing, disclosure of trade data 
and rigorous margin requirements. Third, promote communication among 
regulators, to identify emerging risks and to deal, on a timely basis, 
with market shocks or dislocations.

    Question. What do you believe is the greatest threat to the global 
economy?

    Answer. A risk that we are very focused on at Treasury is 
cybersecurity and the potential vulnerabilities of our financial 
institutions and financial markets. While significant gains have been 
made as a result of government and industry working together, the 
financial system increasingly relies on technology and mobile 
communication, which presents ever-changing scenarios to consider. 
Treasury is approaching this challenge by advocating for increased 
collaboration among regulators, leveraging FBIIC which the Secretary 
chairs, and improving international coordination with our G7 and G20 
partners. Advancing real-time information sharing and the development 
of a common lexicon are just two components that can decrease 
vulnerabilities. If confirmed, I look forward to assisting the 
Secretary in engaging with all FBIIC members to improve the 
cybersecurity of the U.S. financial system.

    Question. What do you believe are the top three issues/risks facing 
international finance that need to be addressed?

    Answer. It is difficult to precisely rank risks, but here are three 
that are important. First, a significant concern to the Treasury 
Department is the lack of transparency with respect to the indebtedness 
of governments worldwide, particularly among developing countries. 
Existing regimes to compile and publish sovereign debt statistics have 
serious deficiencies. Many government liabilities are excluded from 
official debt statistics, thereby masking the actual amount of leverage 
in the public sector of many economies. Hidden liabilities often 
include obligations incurred by public and private entities guaranteed 
by the government, the debts of state-owned enterprises (SOE), and 
financing secured by government commitments and forward sales of 
commodities. Second, rising interest rates will necessarily raise debt 
servicing costs for governments, at best crowding out other areas of 
public investment and at worst moving countries toward debt crises. 
This can be compounded by movements in exchange rates. Finally, the 
threat of debt crisis is potentially exacerbated by the provision of 
easy credit from emergent creditors, such as China, which are motivated 
by geopolitical ambitions rather than development economics and 
principles of debt sustainability.

    Question. What would you do if the President asked you to do 
something unethical or morally questionable?

    Answer. If confirmed as Deputy Secretary, I will work to set an 
example by upholding the ethical standards that apply to all senior 
Department officials.

    Question. If the President said something publicly that was 
factually untrue, what would you do to correct the record?

    Answer. If confirmed as Deputy Secretary, I will work to ensure the 
Department engages as an honest broker with Congress and the American 
people.

    Question. Do you disagree with any of the Trump administration's 
trade policies, regulatory policies, or tax policies? If so, please 
explain which ones.

    Answer. I agree with the agenda of driving economic growth through 
tax reform, deregulation, and achieving free and fair trade. Within my 
area of responsibilities, if I were to have a disagreement on a 
specific policy, I would share this privately with the appropriate 
person.

    Question. Do you believe climate change is a threat to the long-
term interests of the United States?

    Answer. The Treasury Department is not the lead agency charged with 
responding to climate change. If confirmed, I will work to ensure the 
Department provides appropriate support to those agencies charged with 
responding.

    Question. What effect do you believe the U.S.'s withdrawal from the 
2015 Paris Agreement on Climate Change will have on the U.S. economy 
over the long run?

    Answer. I have not studied this question, and I am not aware of any 
analysis from the Department on this matter. If confirmed, I would be 
happy to work with you on this issue.

                                 ______
                                 
             Questions Submitted by Hon. Sheldon Whitehouse
    Question. At the hearing, you said you were unable to answer 
questions about the national security threat that shell companies pose 
because you had not seen relevant national security data.

    After reviewing the data, what is the national security threat 
shell companies pose to the United States?

    Answer. The 2015 U.S. National Money Laundering Risk Assessment 
found that one of the main methods used to move dirty money involves 
creating legal entities without accurate information about the identity 
of the beneficial owner. Bad actors may more easily hide illicit funds 
and avoid detection through business entities because the true owner is 
masked. Treasury recognizes the vulnerabilities that exist in corporate 
formation without the disclosure of beneficial ownership information.

    U.S. companies with hidden beneficial owners have been used by arms 
dealers, narco-traffickers, proliferators of weapons of mass 
destruction, and facilitators of massive health care and mortgage 
frauds, among other abuses. As one example, Viktor Bout, a Russian arms 
dealer, used at least 12 companies incorporated in the United States to 
carry out his arms dealing. Similarly, Samark Lopez Bello, the primary 
frontman for Tareck El Aissami, the former Venezuelan Vice President 
and current Minister of Industries and National Production (both 
designated pursuant to the Foreign Narcotics Kingpin Designation Act in 
February 2017), created five U.S. LLC companies in Florida to hold real 
estate or other U.S. assets in Lopez Bello's name.

    Question. What role does Treasury play in identifying, 
investigating, and preventing money laundering?

    Answer. Treasury is fully dedicated to combating all aspects of 
money laundering at home and abroad, through the mission of the Office 
of Terrorism and Financial Intelligence (TFI). TFI utilizes the 
Department's many assets--including a diverse range of legal 
authorities, core financial expertise, operational resources, and 
expansive relationships with the private sector, interagency, and 
international communities--to identify and attack money laundering 
vulnerabilities and networks across the domestic and international 
financial systems. Treasury's Financial Crimes Enforcement Network 
(FinCEN) is the administrator of and lead regulator for the Bank 
Secrecy Act (BSA), the primary anti-money laundering law of the United 
States.

    The BSA reporting that financial institutions provide is used in a 
variety of ways in support of law enforcement and FinCEN's important 
missions, including:

          Serve as tips to initiate investigations;

          Expand existing investigations by pointing to the identities 
        of previously unknown subjects;

          Promote international information exchange through the 
        Egmont Group of Financial Intelligence Units; and

          Identify significant relationships, trends, and patterns.

    Question. Currently no jurisdiction in the United States requires 
shell companies to disclose their beneficial ownership. Jennifer 
Fowler, the Deputy Assistant Secretary, Office of Terrorist Financing 
and Financial Crimes at Treasury recently told the Judiciary Committee 
that the lack of beneficial ownership information for shell companies 
is ``a vulnerability.'' John Cassara, a former Treasury Special Agent 
and FinCEN Agent, agreed saying, ``[R]equiring the real owner of a U.S. 
company to be named during the incorporation process will cut down, in 
dramatic fashion, the ability of criminals to finance their crimes.''

    Do you agree the United States' lack of beneficial ownership 
collection presents a serious shortcoming in our anti-money laundering 
regime?

    Answer. Treasury recognizes the vulnerabilities that exist in 
corporate formation without the disclosure of beneficial ownership 
information. Illicit actors may more easily hide funds and avoid 
detection through business entities because the true owner is not 
disclosed. The collection of beneficial ownership information is 
critical both at the time of account opening and when a company is 
being incorporated. Treasury's Customer Due Diligence Rule, which went 
into effect in May 2018 for financial institutions, requires those 
institutions to identify and verify the identity of the beneficial 
owners of their legal entity customers at the time of account opening. 
This change assists financial institutions in managing risks and law 
enforcement in pursuing criminals who launder illicit proceeds through 
legal entities. It is an important step forward. Treasury is evaluating 
various options in the area of collecting beneficial ownership at the 
time of company formation, and we look forward to working with Congress 
to support legislation that addresses this issue.

    Question. Is there a national security threat posed by foreign 
nationals spending money in U.S. elections? If so please describe.

    Answer. I have not seen data regarding tax-exempt groups and 
foreign money in elections. As I understand it, Treasury does not track 
this type of data. I would refer you to the Federal Election 
Commission, the independent regulatory agency charged with 
administering and enforcing the Federal campaign finance law.

    Question. What is Treasury's role in preventing foreign money from 
entering our elections?

    Answer. The Federal Election Commission, not Treasury or the IRS, 
is charged with enforcing Federal election laws. If in the course of 
its examination activities the IRS discovers suspicious financial or 
other activities, on a case by case basis, the IRS may coordinate with 
other Federal agencies.

    Question. The IRS has the ability to audit 501(c)(4) organization's 
donor lists. For what purposes would the IRS need this information?

    Answer. It is my understanding that the IRS makes no systematic use 
of Schedule B donor information filed by section 501(c)(4) 
organizations for the purpose of tax administration. If donor 
information is needed for the purposes of an examination, the IRS 
retains the ability to obtain the information directly from the 
organization. Such information may be relevant, on a case by case 
basis, to audit excess benefit transactions under section 4958 and to 
audit the organization's tax exempt status under the general 
prohibitions on private inurement and private benefit.

    Question. You said that you were not involved in the deliberative 
process regarding Revenue Procedure 2018-38, which allows certain tax-
exempt organizations to no longer report donor information to the IRS.

    Who at Treasury was involved?

    Answer. Revenue Procedure 2018-38 addresses a matter of tax 
administration, which is primarily a matter for the IRS. As with most 
tax guidance, the Office of Tax Policy works with the IRS on guidance 
that is issued. The decision-makers were Secretary Mnuchin and Acting 
Commissioner Kautter.

    Question. Today is it easier or more difficult for the IRS to know 
whether foreign nationals are behind politically active non-profit 
organizations than it was before Revenue Procedure 2018-38?

    Answer. The mission of the IRS is to administer and enforce the 
Federal tax laws. The Federal Election Commission, not the IRS, is 
charged with enforcing Federal election laws. Nevertheless, it is worth 
noting that the Revenue Procedure resulted in no change to data that is 
disclosed publicly, and the IRS retains the ability to access all data 
it had before.

                                 ______
                                 
                 Questions Submitted by Hon. Tim Scott
                           opportunity zones
    Question. The Department of Treasury and Internal Revenue Service 
formally certified nominations from States, the District of Columbia, 
and all possessions of the United States to designate Opportunity Zones 
in their areas of jurisdiction.

    This is great news! Securing this provision in the tax bill was a 
huge legislative win for the millions of Americans living in struggling 
communities in need of a renaissance.

    This provision will help to create permanent and positive change 
that will benefit generations to come.

    I look forward to further guidance for the investors and 
entrepreneurs on establishing the investment vehicles and identifying 
qualified investments most likely to drive jobs and economic activity.

    Can I count on you prioritizing this project?

    Answer. Yes. Thank you for your leadership on this issue.
                         fatca and p&c premiums
    Question. I've also raised the issue with Secretary Mnuchin: FATCA 
in relation to property and casualty insurance premiums.

    Anyone with a background in insurance like myself knows that these 
payments don't have a cash value and can't be used to evade taxes.

    Treasury put out a PGP (Priority Guidance Plan) indicating it was 
evaluating the need to report such payments under FATCA.

    I hope you and your team will keep on this in the future. Will you 
commit to working with me on this issue?

    Answer. Yes. I look forward to working with you on this issue.
                   redeeming unclaimed treasury bonds
    Question. South Carolina's Treasurer wrote me a letter in which he 
describes our State's struggle to obtain legal title to over $250 
million in matured and unredeemed U.S. savings bonds owned by South 
Carolinians.

    As you can imagine, South Carolina wants to reunite its citizens 
with their unclaimed assets.

    If the State cannot do so after a rigorous search process, the 
proceeds from the bonds will go to our general treasury for the benefit 
of South Carolina's schools, hospitals, and roads.

    Senator Moran has discussed this issue with Secretary Mnuchin.

    Will I have your attention to it should you be confirmed?

    Answer. Yes, if confirmed, you will have my attention on this 
issue.

                                 ______
                                 
                 Question Submitted by Hon. Dean Heller
    Question. Nevada has become a hotbed for technology companies 
because of its business-friendly environment and collaborative approach 
toward attracting investment. In fact, the Silver State is now a key 
player in the development of cutting-edge technologies like mission-
critical data centers, drones, and autonomous cars and trucks, just to 
name a few. Internet and technology companies are not only a critical 
component of Nevada's economy, but also the American economy, 
contributing an estimated 6 percent to U.S. GDP. Because these 
companies are a core source of U.S. economic strength, an increasing 
number of foreign nations have imposed or are considering imposing 
unilateral taxes on American digital companies to solve their domestic 
fiscal challenges and to promote domestic digital competitors. These 
taxes violate the spirit of our tax treaties, may conflict with 
international trade rules, and in some cases could directly expropriate 
revenue owed to the U.S. Treasury.

    If confirmed, please comment on how the Treasury Department should 
push back on digital taxation proposals emerging in the international 
arena.

    Answer. The administration firmly opposes proposals by any country 
to single out digital companies. Such proposals are based on an 
unprincipled distinction between digital companies and non-digital 
companies. Treasury will continue to engage through the Organization 
for Economic Cooperation and Development's Task Force on the Digital 
Economy, which it co-chairs, as well as in bilateral discussions with 
our trade partners.

                                 ______
                                 
               Questions Submitted By Hon. Orrin G. Hatch
    Question. If confirmed by the Senate as Deputy Secretary, part of 
your role will be to ensure that the many offices of the Treasury 
Department are functioning in concert with one another. What past 
experience do you have that will help you manage the Treasury building, 
and how has the time spent as a Counselor to the Secretary helped you 
prepare for the position you are nominated to?

    Answer. In my previous roles in the private sector I have managed 
teams across a number offices, often dispersed globally. This 
experience has taught me a lot, including that managers must establish 
credibility, act as fair arbiters, and maximize their own effectiveness 
by seeking to make those who report to them most effective. My time 
serving as Counselor has been very valuable in allowing me to build an 
understanding of how the Department works and form strong working 
relationships within the Department.

    Question. As you know, this committee is very active in engaging 
with the Treasury Department, conducting oversight of its activities, 
and working to ensure that regulations the Department issues are in 
line with the legislation Congress has passed. Describe for the 
committee how you envision the relationship between the Department 
generally, and you if confirmed as Deputy Secretary specifically, and 
this committee.

    Answer. I think it is very important that the Department (and I, if 
confirmed) have a strong working relationship with the committee. 
Frequent dialogue is an important part of a strong relationship, so I 
would envision a close and continuous dialogue with the committee.

    Question. The European Commission has proposed new digital services 
taxes. Although such proposals are facially neutral, I am concerned 
that their actual effect would be to single out U.S. high-tech 
companies for onerous taxation, contrary to the spirit, if not the 
letter, of various international commitments. As such, these taxes take 
aim at a core source of U.S. economic strength. Please comment on how 
the U.S. Treasury Department should push back on digital taxation 
proposals emerging in the international arena.

    Answer. The administration firmly opposes proposals by any country 
to single out digital companies. Such proposals are based on an 
unprincipled distinction between digital companies and non-digital 
companies. Treasury will continue to engage on this basis through the 
Organization for Economic Cooperation and Development's Task Force on 
the Digital Economy, which it co-chairs, as well as in bilateral 
discussions with our trade partners.

                                 ______
                                 
                 Questions Submitted by Hon. Ron Wyden
      involvement with irs dark money donor disclosure rule change
    Question. In responding to Senator Casey's question during your 
nomination hearing, you stated that while you were ``not the decision 
maker'' with respect to the IRS's recent decision to exempt dark money 
groups from disclosing donor information to the IRS (Revenue Procedure 
2018-38), you were aware of the issue and present at meetings with 
Secretary Mnuchin where the issue was discussed. Please State in 
writing for the record.

    (a) The dates and locations of any meetings you attended in which 
any matter relating to the disclosure of donor information by tax-
exempt entities was discussed. Of these meetings, please specify which 
meetings Secretary Mnuchin attended.

    Answer. To the best of my recollection, tax-exempt organization 
reporting of information on Schedule B of Form 990 was discussed in a 
handful of meetings between March 2018 and July 2018.

    Question. (b) The names and titles of any individuals attending a 
meeting described in (a) above.

    Answer. The above meetings were regularly scheduled tax meetings 
hosted by the Secretary to discuss a variety of tax-related items. 
Those regularly invited to the meetings include officials from the 
Office of Tax Policy, the IRS, the Office of General Counsel, the 
Office of Legislative Affairs, the Office of Public Affairs, and other 
senior Treasury officials.

    Question. (c) The names and affiliations of any individuals 
associated with an outside group attending a meeting described in (a) 
above.

    Answer. None.

    Question. Please provide any memoranda, meeting summaries, or other 
documents produced in connection with the meetings described in (a) 
above.

    Answer. These documents, if any, would be deliberative in nature.

    Question. Please provide any documents Treasury Department staff 
received or distributed in connection with any meeting described in (a) 
above.

    Answer. These documents, if any, would be deliberative in nature.

    Question. Please provide descriptions of any statements you made 
related to any matter relating to the disclosure of donor information 
by tax-exempt entities during any meeting described in (a) above.

    Answer. These statements, if any, would be deliberative in nature. 
As I stated during my confirmation hearing, my role on this issue was 
limited.

    Question. On July 16, 2018, the Treasury Department issued a press 
release related to the administration's decision to eliminate donor 
disclosure rules for tax-
exempt organizations (https://home.treasury.gov/news/press-releases/
sm426). The press release includes a statement from Secretary Mnuchin. 
Please describe whether you reviewed or were otherwise involved in the 
development of that press release or statement. Please provide any 
emails, memoranda, or other documents related to any involvement you 
may have had in review or development of the press release or 
statement.

    Answer. I was not involved in the development of the press release. 
The press release was shared by Acting Commissioner Kautter with 
Secretary Mnuchin at one of the above-mentioned regular tax meetings, 
but I did not comment on it, as far as I can remember.

    Question. Please provide any emails, memoranda, or other documents 
related to donor disclosure of tax-exempt organizations which were 
authored by you, which you were involved in developing, or which you 
reviewed.

    Answer. I did not author any documents, nor was I involved in their 
development. I recall documents being circulated, though I did not 
engage substantively in their review.

    Question. Please identify who the ``decision-maker'' was with 
respect to the Treasury Department's decision to eliminate donor 
disclosure rules for tax-exempt organizations.

    Answer. The decision-makers were Secretary Mnuchin and Acting 
Commissioner Kautter.
      obama administration position on tax-exempt donor disclosure
    Question. I am concerned that a statement you made in response to 
one of my questions relating to dark money disclosure during your 
confirmation hearing did not accurately reflect the facts surrounding 
this issue. As such, I would like to provide you the opportunity to 
clarify the matter. Specifically, in relation to the Trump 
administration's decision to exempt dark money groups from disclosing 
the identities of major donors to the IRS you stated: ``It was an 
action also recommended by the IRS Commissioner under President Obama. 
He testified about it. So it has become very partisan and that's 
unfortunate. But it was something which the Obama IRS recommended as 
well.''

    It has been widely reported that the IRS was exploring whether to 
eliminate Schedule B donor reporting in 2015 and consulting with 
stakeholders, including State tax administrators, on whether to 
recommend removing the donor disclosure requirement.\1\ IRS's 
exploration of this issue was discussed by Commissioner Koskinen in a 
July 2015 Senate Judiciary Committee hearing. However, I am not aware 
of any instance where any Commissioner or Treasury Secretary under the 
Obama administration made any official statement explicitly 
recommending elimination of the donor disclosure requirement for tax-
exempt entities. Please provide me with a copy of any documents on 
which you based this statement.
---------------------------------------------------------------------------
    \1\ Fred Stokeld, ``IRS Considers Ending Required Reporting of EO 
Contributions,'' Tax Notes, December 14, 2015.

    Answer. As you note, Commissioner Koskinen, in his July 2015 
testimony before the Senate Judiciary Committee, stated that the IRS 
was trying to change the requirement on Form 990 to list donors. In 
addition, in 2014, 2015, and 2016, the Priority Guidance Plan published 
by Treasury and the IRS listed as an item, ``Guidance under Sec. 6033 
relating to the reporting of contributions.'' The Priority Guidance 
Plan is a joint statement issued annually by the Treasury Assistant 
Secretary for Tax Policy, the IRS Chief Counsel, and the IRS 
Commissioner regarding the priorities for tax issues that should be 
addressed in regulations, revenue rulings, revenue procedures, notices, 
or other published administrative guidance. Finally, Treasury and the 
IRS's spring 2016 unified regulatory agenda submitted to OIRA describes 
anticipated regulations to address this issue. Specifically, the agenda 
lists guidance under section 6033 regarding the reporting of 
contributors' names and addresses to be issued as proposed regulations. 
---------------------------------------------------------------------------
The agenda abstract states in relevant part:

        Guidance Under Section 6033 Regarding the Reporting of 
        Contributors Names and Addresses (TEMP)

        Current regulations under the Internal Revenue Code and related 
        reporting forms require many tax-exempt organizations to report 
        detailed information regarding contributions received and their 
        contributors. Some of this information is required by law. Most 
        is required by regulations adopted by the IRS under 26 U.S.C. 
        6001 and 6033. The IRS has determined that for many 
        organizations, the reporting of such information is no longer 
        necessary for the efficient administration of the internal 
        revenue laws. The proposed regulations will eliminate the 
        current reporting requirements for most organizations. The 
        current reporting requirements relating to contributions and 
        contributors will be retained for private foundations and 
        supporting organizations. Organizations that will no longer be 
        required to report such information will continue to be 
        required to collect it and maintain it in their books and 
        records so that it will be available to the Internal Revenue 
        Service upon request. The proposed regulations also will be 
        published simultaneously as temporary regulations effective for 
        information returns filed for taxable years beginning after 
        December 31, 2015.

    This entry is available at https://reginfo.gov/public/do/
eAgendaViewRule?pubId
=201604&RIN=1545-BN29.

    Question. Please indicate ``yes'' or ``no'' (in each case where I 
ask for a ``yes'' or ``no'' answer, you are of course welcome to also 
provide a brief explanation): is it true, as has been reported, that 
while the IRS was exploring whether to eliminate Schedule B reporting 
in 2015, the agency had made no final decision, and was consulting with 
stakeholders including State regulators because they have an interest 
in the information on the Schedule B?

    Answer. I have no information concerning why the Treasury 
Department in the previous administration did not take final action on 
this reform.

    Question. Please indicate ``yes'' or ``no:'' did the IRS or 
Treasury Department under the Obama administration issue any formal 
regulation, revenue procedure, or other guidance eliminating the Form 
990 Schedule B donor disclosure requirement?

    Answer. No.

    Question. Please indicate ``yes'' or ``no:'' did the Obama 
administration issue a Statement of Administration Policy opposing H.R. 
5053 (114th Congress), which would have generally eliminated Schedule B 
donor disclosure, because eliminating donor reporting would constrain 
the IRS in enforcing tax laws?

    Answer. Yes.

    Question. Please indicate ``yes'' or ``no:'' as has been reported, 
the IRS explored whether it was appropriate to eliminate the Schedule B 
donor reporting requirement in 2015 and consulted with various 
stakeholders, including State tax administrators who regularly use 
Schedule B information for State tax administration. The IRS and 
Treasury Department under the Obama administration ultimately did not 
propose eliminating the donor disclosure requirement. Did the IRS or 
Treasury Department under the Trump administration provide State tax 
administrators an opportunity for notice and comment before issuance of 
Revenue Procedure 2018-38? If not, why didn't the Trump administration 
consult with States about this change as the Obama administration had 
done?

    Answer. Revenue Procedure 2018-38 addresses an issue of Federal tax 
administration and is a matter of agency procedure.

    Question. Does the Treasury Department/IRS plan to submit Revenue 
Procedure 2018-38 to the Senate for review under the Congressional 
Review Act?

    Answer. As a matter of general practice, the IRS ordinarily submits 
revenue procedures and other guidance to Congress for review, even when 
not required by the Congressional Review Act. It is my understanding 
that Revenue Procedure 2018-38 was submitted to the congressional 
offices on July 24th.
           donor disclosure necessary for tax administration
    Question. I am concerned that an exchange you engaged in with 
Senator Toomey may not accurately reflect the facts surrounding donor 
disclosure as it relates to tax administration. As such, I would like 
to provide you the opportunity to clarify the matter.

    With respect to Revenue Procedure 2018-38, Senator Toomey asked 
you: ``This category of organizations to which some people made 
contributions, isn't it true that those contributions are not tax 
deductible?'' You responded: ``That's right.''

    Please indicate ``yes'' or ``no:'' while individuals' contributions 
to 501(c)(4) and (c)(6) organizations are generally not tax-deductible, 
isn't it also true (as is stated clearly on the IRS website \2\) that 
contributions to such organizations by a corporation, partnership, or 
other person may be tax-deductible as a trade or business expense?
---------------------------------------------------------------------------
    \2\ https://www.irs.gov/charities-non-profits/other-non-profits/
donations-to-section-501c4-organizations.

    Answer. Yes, if the payment independently meets the requirements of 
a trade or business expense and the requirements for deductibility of 
---------------------------------------------------------------------------
such expenses.

    Question. Senator Toomey also stated: ``Since the mission of the 
IRS is to determine what people owe in taxes, and since these 
contributions have nothing to do with what people owe in taxes, it's 
really not the business of the IRS to be trying to police who 
contributed what to these organizations in a series of contributions 
that have no tax consequences. Isn't that fair to say?'' You responded: 
``That's right, Senator.''

    Please indicate ``yes'' or ``no:'' is the IRS responsible for 
enforcement of the prohibition on private inurement under IRC section 
501(c)(4) and the rules under IRC section 4958 related to self-dealing?

    Answer. Yes.

    Question. Please indicate ``yes'' or ``no:'' is it true that IRC 
section 4958 and the regulations promulgated thereunder impose taxes on 
self-dealing transactions between 501(c)(4) organizations and 
``substantial contributors'' in certain cases? \3\
---------------------------------------------------------------------------
    \3\ 26 CFR Sec. 53.4958-3(e)(2).

---------------------------------------------------------------------------
    Answer. Yes.

    Question. Please indicate ``yes'' or ``no:'' isn't it true that 
without donor information provided on Schedule B of Form 990, the IRS 
will have limited ability to identify substantial contributors who may 
have engaged in self-dealing, without subjecting the organization to an 
audit?

    Answer. No. The IRS makes no systematic use of the information 
regarding section 501(c)(4) organization's donor lists for purposes of 
tax administration. If the information is needed for the purposes of an 
examination, the IRS retains the ability to obtain the information 
directly from the organization.
               proposed treasury action to index capital 
                 gains to inflation through regulation
    Question. During your nomination hearing, Senator Toomey requested 
that you, in your role as Deputy Secretary of the Treasury, enlist 
Treasury to authorize indexing of capital gains to inflation through 
regulations. You replied to Senator Toomey that you believed Treasury 
has the authority to index capital gains through regulations without 
needing Congress to take legislative action. I would like to understand 
the basis of this authority. I refer you to a May 24, 2018 letter to 
Treasury from eight Finance Committee Democratic members and myself, in 
which we argue that indexing capital gains to inflation requires 
legislative action and so exceeds Treasury's rule-making authority.

    If confirmed as Deputy Secretary of the Treasury, do you pledge to 
interpret our Nation's internal revenue laws faithfully, regardless of 
any policy and political directives made to you by the Secretary of the 
Treasury?

    Answer. Yes.

    Question. In your faithful interpretation of U.S. internal revenue 
laws and related regulatory authority, has Congress granted Treasury 
the authority to write new rules that impose capital gains taxes only 
on real gains, and not nominal gains, as has been the law--and the 
interpretation, to our understanding--since the Revenue Act of 1918? If 
so, can you cite what IRC statute(s) extends such authority to 
Treasury?

    Answer. In response to Senator Toomey's request to work with him to 
determine whether the Treasury Department could implement regulations 
to tax real capital gains instead of nominal capital gains, I committed 
to work with him on the issue. This Treasury Department has not taken a 
position on the issue, and the Department's Office of General Counsel 
would need to evaluate the issue.

    Question. Legal opinions written by the Treasury and Justice 
Departments in 1992 under President George H.W. Bush concluded that 
Congress intended the word ``cost'' to mean the price paid in nominal 
dollars without adjustment for inflation. That plain language 
definition of cost appears in IRC section 1012--Basis of Property. Can 
you explain then (a) why the 1992 Treasury and DOJ legal opinions are 
wrong?

    Answer. The Treasury Department's Office of General Counsel would 
need to evaluate this issue.

    Question. (b) Why the language of IRC section 1012 contains 
sufficient ambiguity to permit rule-making by Treasury that interprets 
basis to be measured in real terms as opposed to nominal terms?

    Answer. Section 1012 of the Internal Revenue Code provides that the 
basis of property is generally its ``cost'' but does not provide a 
definition for that term. To provide certainty for taxpayers and the 
IRS, the Treasury regulations under section 1012 interpret the term 
``cost'' generally to be ``the amount paid for such property in cash or 
other property'' (see 26 CFR Sec. 1.1012-1(a)). Beyond this, the 
Treasury Department's Office of General Counsel would need to evaluate 
this issue.

    Question. Finally, please supply the legal argument for why 
inflation indexing is explicitly provided in statute, such as with 
respect to income tax bracket amounts described in IRC sections 1 and 
11.

    If such indexing to inflation were absent, in your interpretation, 
would Treasury have rule-making authority to allow for such indexing?

    Answer. The Treasury Department's Office of General Counsel would 
need to evaluate this issue.

    Question. The new tax law passed at the end of last year changed 
the measure of inflation used to index individual income tax brackets 
and other tax provisions from CPI-U to chained CPI. In your faithful 
interpretation, did Treasury already possess sufficient rule-making 
authority to index provisions of the tax code to whatever measure of 
inflation it deemed fit, without congressional action?

    Answer. Where Congress has already provided a specified measure of 
inflation to be used to index amounts provided in particular provisions 
of the tax code, the Treasury Department would be required to use that 
measure.
                         currency manipulation
    Question. During his candidacy, President Trump repeatedly promised 
to name China a currency manipulator. Almost immediately after being 
inaugurated, he seems to have changed course, and every currency report 
issued by the Treasury Department has declined to label China as a 
currency manipulator. Just last week, the President again tweeted that 
China, as well as ``the European Union and others have been 
manipulating their currencies and interest rates lower, while the U.S. 
is raising rates while the dollar gets stronger and stronger with each 
passing day.''

    Do you agree with the President that China and the EU are 
manipulating their currencies?

    Answer. The Treasury Department issued its most recent semiannual 
currency report to Congress on April 13th. As noted by the Senator, the 
Department did not find any country had manipulated its currency in the 
period covered by that report. On October 16th, the Treasury Department 
will deliver to Congress its next semiannual currency report, which 
will examine the currency policies of all major U.S. trading partners.

    Question. What do you take from the President's statement about how 
you and other Treasury officials should be evaluating countries that 
are manipulating their currency?

    Answer. I take from the President's statement that securing 
stronger and more balanced global growth requires that countries avoid 
policies that facilitate unfair competitive advantage. The Treasury 
Department continues to track closely the foreign exchange and 
macroeconomic policies of all major U.S. trading partners in order to 
monitor where unfair currency practices may be emerging.
                             trade deficits
    Question. What do you believe trade deficits reflect about our 
trade relationships?

    Answer. Large trade imbalances can reflect underlying trade 
distortions resulting from unfair trade practices. It is critical that 
the administration enforce the trade agreements we have as well as 
address unfair practices that hurt our firms and workers, in order to 
bring about free and fair trade.

    Question. Do you agree with the President's apparent position that 
trade deficits are per se detrimental to the United States?

    Answer. As previously stated, to the extent large and continuing 
trade imbalances arise from unfair and distortive trade actions by our 
trading partners, they are likely to be detrimental to U.S. firms and 
workers.

    Question. Do you think there is a relationship between our 
increasing budget deficit, which is driven by the Republican tax cuts, 
and the trade deficit since much of our budget deficit is financed from 
foreign purchases of U.S. Government debt?

    Answer. As previously stated, large trade imbalances can reflect 
underlying trade distortions resulting from unfair trade practices. At 
a macroeconomic level, trade balances--or more accurately, current 
account balances, discussed in the next response--reflect the imbalance 
between saving and investment within an economy. Countries where saving 
is higher than investment have current account (and typically trade) 
surpluses, whereas countries like the United States where overall 
investment is higher than saving (including consumers, businesses, and 
the government), have current account (and typically trade) deficits.

    Question. What is the relationship between the current account 
balance and the trade balance?

    Answer. The trade balance is one component of the current account 
balance, which also includes the net income balance. In the majority of 
economies--including the United States--the trade balance is the 
largest component of the current account balance. In 2017, the U.S. 
current account balance stood at a deficit of $449 billion (or 2.3 
percent of GDP). This overall current account deficit was made up of a 
trade deficit of $552 billion and an income surplus of $103 billion.
                      currency advisory committee
    Question. Dealing with the issue of currency manipulation is 
something this committee has spent a lot of time on. In the Bipartisan 
Congressional Trade Priorities and Accountability Act of 2015, or 
``TPA,'' we included two new negotiating objectives to address currency 
manipulation in trade agreements--something we haven't heard a lot 
about from the Treasury Department in the context of NAFTA. Thanks to 
Senator Bennet and others, we also strengthened enforcement tools to 
combat currency manipulators in the Customs bill, which became law in 
2016.

    As part of the Customs bill, we created a new Advisory Committee on 
International Exchange Rate Policy. That committee has yet to be 
established, even though Democrats in the House and Senate have 
recommended members.

    If confirmed, will you commit to work to set up the Advisory 
Committee to assist the Treasury Department on international currency 
topics?

    Answer. Section 702(c) of the Customs bill required termination of 
the Advisory Committee 2 years after its enactment in February of 2016. 
During the Obama administration and the present administration, no 
members were appointed to the Advisory Committee per the procedures 
described in section 702(b). The issue of currency manipulation remains 
important, and the Treasury Department looks forward to continuing to 
work closely with Congress to ensure our major trading partners do not 
engage in currency policies that distort trade and hurt American firms 
and workers.
                             china strategy
    Question. There is widespread agreement that we have major problems 
in our trade relationship with China, but there are also many questions 
about what the administration's strategy is, or whether there is a 
strategy at all. At times it is not clear to our trading partners or to 
Congress who is calling the shots on trade negotiations with China--
sometimes it's Secretary Mnuchin, sometimes it's Secretary Ross, 
Ambassador Lighthizer, or Mr. Navarro. And they are rarely sending a 
consistent message on behalf of the United States.

    If confirmed, part of your responsibilities will be to oversee 
trade policy. What role will you play in helping to implement a 
coherent China trade policy? Do you agree with the current China trade 
policy?

    Answer. I support the administration's efforts to create a more 
fair and reciprocal trade relationship with China and, as appropriate, 
will work with Secretary Mnuchin and other senior officials to push 
China to address its unfair trade practices.
           consultations on china strategy and trade matters
    Question. Other appointees to this administration have promised to 
consult with Congress and be responsive to questions from this 
committee about China and other matters. And yet repeatedly, appointees 
to the Treasury Department have fallen miserably short in doing just 
that. If the administration continues to box out Congress, it risks a 
blowback against its trade agenda.

    If confirmed, will you make it a priority to bring Congress--and 
other stakeholders--into the conversation about a China strategy? We 
don't need more empty promises, so please give me some specific 
examples of how you will effectuate better communication with Congress.

    Answer. I highly value input from Congress and relevant 
stakeholders. If confirmed as Deputy Secretary, I will work to ensure 
that the Department communicates with members of Congress and their 
staffs on Treasury's role in trade negotiations. I am aware of the 
consultation requirements that Congress set forth in Pub. L. 114-26. To 
the degree they apply to Treasury, even in spirit, you have my 
commitment to work to ensure the Department adheres to them.
                     international affairs staffing
    Question. There are recent reports that the Office of International 
Affairs has lost a significant number of both highly experienced career 
staff and rising junior staff. This raises significant concerns about 
Treasury's capacity to handle the multitude of important international 
topics it is currently engaged in, from its role in the relationship 
with China and tariff policy, to CFIUS reform, to monitoring currency 
manipulation and engaging in international negotiations supporting our 
trade agenda.

    In your view, what has caused this wave of attrition, and how do 
you plan to address it?

    Answer. We have a very high-caliber civil service working within 
the Treasury Department, as well as highly qualified administration 
appointees. The International Affairs office is exemplary, and we could 
not fulfill our mission without the deep expertise and passion for 
public service by all employees. With the recent lifting of Treasury's 
hiring freeze, we are beginning external recruitment consistent with 
the administration's commitment to very high standards for Federal 
employees.
                       anonymous shell companies
    Question. During your confirmation hearing, I asked you about the 
national security risks posed by the abuse of anonymous shell 
companies. As you know, anonymous shell companies are abused by bad 
actors for money laundering and terrorist financing, and at your 
nomination hearing you agreed that ``there are significant law 
enforcement benefits to solving beneficial ownership.'' You further 
stated that beneficial ownership legislation is something you are 
``committed to working with you very closely on and do want to solve.''

    Will you commit to working with me and this committee on a 
bipartisan basis to ensure that we adopt meaningful beneficial 
ownership legislation before the end of 2018? And, will you personally 
commit to working with my office to realize this important goal, and 
consult with this committee and my staff on any potential actions 
Treasury takes on this issue before doing so?

    Answer. Treasury recognizes the vulnerabilities that exist in 
corporate formation without the disclosure of beneficial ownership 
information. We look forward to working with you and other members to 
enhance transparency of the ownership of legal entities. I will commit 
to working on this issue with the committee on a bipartisan basis, 
including your staff. I believe the end of 2018 is a worthy goal, 
though timing will of course not be solely in Treasury's control.

                                 ______
                                 
             Questions Submitted by Hon. Michael F. Bennet
    Question. The Treasury Department recently announced that 501(c)(4) 
social welfare organizations are no longer required to report their 
donors to the IRS. A former general counsel to the Federal Elections 
Commission thought that this change in policy will ``make it easier for 
large contributors to hide money that is being used to influence 
elections, including money given by foreign interests.''

    Why shouldn't the IRS be able to determine whether groups are 
receiving contributions from foreign nationals to influence our 
elections, which are prohibited under the law?

    Answer. The integrity of the U.S. electoral system is central to 
our democracy, and foreign nationals should not be permitted to 
improperly interfere in U.S. elections in any way. Congress entrusted 
the Federal Election Commission and the Department of Justice with the 
enforcement of our Nation's campaign finance laws, including the 
prohibition to which you refer.

    The mission of the IRS is to administer and enforce the Federal tax 
laws. If in the course of its examination activities the IRS discovers 
evidence of a possible violation of Federal criminal law outside its 
jurisdiction, on a case by case basis, the IRS may refer the matter to 
``the appropriate Federal agency charged with the responsibility of 
enforcing such law'' (26 U.S.C. Sec. 6103).

    Question. What public policy goal is this serving?

    Answer. Tax-exempt entities should not be required to report on 
their annual returns to the IRS information that the IRS does not need 
in that form to administer or enforce the Federal tax laws. The new 
policy announced by the IRS will protect taxpayers by reducing the risk 
of inadvertent disclosure or misuse of confidential information and 
will save both taxpayer and government resources. It is worth noting 
that the Schedule B modifications resulted in no change to data that is 
disclosed publicly, and the IRS retains its ability to access all data 
it had before. It is worth further noting that the IRS under President 
Obama was pursuing this policy, I assume for similar public policy 
reasons. In 2014, 2015, and 2016, the Priority Guidance Plan published 
by Treasury and the IRS listed as an item, ``Guidance under Sec. 6033 
relating to the reporting of contributions,'' and Treasury and the 
IRS's spring 2016 unified regulatory agenda submitted to OIRA describes 
anticipated regulations to address this issue. This is available at: 
https://reginfo.gov/public/do/eAgendaViewRule?pubId=201604&RIN=1545-
BN29.

    Question. In your view, does the need to protect secret donors 
outweigh the need to protect our democracy from foreign nationals?

    Answer. We clearly must not have foreign nationals interfere in our 
elections. The Federal Election Commission and the Department of 
Justice are charged with enforcing Federal election laws.

    The recent Treasury/IRS decision to end the collection of donor 
names and addresses for certain tax-exempt organizations will have no 
effect on public transparency of donor information. As stated in the 
previous question, the Schedule B modifications resulted in no change 
to data that is disclosed publicly, and the IRS retains its ability to 
access all data it had before. The modifications affected only 
personally identifiable information that Federal law prohibits the IRS 
from publicly disclosing. I understand the issue has become quite 
politicized, but the IRS under the Obama administration reached a 
similar public policy conclusion, as noted above.

    Question. Last year, Secretary Mnuchin predicted that, ``Not only 
will this tax plan pay for itself, but it will pay down debt.'' Next 
year we're going to have a 
trillion-dollar deficit--the largest as a share of our economy outside 
of a recession since World War II. Deficits are projected to remain 
historically high through the rest of the decade.

    You answered at the hearing that you agree that the tax cuts will 
pay for themselves. Can you explain what you disagree with in the 
analysis by the Joint Committee on Taxation, the Tax Policy Center, and 
the committee for a Responsible Federal Budget--all nonpartisan, 
independent scorekeepers--who each found that the tax cuts would add 
more than $1 trillion to deficits over the next decade (and more if 
fully extended)?

    Answer. I do not know the assumptions underlying the analyses you 
point to. I do agree with the analysis of the Council of Economic 
Advisors, which suggests that the Tax Cuts and Jobs Act and other 
policies of this administration will lead to increased investment, 
growth and tax revenue. In addition, other outside analysts have found 
that the proposals that underpinned the tax bill will produce 
significant economic responses (e.g., Laurence Kotlikoff of Boston 
University and others).

    Question. Treasury serves as a powerful stabilizing force for our 
country. Part of that stability is preserved by insulating Treasury 
from politics, which is central to the role of the Deputy Secretary.

    I appreciate that in your answers at the hearing, you agreed that 
Treasury's work to combat illicit financial activity, impose sanctions, 
and conduct national security reviews through the CFIUS process should 
be free from political interference, even if a company or individual 
affiliated with President Trump, his close associates, or family 
members is involved. I also appreciate that you agreed the same is true 
for tax administration and enforcement at the IRS.

    Can you confirm that if inappropriate political interference occurs 
in any of the above processes that you will notify the bipartisan 
membership of the Finance Committee (either the chairman and ranking 
member or the full membership, as appropriate)?

    Answer. If confirmed, I am committed to full compliance with laws 
and regulations designed to prevent conflicts of interest and any other 
form of improper influence over Treasury's execution of its statutory 
responsibilities. In addition, under Treasury Order 114-10, all 
Treasury employees are expected to report violations of Federal law 
through appropriate channels. In addition, I will work hard to set an 
example by conducting myself in accordance with high ethical standards.

    Question. What are you going to do if confirmed as Deputy Treasury 
Secretary to push back on some of the damaging escalation in trade 
policies that harm our domestic manufacturers, our workers, and our 
farmers and ranchers?

    Answer. The administration believes in free trade, but it must also 
be fair trade to ensure a balanced relationship in which U.S. firms and 
workers are protected against unfair foreign trade practices. The 
administration stands ready to engage with our trading partners to 
resolve these differences. The administration, including Secretary 
Mnuchin and I, have sympathy for industries that are targeted by unfair 
trade practices, and we remain committed to defending America's workers 
and agricultural producers.

                                 ______
                                 
                     Submitted by Hon. Tim Scott, 
                   a U.S. Senator From South Carolina

                       DEPARTMENT OF THE TREASURY

                          WASHINGTON, DC 20220

                            October 20, 2017

                       Department of the Treasury

                    2017-2018 Priority Guidance Plan

                          Joint Statement by:

                            David J. Kautter

                   Assistant Secretary for Tax Policy

                    U.S. Department of the Treasury

                            John A. Koskinen

                              Commissioner

                        Internal Revenue Service

                            William M. Paul

                          Acting Chief Counsel

                        Internal Revenue Service

We are pleased to announce the release of the 2017-2018 Priority 
Guidance Plan. As described below, the 2017-2018 Priority Guidance Plan 
sets forth guidance priorities for the Department of the Treasury 
(Treasury) and the Internal Revenue Service (IRS) based on public 
input, and taking into account the burden-reducing policies and reforms 
described in Section 1 of Executive Order 13789 (April 21, 2017; 82 FR 
19317) and Executive Order 13777 (February 24, 2017; 82 FR 9339).

The 2017-2018 Priority Guidance Plan contains guidance projects that we 
hope to complete during the twelve-month period from July 1, 2017, 
through June 30, 2018 (the plan year). Part 1 of the plan focuses on 
the eight regulations from 2016 that were identified pursuant to 
Executive Order 13789 and our intended actions with respect to those 
regulations. Part 2 of the plan describes certain projects that we have 
identified as burden reducing and that we believe can be completed in 
the 8\1/2\ months remaining in the plan year. As in the past, we intend 
to update the plan on a quarterly basis, and additional burden 
reduction projects may be added. Part 3 of the plan describes the 
various projects that comprise our implementation of the new statutory 
partnership audit regime, which has been a topic of significant concern 
and focus as the statutory rules go into effect on January 1, 2018. 
Part 4 of the plan, in line with past years' plans and our long-
standing commitment to transparency in the process, describes specific 
projects by subject area that will be the focus of the balance of our 
efforts this plan year. Many of these projects are included on the plan 
in response to specific requests for guidance from interested 
stakeholders. In addition, many of these projects afford burden 
reduction by providing taxpayers and their advisers with clarity as to 
the application of the tax law so that businesses and individuals can 
significantly reduce the time needed to plan their affairs with 
certainty as to their tax consequences. Finally, most of these projects 
do not involve the issuance of new regulations. Rather, they will 
provide helpful guidance to taxpayers on a variety of tax issues 
important to individuals and businesses in the form of: (1) revocations 
of final, temporary, or proposed regulations; (2) notices, revenue 
rulings, and revenue procedures; and (3) simplifying and burden 
reducing amendments to existing regulations.

As in past years, we solicited comments from taxpayers to develop our 
Priority Guidance Plan, and we received many thoughtful suggestions for 
areas where guidance could clarify existing rules, eliminate 
unnecessary complexity, and provide reliance authority in areas where 
non-precedential IRS rules already exist. With respect to all of the 
projects described in this plan (as well any added in our quarterly 
updates), regardless of how they are categorized here, we will be 
guided by the 
burden-reducing principles and policies described in aforementioned 
Executive Orders, and focusing on reducing burdens and complexity 
wherever possible.

As in past years, we intend to update and republish the 2017-2018 plan 
during the plan year to reflect additional items that have become 
priorities and guidance that we have published during the plan year. 
The periodic updates allow us flexibility to consider comments received 
from taxpayers and tax practitioners relating to additional guidance 
priorities and to respond to developments arising during the plan year.

The published guidance process can be fully successful only if we have 
the benefit of the insight and experience of taxpayers and 
practitioners who must apply the internal revenue laws. Therefore, we 
invite the public to continue to provide us with their comments and 
suggestions as we develop guidance throughout the plan year.

Additional copies of the 2017-2018 Priority Guidance Plan can be 
obtained from the IRS website at http://www.irs.gov/uac/Priority-
Guidance-Plan. Copies can also be obtained by calling Treasury's Office 
of Public Affairs at (202) 622-2960.

                                 ______
                                 
                          office of tax policy
                                  and
                        internal revenue service
                    2017-2018 priority guidance plan

                     Updated as of October 12, 2017

                       Released October 20, 2017

PART 1. E.O. 13789--IDENTIFYING AND REDUCING REGULATORY BURDENS

 1.  Withdrawal of proposed regulations under Sec. 2704 regarding 
restrictions on liquidation of an interest for estate, gift, and 
generation-skipping transfer taxes. Proposed regulations were published 
on August 4, 2016.

 2.  Withdrawal of proposed regulations under Sec. 103 regarding the 
definition of political subdivision. Proposed regulations were 
published on February 23, 2016.

 3.  Proposed amendment of regulations under Sec. 7602 regarding the 
participation of attorneys described in Sec. 6103(n) in a summons 
interview. Final regulations were published on July 14, 2016.

 4.  Proposed removal of temporary regulations under Sec. 707 
concerning treatment of liabilities for disguised sale purposes and 
review of regulations under Sec. 752 concerning liabilities recognized 
as recourse partnership liabilities. Temporary and proposed regulations 
were published on October 5, 2016.

 5.  Delay and proposed removal of documentation regulations under 
Sec. 385 and review of other regulations under Sec. 385. Final, 
temporary, and proposed regulations were published on October 21, 2016.

           PUBLISHED August 14, 2017 in IRB 2017-33 as NOT. 2017-36 
        (RELEASED July 28, 2017).

 6.  Proposed modification of regulations under Sec. 367 regarding the 
treatment of certain transfers of property to foreign corporations. 
Final regulations were published on December 16, 2016.

 7.  Proposed modification of regulations under Sec. 337(d) regarding 
certain transfers of property to regulated investment companies (RICs) 
and real estate investment trusts (REITs). Temporary and proposed 
regulations were published on June 8, 2016.

 8.  Proposed modification of regulations under Sec. 987 on income and 
currency gain or loss with respect to a Sec. 987 qualified business 
unit. Final regulations were published on December 8, 2016.

PART 2. NEAR-TERM BURDEN REDUCTION

 1.  Guidance removing or updating regulations that are unnecessary, 
create undue complexity, impose excessive burdens, or fail to provide 
clarity and useful guidance.

 2.  Guidance under Sec. 871(m), including with respect to non-delta-
one transactions.

           PUBLISHED August 21, 2017 in IRB 2017-34 as NOT. 2017-42 
        (RELEASED August 5, 2017).

 3.  Guidance under Chapter 3 (Sec. Sec. 1441-1446) and Chapter 4 
(Sec. Sec. 1471-1474). Final and temporary regulations were published 
on January 6, 2017. Guidance may include the following: addressing 
withholding on gross proceeds and foreign passthru payments under 
Chapter 4; coordinating certain documentation requirements for 
participating foreign financial institutions with the requirements 
under IGAs; revising the withholding requirements on insurance premiums 
under Chapter 4; guidance concerning certain due diligence requirements 
of withholding agents under Chapter 3, including the requirement to 
collect and report foreign taxpayer identification numbers of certain 
account holders; and guidance on refunds and credits under Chapter 3, 
Chapter 4, and related provisions. Notice 2015-10 (regarding refunds 
and credits) was published on May 18, 2015.

           PUBLISHED October 10, 2017 in IRB 2017-41 as NOT. 2017-46 
        (RELEASED September 25, 2017).

 4.  Regulations under Sec. Sec. 1014(f) and 6035 regarding basis 
consistency between estate and person acquiring property from decedent. 
Proposed and temporary regulations were published on March 4, 2016.

 5.  Guidance under Sec. 170(e)(3) regarding charitable contributions 
of inventory.

 6.  Final regulations under Sec. 263A regarding the inclusion of 
negative amounts in additional Sec. 263A costs. Proposed regulations 
were published on September 5, 2012.

 7.  Final regulations under Sec. Sec. 4051 and 4071 on heavy trucks, 
tractors, trailers, and tires. Proposed regulations were published on 
March 31, 2016.

 8.  Final regulations under Sec. 2642(g) describing the circumstances 
and procedures under which an extension of time will be granted to 
allocate GST exemption.

 9.  Regulations streamlining the Sec. 754 election statement.

           PUBLISHED October 12, 2017 in FR as REG-116256-17 (NPRM).

10.  Guidance under Sec. 1362(f) regarding the validity or continuation 
of an S corporation election in certain situations involving 
disproportionate distributions, inconsistent tax return filings, or 
omissions on Form 2553, Election by a Small Business Corporation.

11.  Guidance under Sec. 301.9100 regarding relief for late regulatory 
elections.

12.  Relief for late elections due to erroneously late-filed 
partnership and REMIC returns.

           PUBLISHED September 18, 2017 in IRB 2017-38 as NOT. 2017-47 
        (RELEASED September 1, 2017).

13.  Final regulations under Sec. 3402(q). Proposed regulations were 
published on December 30, 2016.

           PUBLISHED September 27, 2017 in FR as TD 9824.

14.  Guidance on refunds under Combat-Injured Veterans Tax Fairness 
Act.

15.  Guidance under Sec. 954(c) regarding foreign currency gains.

16.  Guidance under Sec. 954, including regarding the use of foreign 
statement reserves for purposes of measuring qualified insurance income 
under Sec. 954(i).

17.  Final regulations and related guidance on closed defined benefit 
plans and related matters. Proposed regulations were published on 
January 29, 2016.

           PUBLISHED September 18, 2017 in IRB 2017-38 as NOT. 2017-45 
        (RELEASED August 31, 2017).

18.  Guidance under Sec. 3405 regarding distributions made to payees, 
including military and diplomatic payees, with an address outside the 
United States.

19.  Update to Revenue Ruling 67-390.

PART 3. BIPARTISAN BUDGET ACT OF 2015--PARTNERSHIP AUDIT REGULATIONS

 1.  General guidance under new partnership audit rules.

 2.  Regulations addressing administrative and judicial review rules.

 3.  Regulations addressing push out election by tiered structures.

 4.  Regulations addressing adjustments to bases and capital accounts 
and the tax and book basis of partnership property.

 5.  Regulations addressing the operation of certain international 
provisions in the context of the centralized partnership audit regime, 
including rules relating to the withholding of tax on foreign persons, 
withholding of tax to enforce reporting on certain foreign accounts, 
and the treatment of creditable foreign tax expenditures of a 
partnership.

PART 4. GENERAL GUIDANCE

CONSOLIDATED RETURNS

 1.  Regulations under Sec. 1.1502-36 and related provisions regarding 
losses on subsidiary stock.

 2.  Regulations under Sec. 1.1502-75(d) regarding group continuation. 
Final regulations were published on September 8, 1966.

 3.  Final regulations under Sec. 1.1502-76 regarding when a member 
joins or leaves a consolidated group. Proposed regulations were 
published on March 6, 2015.

 4.  Final regulations under Sec. 1.1502-91 regarding the 
redetermination of consolidated net unrealized built-in gain and loss. 
Proposed regulations were published on October 24, 2011.

CORPORATIONS AND THEIR SHAREHOLDERS

 1.  Updating Sec. 301 regulations to reflect statutory changes.

 2.  Guidance under Sec. 305(b) regarding certain stock distributions 
by REITs and RICs.

           PUBLISHED August 28, 2017 IN IRB 2017-35 as REV. PROC. 
        2017-45 (RELEASED August 11, 2017).

 3.  Final regulations under Sec. 305(c) regarding the amount and 
timing of deemed distributions from conversion ratio adjustments on 
convertible debt and stock. Proposed regulations were published on 
April 13, 2016.

 4.  Regulations regarding transactions involving the transfer or 
receipt of no net equity value. Proposed regulations were published on 
March 10, 2005.

           PUBLISHED in FR on July 13, 2017 as REG-139633-08 
        (WITHDRAWAL).

 5.  Regulations under Sec. 336(e) to revise the treatment of certain 
stock dispositions as asset sales. Final regulations were published on 
May 15, 2015.

 6.  Revising regulations under Sec. 1.337(d)-7 regarding the treatment 
of certain foreign corporations. Final regulations were published on 
August 2, 2013.

 7.  Guidance regarding the application of Sec. Sec. 355 and 361 to a 
distributing corporation's use of its controlled corporation's stock, 
securities, or other obligations to retire putative debt of the 
distributing corporation.

 8.  Guidance regarding procedures of Pilot Program for issuing private 
letter rulings under Sec. 355.

           PUBLISHED October 10, 2017 in IRB 2017-41 as REV. PROC. 
        2017-52 (RELEASED September 21, 2017).

 9.  Revising regulations under Sec. 368(a)(1)(F). Final regulations 
were published on September 21, 2015.

10.  Guidance regarding continuity of interest under Sec. 368. Proposed 
regulations were published on December 19, 2011.

11.  Final regulations regarding the scope and application of Sec. 597. 
Proposed regulations were published on May 20, 2015.

EMPLOYEE BENEFITS

A. Retirement Benefits

 1.  Regulations updating the rules applicable to ESOPs.

 2.  Final regulations on the application of the normal retirement age 
regulations under Sec. 401(a) to governmental plans. Proposed 
regulations were published on January 27, 2016.

 3.  Guidance under Sec. 401(a)(9) on the use of lump sum payments to 
replace lifetime income being received by retirees under defined 
benefit pension plans.

 4.  Final regulations regarding Qualified Nonelective Contributions 
(QNECs) and Qualified Matching Contributions (QMACs). Proposed 
regulations were published on January 18, 2017.

 5.  Announcements on hardship distributions and loans from retirement 
plans as a result of Hurricanes Harvey and Irma.

           PUBLISHED September 25, 2017 in IRB 2017-39 as ANN. 2017-11 
        (RELEASED August 30, 2017).

           PUBLISHED October 2, 2017 in IRB 2017-40 as ANN. 2017-13 
        (RELEASED September 12, 2017).

 6.  Regulations under Sec. Sec. 219, 408, 408A, and 4973 regarding 
IRAs.

 7.  Guidance updating regulations for service credit and vesting under 
Sec. 411.

 8.  Regulations under Sec. 411(a)(11). Proposed regulations were 
published on October 9, 2008.

 9.  Guidance on the treatment of future interest credits and annuity 
conversion factor under a hybrid defined benefit plan and adjustments 
under a variable annuity plan for purposes of satisfying certain 
qualification requirements.

10.  Guidance related to church plans.

11.  Regulations on the definition of governmental plan under 
Sec. 414(d). An ANPRM was published on November 8, 2011.

12.  Guidance regarding the aggregation rules under Sec. 414(m).

13.  Final regulations under Sec. 415 regarding Sec. 7873 treaty 
fishing rights income. Proposed regulations were published on November 
15, 2013.

14.  Final regulations under Sec. 417(e) that update the minimum 
present value requirements for defined benefit plans. Proposed 
regulations were published on November 25, 2016.

15.  Notice providing model amendments for Sec. 417(e).

           PUBLISHED September 5, 2017 in IRB 2017-36 as NOT. 2017-44 
        (RELEASED August 18, 2017).

16.  Revenue procedures relating to approval for funding method 
changes.

17.  Final regulations and other guidance under Sec. 430(h)(3) revising 
the mortality tables used for pension funding purposes. Proposed 
regulations were published on December 29, 2016.

           PUBLISHED October 5, 2017 in FR as TD 9826.

18.  Notice on funding relief as a result of Hurricanes Harvey and 
Irma.

           PUBLISHED October 2, 2017 in IRB 2017-40 as NOT. 2017-49 
        (RELEASED September 12, 2017).

19.  Revenue Procedure on multiemployer plan benefit suspensions under 
Sec. 432(e)(9) as amended by the Multiemployer Pension Reform Act of 
2014.

           PUBLISHED July 31, 2017 in IRB 2017-31 as REV. PROC. 2017-
        43 (RELEASED July 12, 2017).

20.  Regulations relating to the reporting requirements under 
Sec. 6057. Proposed regulations were published on June 21, 2012.

21.  Additional guidance on issues relating to lifetime income from 
retirement plans and IRAs.

22.  Revenue procedure modifying EPCRS to provide guidance with regard 
to certain corrections.

23.  Guidance on missing participants.

B. Executive Compensation, Health Care and Other Benefits, and 
Employment Taxes

 1.  Regulations under Sec. 86 regarding rules for lump-sum elections.

 2.  Regulations under Sec. Sec. 119 and 132 regarding employer-
provided meals.

 3.  Updated guidance on the classification system for the line of 
business determination under Sec. 1.132-4 for purposes of qualified 
employee discounts and no-additional-cost services.

 4.  Guidance under Sec. 162(m) addressing certain situations involving 
a short taxable year.

 5.  Final regulations on income inclusion and various other issues 
under Sec. 409A. Proposed regulations were published on December 8, 
2008, and on June 22, 2016.

 6.  Revenue ruling under Sec. 419A on the definition of post-
retirement medical benefits.

 7.  Regulations amending Sec. 1.419A-2T relating to collectively-
bargained welfare benefit funds.

 8.  Final regulations under Sec. 457(f) and related guidance on 
ineligible plans. Proposed regulations were published on June 22, 2016.

 9.  Guidance on the application of Sec. 409A to compensation deferred 
prior to 2009 and includible in income under Sec. 457A no later than 
2017.

10.  Final regulations under Sec. 512 explaining how to compute 
unrelated business taxable income of voluntary employees' beneficiary 
associations described in Sec. 501(c)(9). Proposed regulations were 
published on February 6, 2014.

11.  Guidance on the application of Sec. 1402(a)(13) to limited 
liability companies.

12.  Guidance under Sec. 3402 to remove alternative method of figuring 
withholding based on combined income, employee social security, and 
employee Medicare tax withholding tables.

13.  Guidance on certain transactions involving welfare benefit funds.

14.  Guidance on issues under Sec. 4980H.

15.  Regulations under Sec. 4980I regarding the excise tax on high cost 
employer-
provided coverage.

16.  Guidance on procedures under Sec. 7436.

17.  Guidance under Sec. 9831(d) on qualified small employer health 
reimbursement arrangements (QSEHRAs) as added by section 18001 of the 
21st Century Cures Act.

EXCISE TAX

 1.  Guidance under Sec. 48.4041-7 on dual use of taxable liquid fuel.

 2.  Guidance on the definition of compressed natural gas for purposes 
of Sec. Sec. 4041 and 6426.

 3.  Guidance on claims for dyed fuel relief under Notice 2017-30.

 4.  Regulations under Sec. 4261(e)(3)(C) regarding the application of 
the domestic air transportation excise tax under Sec. 4261 to the 
purchase of mileage awards.

 5.  Guidance on whether gasoline blendstocks combined with taxable 
fuel qualify for the alternative fuel mixture credit under 
Sec. 6426(e).

 6.  Final regulations under ACA Sec. 9010 regarding retrospectively 
rated insurance contracts.

 7.  Guidance on the allocated fee amount under ACA Sec. 9010 for the 
2019 fee year.

 8.  Final regulations for ACA Sec. 9010 on definition of a covered 
entity.

EXEMPT ORGANIZATIONS

 1.  Update revenue procedures on grantor and contributor reliance 
under Sec. Sec. 170 and 509, including update to Revenue Procedure 
2011-33 for EO Select Check.

 2.  Final regulations on Sec. 509(a)(3) supporting organizations. 
Proposed regulations were published on February 19, 2016.

 3.  Guidance under Sec. 512 regarding methods of allocating expenses 
relating to dual use facilities.

 4.  Guidance on Sec. 529(c)(3)(D) on the recontribution within 60 days 
of refunded qualified higher education expenses as added by section 302 
of the Protecting Americans from Tax Hikes Act of 2015.

 5.  Final regulations under Sec. 529A on Qualified ABLE Programs as 
added by section 102 of the ABLE Act of 2014. Proposed regulations were 
published on June 22, 2015.

 6.  Guidance under Sec. 4941 regarding a private foundation's 
investment in a partnership in which disqualified persons are also 
partners.

 7.  Update to Revenue Procedure 92-94 on Sec. Sec. 4942 and 4945.

           PUBLISHED October 2, 2017 in IRB 2017-40 as REV. PROC. 
        2017-53 (RELEASED September 14, 2017).

 8.  Guidance regarding the excise taxes on donor advised funds and 
fund management.

 9.  Final regulations under Sec. 6104(c). Proposed regulations were 
published on March 15, 2011.

10.  Final regulations designating an appropriate high-level Treasury 
official under Sec. 7611. Proposed regulations were published on August 
5, 2009.

FINANCIAL INSTITUTIONS AND PRODUCTS

 1.  Regulations relating to the definition of registered form under 
Sec. Sec. 149(a) and 163(f).

           PUBLISHED September 19, 2017 in FR as REG-125374-16 (NPRM).

 2.  Guidance under Sec. 166 on the conclusive presumption of 
worthlessness for bad debts. Notice 2013-35, which requested comments 
on the existing rules, was published on June 10, 2013.

 3.  Regulations under Sec. 249 relating to the amount of a repurchase 
premium attributable to the cost of borrowing.

 4.  Guidance under Sec. Sec. 446, 1275, and 6050H to address the 
treatment and reporting of capitalized interest on modified home 
mortgages.

 5.  Guidance addressing issues relating to mark-to-market accounting 
under Sec. 475.

 6.  Final regulations under Sec. 851 relating to investments in stock 
and securities. Proposed regulations were published on September 28, 
2016.

 7.  Guidance regarding application of the cure provisions under 
Sec. 851(i) for regulated investment companies (RICs) and 
Sec. 856(c)(7) and (g)(5) for real estate investment trusts (REITs).

 8.  Guidance clarifying the definition of income in Sec. 856(c)(3) for 
purposes of the REIT qualification tests.

 9.  Guidance under Sec. 856(c)(5)(J) to determine whether Subpart F 
income and passive foreign investment company (PFIC) inclusions are 
treated as qualifying income for purposes of Sec. 856(c).

10.  Regulations under Sec. 1001 on the modification of debt 
instruments, including issues relating to disregarded entities.

11.  Guidance on the constant yield election under Sec. 1276(b).

12.  Regulations under Sec. 7872. Proposed regulations were published 
on August 20, 1985.

13.  Guidance on the exchange of mortgage-backed securities.

14.  Guidance on the treatment of fees relating to debt instruments and 
other securities.

GENERAL TAX ISSUES

 1.  Guidance under Sec. Sec. 24, 25A, and 32 pursuant to section 208 
of the Protecting Americans from Tax Hikes Act of 2015.

 2.  Final regulations on the allocation of the research credit to 
corporations and trades or businesses under common control for purposes 
of Sec. 41(f)(1). Final, temporary, and proposed regulations were 
published on April 3, 2015.

 3.  Final regulations under Sec. 42 relating to compliance monitoring, 
including issues identified in Notice 2012-18. Proposed and temporary 
regulations were published on February 25, 2016.

 4.  Final regulations under Sec. 45D that revise and clarify certain 
rules relating to recapture of the new markets tax credit as well as 
other issues. Proposed regulations were published August 11, 2008.

 5.  Marginal well production credit under Sec. 45I for natural gas.

           PUBLISHED October 2, 2017 in IRB 2017-40 as NOT. 2017-51 
        (RELEASED September 12, 2017).

 6.  Guidance under Sec. 47 concerning the rehabilitation credit and 
2017 disaster relief.

 7.  Guidance on the modification, extension, and phase out of the 
investment tax credit (ITC) for solar energy property under Sec. 48.

 8.  Revenue Ruling under Sec. 102 regarding whether contributions of 
money received through a crowdfunding site to pay for medical expenses 
under Sec. 213 are excludable from income because the contributions are 
gifts.

 9.  Final regulations under Sec. 152 regarding dependency deduction.

10.  Guidance facilitating leave-donation programs in areas affected by 
Hurricane and Tropical Storm Harvey.

           PUBLISHED October 25, 2017 in IRB 2017-39 as NOT. 2017-48 
        (RELEASED September 5, 2017).

11.  Guidance facilitating leave-donation programs in areas affected by 
Hurricane and Tropical Storm Irma.

           PUBLISHED on October 2, 2017 in IRB 2017-40 as NOTICE 2017-
        52 (RELEASED September 14, 2017).

12.  Guidance extending relief originally provided in Notice 2011-14, 
2011-11 I.R.B. 544, for the Treasury Department's Housing Finance 
Agency Innovation Fund for the Hardest-Hit Housing Markets (HFA Hardest 
Hit Fund).

           PUBLISHED August 7, 2017 in IRB 2017-32 as NOT. 2017-40 
        (RELEASED July 31, 2017).

13.  Guidance under Sec. 167 regarding a safe harbor for normalization.

           PUBLISHED October 18, 2017 in IRB 2017-38 as REV. PROC. 
        2017-47 (RELEASED September 7, 2017).

14.  Final regulations under Sec. 170 regarding charitable 
contributions. Proposed regulations were published on August 7, 2008.

15.  Final regulations under Sec. 199 regarding allocation of W-2 wages 
in a short taxable year and in an acquisition or disposition. Proposed 
and temporary regulations were published on August 27, 2015.

16.  Regulations under Sec. 199 relating to computer software.

17.  Guidance on qualified films under Sec. 199.

18.  Guidance clarifying whether the business use of an aircraft by a 
lessee that is a five percent owner or related party of the lessor of 
the aircraft is qualified business use for purposes of Sec. 280F.

19.  Final regulations under Sec. 468A involving the decommissioning 
costs of a nuclear power plant.

20.  Final regulations under Sec. 1411 regarding issues related to the 
net investment income tax. Proposed regulations were published on 
December 2, 2013.

21.  Guidance under Sec. 7701 providing criteria for treating an entity 
as an integral part of a state, local, or tribal government.

GIFTS AND ESTATES AND TRUSTS

 1.  Guidance on basis of grantor trust assets at death under 
Sec. 1014.

 2.  Final regulations under Sec. 2032(a) regarding imposition of 
restrictions on estate assets during the six month alternate valuation 
period. Proposed regulations were published on November 18, 2011.

 3.  Guidance under Sec. 2053 regarding personal guarantees and the 
application of present value concepts in determining the deductible 
amount of expenses and claims against the estate.

INSURANCE COMPANIES AND PRODUCTS

 1.  Final regulations under Sec. 72 on the exchange of property for an 
annuity contract. Proposed regulations were published on October 18, 
2006.

 2.  Guidance under Sec. 807 and 816 regarding the determination of 
life insurance reserves for life insurance and annuity contracts using 
principles-based methodologies, including stochastic reserves based on 
conditional tail expectation.

INTERNATIONAL

A. Subpart F/Deferral

 1.  Guidance on the treatment of upfront payments on swaps under 
Sec. 956. Temporary and proposed regulations were published on May 8, 
2015.

 2.  Guidance on the treatment under Sec. 956(c) of certain property 
temporarily stored in the United States following Hurricane Irma or 
Hurricane Maria.

 3.  Guidance under Sec. 1295, 1297, and 1298 on passive foreign 
investment companies. Proposed regulations regarding foreign insurance 
companies were published on April 24, 2015.

B. Inbound Transactions

 1.  Regulations under Sec. 897 and 1445 relating to changes in the 
Protecting Americans from Tax Hikes Act of 2015.

C. Outbound Transactions

 1.  Regulations under Sec. 367. Notice 2016-73 regarding the treatment 
of certain triangular reorganizations involving foreign corporations, 
and the amount of an income inclusion required in certain inbound 
nonrecognition transactions was released December 6, 2016. Notice 2014-
32 regarding triangular reorganizations involving foreign corporations 
was released April 25, 2014.

 2.  Guidance on transfers of property to partnerships with related 
foreign partners and controlled transactions involving partnerships. 
Temporary and proposed regulations were published on January 19, 2017.

D. Foreign Tax Credits

 1.  Guidance under Sec. 901, including on the allocation of foreign 
tax imposed on disregarded entities and partnerships.

 2.  Final regulations under Sec. 901(m) on covered asset acquisitions. 
Temporary and proposed regulations were published on December 7, 2016.

 3.  Guidance under Sec. 905, including final regulations under 
Sec. 905(c) on foreign tax redeterminations. Temporary and proposed 
regulations were published on November 7, 2007. Notice 2016-10 was 
released on January 15, 2016.

E. Transfer Pricing

 1.  Guidance under Sec. 482, including with respect to the treatment 
and allocation of risk. Temporary and proposed regulations were 
published on September 16, 2015.

 2.  Annual Report on the Advance Pricing Agreement Program. 
Announcement 2017-03 was released March 27, 2017.

F. Sourcing and Expense Allocation

 1.  Regulations and other guidance under Sec. 861 regarding the 
allocation and apportionment of interest expense, including guidance 
related to interest expense attributable to certain loans to related 
partnerships.

 2.  Regulations under Sec. 861 on the character of income, including 
income arising in transactions involving intellectual property and the 
provision of digital goods and services.

G. Treaties

 1.  Guidance under Sec. 894 and treaties, including regarding the 
application of various treaty provisions to hybrid entities and 
instruments.

H. Other

 1.  Guidance on the physical presence of certain individuals in the 
Commonwealth of Puerto Rico or the United States Virgin Islands under 
Sec. 937(a) following Hurricane Irma or Hurricane Maria.

 2.  Guidance under Chapter 3 (Sec. Sec. 1441-1446) and Chapter 4 
(Sec. Sec. 1471-1474), including regulations on verification 
requirements for sponsoring entities for Chapter 4 purposes, and 
regulations regarding the withholding obligations on deemed 
distributions from conversion ratio adjustments on convertible debt and 
stock. Final, temporary, and proposed regulations under chapters 3 and 
4 were published on January 6, 2017. Proposed regulations (regarding 
verification requirements for sponsoring entities) were published on 
January 6, 2017. Proposed regulations (regarding conversion ratio 
adjustments) were published on April 13, 2016.

 3.  Regulations under Sec. Sec. 6039F, 6048, and 6677 on foreign trust 
reporting and reporting with respect to foreign gifts, and regulations 
under Sec. Sec. 643(i) and 679 relating to certain transactions between 
U.S. persons and foreign trusts.

 4.  Regulations and other guidance under Sec. 7701.

 5.  Regulations under Sec. 1256(g)(2) regarding the definition of a 
foreign currency contract, in light of the decision in Wright v. 
Commissioner, 809 F.3d 877 (6th Cir. 2016).

PARTNERSHIPS

 1.  Final regulations under Sec. 1.337(d)-3 relating to partnership 
transactions involving a corporate partner's stock or other equity 
interests. Final, temporary, and proposed regulations were published on 
June 12, 2015.

 2.  Final regulations under Sec. 469(h)(2) concerning limited partners 
and material participation. Proposed regulations were published on 
November 28, 2011.

 3.  Final regulations on the fractions rule under Sec. 514(c)(9)(E).

 4.  Regulations to update the securities partnership aggregation rules 
under Sec. 704(c).

 5.  Final regulations under Sec. Sec. 704, 734, 743, and 755 arising 
from the American Jobs Creation Act of 2004, regarding the disallowance 
of certain partnership loss transfers and no reduction of basis in 
stock held by a partnership in a corporate partner. Proposed 
regulations were published on January 16, 2014.

 6.  Guidance under Sec. 707 on disguised sales of partnership 
interests.

 7.  Final regulations under Sec. 732(f) regarding aggregation of basis 
for partnership distributions involving equity interests of a partner. 
Proposed regulations were published on June 12, 2015.

 8.  Final regulations under Sec. 752 regarding related person rules. 
Proposed regulations were published on December 16, 2013.

 9.  Final regulations under Sec. Sec. 761 and 1234 on the tax 
treatment of noncompensatory partnership options. Proposed regulations 
were published on February 5, 2013.

10.  Guidance under Sec. 7704(d)(1)(E) regarding qualifying income 
derived from fertilizer for publicly traded partnerships.

TAX ACCOUNTING

 1.  Guidance under Sec. Sec. 167 and 168 for determining whether 
certain assets used by a wireline telecommunication service provider 
are primarily used for providing one-way or two-way communication 
services.

 2.  Revenue procedure under Sec. 263(a) regarding the capitalization 
of natural gas transmission and distribution property.

 3.  Guidance regarding the treatment of deferred revenue in stock 
acquisitions.

 4.  Regulations under Sec. 453A regarding contingent payment sales.

 5.  Regulations under Sec. 472 regarding dollar-value last-in, first-
out (LIFO) inventories, including rules for combining pools as a result 
of a change in method of accounting, certain corporate acquisitions, 
and certain nonrecognition transactions.

 6.  Final regulations amending Sec. 1.472-8 regarding the inventory 
price index computation (IPIC) method.

TAX ADMINISTRATION

 1.  Guidance under Sec. 6011.

 2.  Guidance under Sec. Sec. 25A, 6050S, and 6724(f) relating to 
changes made by sections 804 and 805 of the Trade Preferences Extension 
Act of 2015 regarding education tax credits and related information 
reporting. Proposed regulations were published on August 2, 2016.

 3.  Update to Sec. Sec. 6051 and 6052 regarding truncated taxpayer 
identification numbers.

           PUBLISHED September 20, 2017 in FR as REG-105004-16 (NPRM).

 4.  Guidance under section 2006 of the Fixing America's Surface 
Transportation Act of 2015 regarding due dates and extensions for 
certain forms.

           PUBLISHED July 20, 2017 in FR as REG-128483-15 (NPRM).

           PUBLISHED July 20, 2017 in FR as TD 9821 (FINAL and TEMP).

 5.  Finalize removal of automatic extension of time to file certain 
information returns. Proposed and temporary regulations were published 
on August 13, 2015.

 6.  Regulations under Sec. Sec. 6662, 6662A, and 6664 regarding 
accuracy-related penalties relating to understatements. Notice 2005-12, 
which provided interim guidance, was published on February 14, 2005.

 7.  Final regulations under Sec. 6707A, as amended by section 2041(a) 
of the Small Business Jobs Act of 2010, regarding the penalty for 
failure to disclose reportable transactions. Proposed regulations were 
published on August 28, 2015.

 8.  Guidance on safe harbors for de minimis errors on information 
returns and payee statements under section 202 of the Protecting 
Americans from Tax Hikes Act of 2015.

 9.  Guidance under Sec. 7123 concerning alternative dispute 
resolution.

10.  Guidance under Sec. 7345.

11.  Update to Revenue Procedure 2007-56 (Combat Zone and Disaster 
Relief).

12.  Update to the whistleblower regulations.

13.  Guidance on user fees.

           PUBLISHED July 19, 2017 in FR as TD 9820.

TAX-EXEMPT BONDS

 1.  Guidance on remedial actions for tax-advantaged bonds under 
Sec. Sec. 54A, 54AA, and 141.

 2.  Guidance on private activity bonds under Sec. 141.

 3.  Regulations on public approval requirements for private activity 
bonds under Sec. 147(f). Proposed regulations were published on 
September 9, 2008.

           PUBLISHED September 28, 2017 in FR as REG-128841-07 (NPRM).

 4.  Guidance on rebate overpayment under Sec. 148.

           PUBLISHED September 11, 2017 in IRB 2017-37 as REV. PROC. 
        2017-50 (RELEASED August 25, 2017).

 5.  Regulations on bond reissuance under Sec. 150.

APPENDIX--Regularly Scheduled Publications

JULY 2017

 1.  Revenue ruling setting forth tables of the adjusted applicable 
federal rates for the current month for purposes of Sec. Sec. 42, 382, 
1274, 1288, and 7520.

           PUBLISHED July 3, 2017 in IRB 2017-27 as REV. RUL. 2017-14 
        (RELEASED June 16, 2017).

 2.  Notice setting forth updates for the corporate bond yield curve 
for plan years beginning in July 2017, the 24-month average segment 
rates, the funding segment rates applicable for July 2017, the spot 
segment rates for June 2017 that are used for determining minimum 
present values, and the 30-year Treasury rates.

           PUBLISHED July 31, 2017 in IRB 2017-31 as NOT. 2017-39 
        (RELEASED July 13, 2017).

 3.  Revenue ruling providing the average annual effective interest 
rates charged by each Farm Credit Bank District.

           PUBLISHED August 28, 2017 in IRB 2017-35 as REV. RUL. 2017-
        16 (RELEASED August 25, 2017).

AUGUST 2017

 1.  Revenue ruling setting forth tables of the adjusted applicable 
federal rates for the current month for purposes of Sec. Sec. 42, 382, 
1274, 1288, and 7520.

           PUBLISHED August 7, 2017 in IRB 2017-32 as REV. RUL. 2017-
        15 (RELEASED July 18, 2017).

 2.  Notice setting forth updates for the corporate bond yield curve 
for plan years beginning in August 2017, the 24-month average segment 
rates, the funding segment rates applicable for August 2017, the spot 
segment rates for July 2017 that are used for determining minimum 
present values, and the 30-year Treasury rates.

           PUBLISHED August 28, 2017 in IRB 2017-35 as NOT. 2017-43 
        (RELEASED August 11, 2017).

 3.  Revenue procedure providing the domestic asset/liability 
percentages and the domestic investment yield percentages for taxable 
years beginning after December 31, 2015, for foreign companies 
conducting insurance business in the United States.

           PUBLISHED August 28, 2017 in IRB 2017-35 as REV. PROC. 
        2017-44 (RELEASED August 11, 2017).

SEPTEMBER 2017

 1.  Revenue ruling setting forth tables of the adjusted applicable 
federal rates for the current month for purposes of Sec. Sec. 42, 382, 
1274, 1288, and 7520.

           PUBLISHED September 5, 2017 in IRB 2017-36 as REV. RUL. 
        2017-17 (RELEASED August 16, 2017).

 2.  Revenue ruling under Sec. 6621 regarding the applicable interest 
rates for overpayments and underpayments of tax for the period October 
through December 2017.

           PUBLISHED September 25, 2017 in IRB 2017-18 as REV. RUL. 
        2017-18 (RELEASED September 8, 2017).

 3.  Notice setting forth updates for the corporate bond yield curve 
for plan years beginning in September 2017, the 24-month average 
segment rates, the funding segment rates applicable for September 2017, 
the spot segment rates for August 2017 that are used for determining 
minimum present values, and the 30-year Treasury rates.

           PUBLISHED October 2, 2017 in IRB 2017-40 as NOT. 2017-50 
        (RELEASED September 13, 2017).

 4.  Notice under Sec. 274 regarding the deemed substantiation of 
travel expenses using per diem rates.

 5.  Update of Notice 2004-83 to add approved applicants for designated 
private delivery service status under Sec. 7502(f). Will be published 
only if any new applicants are approved.

 6.  Notice identifying the counties that experienced exceptional, 
extreme, or severe drought during the preceding 12-month period ending 
August 31, 2017, for purposes of determining whether the replacement 
period within which to replace livestock sold on account of drought is 
extended under Sec. 1033(e)(2)(B) and Notice 2006-82.

 7.  Revenue ruling setting forth the terminal charge and the standard 
industry fare level (SIFL) cents-per-mile rates for the second half of 
2017 for use in valuing personal flights on employer-provided aircraft.

 8.  Notice on annual adjustment in the fee imposed to fund the Patient 
Centered Outcomes Research Trust Fund.

OCTOBER 2017

 1.  Revenue ruling setting forth tables of the adjusted applicable 
federal rates for the current month for purposes of Sec. Sec. 42, 382, 
1274, 1288 and 7520.

           PUBLISHED October 10, 2017 in IRB 2017-41 as REV. RUL. 
        2017-20 (RELEASED September 19, 2017).

 2.  Notice setting forth updates for the corporate bond yield curve 
for plan years beginning in October 2017, the 24-month average segment 
rates, the funding segment rates applicable for October 2017, the spot 
segment rates for September 2017 that are used for determining minimum 
present values, and the 30-year Treasury rates.

 3.  Revenue procedure under Sec. 1 and other sections of the Code 
regarding inflation adjusted items for 2018.

 4.  Revenue procedure providing the loss payment patterns and discount 
factors for the 2017 accident year to be used for computing unpaid 
losses under Sec. 846.

 5.  Revenue procedure providing the salvage discount factors for the 
2017 accident year to be used for computing discounted estimated 
salvage recoverable under Sec. 832.

 6.  Update of Revenue Procedure 2005-27 listing the tax deadlines that 
may be extended by the Commissioner under Sec. 7508A in the event of a 
presidentially declared disaster or terrorist attack. Will be published 
only if there are any updates.

 7.  Guidance providing the amounts of unused housing credit carryover 
allocated to qualified states under Sec. 42(h)(3)(D) for the calendar 
year.

 8.  Guidance providing the calendar year inflation adjustment factor 
to be used in determining the credit for carbon dioxide 
(CO2) sequestration under Sec. 45Q.

NOVEMBER 2017

 1.  Revenue ruling setting forth tables of the adjusted applicable 
federal rates for the current month for purposes of Sec. 42, 382, 1274, 
1288 and 7520.

 2.  Revenue ruling providing the ``base period T-Bill rate'' as 
required by Sec. 995(f)(4).

 3.  Revenue ruling setting forth covered compensation tables under 
Sec. 401(l)(5)(E) that are used for purposes of applying the permitted 
disparity rules under Sec. 401(l) to defined benefit plans for the 2018 
plan year.

 4.  Notice setting forth updates for the corporate bond yield curve 
for plan years beginning in November 2017, the 24-month average segment 
rates, the funding segment rates applicable for November 2017, the spot 
segment rates for October 2017 that are used for determining minimum 
present values, and the 30-year Treasury rates.

 5.  Update of Revenue Procedure 2016 13 regarding adequate disclosure 
for purposes of theSec. 6662 substantial understatement penalty and the 
Sec. 6694 preparer penalty. Will be published only if there are any 
updates.

 6.  Notice setting forth cost-of-living adjustments effective January 
1, 2018, applicable to the dollar limits on benefits under qualified 
defined benefit pension plans and other provisions affecting certain 
plans of deferred compensation.

  7.  Federal Register Notice on Railroad Retirement Tier 2 tax rate.

 8.  Notice under Sec. 274 regarding the 2018 optional standard mileage 
rates.

 9.  Notice setting forth required amendment deadlines for Sec. 401(a) 
plans with respect to certain changes in qualification requirements.

10.  Notice providing guidance for public power providers to submit 
applications relating to reallocations of New Clean Renewable Energy 
Bonds under Sec. 54C.

DECEMBER 2017

 1.  Revenue ruling setting forth tables of the adjusted applicable 
federal rates for the current month for purposes of Sec. Sec. 42, 382, 
1274, 1288, and 7520.

 2.  Revenue ruling under Sec. 6621 regarding the applicable interest 
rates for overpayments and underpayments of tax for the period January 
through March 2018.
 3.  Notice setting forth updates for the corporate bond yield curve 
for plan years beginning in December 2017, the 24-month average segment 
rates, the funding segment rates applicable for December 2017, the spot 
segment rates for November 2017 that are used for determining minimum 
present values, and the 30-year Treasury rates.

JANUARY 2018

 1.  Revenue procedure updating the procedures for issuing private 
letter rulings, determination letters, and information letters on 
specific issues under the jurisdiction of the Chief Counsel.

 2.  Revenue procedure updating the procedures for furnishing technical 
advice, including technical expedited advice, to certain IRS offices, 
in the areas under the jurisdiction of the Chief Counsel.

 3.  Revenue procedure updating the previously published list of ``no-
rule'' issues under the jurisdiction of certain Associate Chief Counsel 
(Corporate), Associate Chief Counsel (Financial Institutions and 
Products), Associate Chief Counsel (Income Tax and Accounting), 
Associate Chief Counsel (Passthroughs and Special Industries), 
Associate Chief Counsel (Procedure and Administration), and Associate 
Chief Counsel (Tax Exempt and Government Entities) on which advance 
letter rulings or determination letters will not be issued.

 4.  Revenue procedure updating the procedures for issuing 
determination letters and letter rulings on issues under the 
jurisdiction of the Office of the Commissioner, Tax Exempt and 
Government Entities Division, Employee Plans Rulings and Agreements 
Office.

 5.  Revenue procedure updating the procedures for issuing 
determination letters under the jurisdiction of the Office of the 
Commissioner, Tax Exempt and Government Entities Division, Exempt 
Organizations Rulings and Agreements Office.

 6.  Revenue procedure updating the previously published list of ``no-
rule'' issues under the jurisdiction of the Associate Chief Counsel 
(International) on which advance letter ruling or determination letters 
will not be issued.

 7.  Revenue ruling setting forth tables of the adjusted applicable 
federal rates for the current month for purposes of Sec. Sec. 42, 382, 
1274, 1288, and 7520.

 8.  Revenue ruling providing the dollar amounts, increased by the 2018 
inflation adjustment, for Sec. 1274A.

 9.  Revenue procedure under Sec. 280F providing limitations on 
depreciation deductions for owners of passenger automobiles first 
placed in service during the calendar year and amounts to be included 
in income by lessees of passenger automobiles first leased during the 
calendar year.

10.  Notice setting forth updates for the corporate bond yield curve 
for plan years beginning in January 2018, the 24-month average segment 
rates, the funding segment rates applicable for January 2018, the spot 
segment rates for December 2017 that are used for determining minimum 
present values, and the 30-year Treasury rates.

11.  Revenue procedure under Sec. 143 regarding average area purchase 
price.

12.  Notice providing the maximum allowable value for use of the fleet-
average value and vehicle-cents-per-mile rules to value employer-
provided automobiles first made available to employees for personal use 
in the calendar year.

13.  Revenue ruling setting forth the prevailing state assumed interest 
rates provided for the determination of reserves under Sec. 807 for 
contracts issued in 2017 and 2018.

FEBRUARY 2018

 1.  Revenue ruling setting forth tables of the adjusted applicable 
federal rates for the current month for purposes of Sec. 42, 382, 1274, 
1288, and 7520.

 2.  Notice setting forth updates for the corporate bond yield curve 
for plan years beginning in February 2018, the 24-month average segment 
rates, the funding segment rates applicable for February 2018, the spot 
segment rates for January 2018 that are used for determining minimum 
present values, and the 30-year Treasury rates.

 3.  Notice under Sec. 911 on the Housing Cost Amount for 2018.

 4.  Notice providing the inflation adjustment factor for renewable 
electricity (revised).

MARCH 2018

 1.  Revenue procedure providing annual indexing required under 36B.

 2.  Revenue ruling setting forth tables of the adjusted applicable 
federal rates for the current month for purposes of Sec. Sec. 42, 382, 
1274, 1288, and 7520.

 3.  Guidance providing the 2018 calendar year resident population 
estimates used in determining the state housing credit ceiling under 
Sec. 42(h) and the private activity bond volume cap under Sec. 146.

 4.  Revenue ruling under Sec. 6621 regarding the applicable interest 
rates for overpayments and underpayments of tax for the period April 
through June 2018.

 5.  Revenue ruling setting forth the terminal charge and the standard 
industry fare level (SIFL) cents-per-mile rates for the first half of 
2018 for use in valuing personal flights on employer-provided aircraft.

 6.  Notice setting forth updates for the corporate bond yield curve 
for plan years beginning in March 2018, the 24-month average segment 
rates, the funding segment rates applicable for March 2018, the spot 
segment rates for February 2018 that are used for determining minimum 
present values, and the 30-year Treasury rates.

 7.  Revenue procedure providing the annual update to the List of 
Automatic Changes for taxpayer changes in method of accounting.

APRIL 2018

 1.  Revenue ruling setting forth tables of the adjusted applicable 
federal rates for the current month for purposes of Sec. Sec. 42, 382, 
1274, 1288, and 7520.

 2.  Revenue procedure providing a current list of countries and the 
dates those countries are subject to the Sec. 911(d)(4) waiver and 
guidance to individuals who fail to meet the eligibility requirements 
of Sec. 911(d)(1) because of adverse conditions in a foreign country.

 3.  Notice setting forth updates for the corporate bond yield curve 
for plan years beginning in April 2018, the 24-month average segment 
rates, the funding segment rates applicable for April 2018, the spot 
segment rates for March 2018 that are used for determining minimum 
present values, and the 30-year Treasury rates.

 4.  Guidance providing the calendar year inflation adjustment factor 
and reference prices for the renewable electricity production credit 
under Sec. 45.

MAY 2018

 1.  Revenue ruling setting forth tables of the adjusted applicable 
federal rates for the current month for purposes of Sec. Sec. 42, 382, 
1274, 1288, and 7520.

 2.  Notice setting forth updates for the corporate bond yield curve 
for plan years beginning in May 2018, the 24-month average segment 
rates, the funding segment rates applicable for May 2018, the spot 
segment rates for April 2018 that are used for determining minimum 
present values, and the 30-year Treasury rates.

 3.  Revenue procedure providing guidance for use of the national and 
area median gross income figures by issuers of qualified mortgage bonds 
and mortgage credit certificates in determining the housing cost/income 
ratio under Sec. 143.

 4.  Revenue procedure under Sec. 223 regarding the inflation adjusted 
items for 2019.

 5.  Revenue procedure under Sec. 5000A concerning the 2018 national 
average premium for a bronze level of coverage.

 6.  Guidance providing the inflation adjustment factor to be used in 
determining the enhanced oil recovery credit under Sec. 43 for tax 
years beginning in the calendar year.

 7.  Notice regarding marginal production rates under Sec. 613A for oil 
and gas well depletion.

JUNE 2018

 1.  Revenue ruling setting forth tables of the adjusted applicable 
federal rates for the current month for purposes of Sec. Sec. 42, 382, 
1274, 1288, and 7520.

 2.  Revenue ruling under Sec. 6621 regarding the applicable interest 
rates for overpayments and underpayments of tax for the period July 
through September 2018.

 3.  Notice setting forth updates for the corporate bond yield curve 
for plan years beginning in June 2018, the 24-month average segment 
rates, the funding segment rates applicable for June 2018, the spot 
segment rates for May 2018 that are used for determining minimum 
present values, and the 30-year Treasury rates.

 4.  Notice setting forth the 2015 Sec. 45K(d)(2)(C) reference price 
for the nonconventional source production credit.

 5.  Notice setting the inflation adjustment factor for the credit for 
carbon dioxide (CO2) sequestration under Sec. 45Q for 
calendar year 2017.

                                 ______
                                 

                  THE HONORABLE CURTIS M. LOFTIS, JR.

                            State Treasurer

                         Post Office Box 11778

                           Columbia, SC 29211

                         Wade Hampton Building

                           1200 Senate Street

                           Columbia, SC 29201

                   (803) 734-2101 Fax (803) 734-2690

                          www.treasurer.sc.gov

                             July 12, 2018

Senator Tim Scott
717 Hart Senate Office Building
Washington, DC 20510

Dear Senator Scott:

    I am writing to ask you to join a letter directed to Secretary 
Mnuchin requesting answers to questions regarding matured and 
unredeemed United States Savings Bonds. In the May 22, 2018, 
Subcommittee on Financial Services and General Government Hearing, 
Secretary Mnuchin gave his personal assurance to Senator Moran that he 
would follow up with answers to Senator Moran's questions regarding 
U.S. Treasury's refusal to honor certain states' escheat judgments and 
redemption requests for the proceeds of matured and unredeemed U.S. 
Savings Bonds.

    U.S. Treasury passed a regulation on Christmas Eve in 2015, which 
effectively prohibits my ability to fulfill my responsibilities under 
South Carolina law to make every effort to reunite our citizens with 
their lost or unclaimed properly. This regulation obstructs slates' 
efforts to redeem matured and unredeemed savings bonds that have been 
lost, stolen, abandoned, or destroyed and return the proceeds to their 
citizens.

    In the past, little or no effort has been made by Treasury to 
locate the owners of matured and unredeemed debt (commonly called 
``MUD'' by Treasury). Savings bonds that are fully mature yet remain 
unredeemed by the savings bond owner are classified as MUD. These 
savings bonds, by Treasury's own admission, are unpaid loans that are 
owed to the citizens by the federal government. Every effort has been 
made to convince Treasury to return these U.S. savings bonds to the 
states so that the states could carry out their statutory duties as 
unclaimed prope1ty administrators. The states have made numerous 
redemption attempts and Freedom of information Act requests to Treasury 
in order to accomplish reuniting savings bond owners with their 
proceeds. Unfortunately, Treasury has refused to redeem escheated 
savings bonds unless a state has physical possession of the bond and 
has also denied states' repeated Freedom of Information Act requests 
seeking to identify and locate the owners of the lost or unclaimed 
bonds. As a result, a number of state treasurers, including myself, 
have brought lawsuits against Treasury in the Court of Federal Claims 
to address this issue. If the escheated savings bonds are redeemed and 
the money sent to the states, the states will use their highly 
celebrated unclaimed property programs to reunite savings bond owners 
with the proceeds of their savings bonds. The states are uniquely 
prepared and have the resources to address this issue. This effort by 
the states will allow citizens to be reunited with their investments 
and will allow U.S. Treasury to fulfill its contractual responsibility 
to repay these savings bonds.

    To give you an example, our state obtained a court order with an 
effective date of December 18, 2015, escheating the title to 
approximately $249 million of these matured and unredeemed bonds. When 
I presented this order to the U.S. Treasury along with a request for 
Treasury to redeem the proceeds of these bonds that South Carolinians 
purchased many years ago, Treasury denied my request.

    I hope this letter raises your awareness of Treasury's endeavors to 
impede the states' efforts. I ask that you urge Treasury to reconsider 
this regulation and their policies, and to develop a reasonable 
solution to this issue. Finally, I ask that you join the attached 
letter and request that Treasury provide the information that has been 
sought by you and your colleagues for many years.

            Sincerely,

            Curtis Loftis
            Treasurer for the State of South Carolina

                                 ______
                                 

                              U.S. SENATORS
                States Currently Involved in Federal Case
------------------------------------------------------------------------
               State                                 Name
------------------------------------------------------------------------
Kansas                               Pat Roberts
------------------------------------------------------------------------
                                     Jerry Moran
------------------------------------------------------------------------
South Dakota                         John Thune
------------------------------------------------------------------------
                                     Mike Rounds
------------------------------------------------------------------------
Louisiana                            Bill Cassidy
------------------------------------------------------------------------
                                     John Kennedy
------------------------------------------------------------------------
Kentucky                             Mitch McConnell
------------------------------------------------------------------------
                                     Rand Paul
------------------------------------------------------------------------
Mississippi                          Roger F. Wicker
------------------------------------------------------------------------
                                     Cindy Hyde-Smith
------------------------------------------------------------------------
South Carolina                       Lindsey Graham
------------------------------------------------------------------------
                                     Tim Scott
------------------------------------------------------------------------
Indiana                              Joe Donnelly
------------------------------------------------------------------------
                                     Todd Young
------------------------------------------------------------------------
Ohio                                 Sherrod Brown
------------------------------------------------------------------------
                                     Rob Portman
------------------------------------------------------------------------
Florida                              Bill Nelson
------------------------------------------------------------------------
                                     Marco Rubio
------------------------------------------------------------------------
Arkansas                             John Boozman
------------------------------------------------------------------------
(represented by separate counsel)    Tom Cotton
------------------------------------------------------------------------


                 Additional States With Escheatment Laws
------------------------------------------------------------------------
               State                                 Name
------------------------------------------------------------------------
Pennsylvania                         Robert P. Casey, Jr.
------------------------------------------------------------------------
                                     Patrick J. Toomey
------------------------------------------------------------------------
Missouri                             Claire McCaskill
------------------------------------------------------------------------
                                     Roy Blunt
------------------------------------------------------------------------
Iowa                                 Chuck Grassley
------------------------------------------------------------------------
                                     Joni Ernst
------------------------------------------------------------------------
North Carolina                       Richard Burr
------------------------------------------------------------------------
                                     Thom Tillis
------------------------------------------------------------------------
Georgia                              Johnny Isakson
------------------------------------------------------------------------
                                     David Perdue
------------------------------------------------------------------------
New Hampshire                        Jeanne Shaheen
------------------------------------------------------------------------
                                     Margaret Wood Hassan
------------------------------------------------------------------------
Maine                                Susan M. Collins
------------------------------------------------------------------------
                                     Angus S. King, Jr.
------------------------------------------------------------------------
Illinois                             Richard J. Durbin
------------------------------------------------------------------------
                                     Tammy Duckworth
------------------------------------------------------------------------
Wisconsin                            Ron Johnson
------------------------------------------------------------------------
                                     Tammy Baldwin
------------------------------------------------------------------------
Rhode Island                         Jack Reed
------------------------------------------------------------------------
                                     Sheldon Whitehouse
------------------------------------------------------------------------


                                 ______
                                 
                 Prepared Statement of Hon. Ron Wyden, 
                       a U.S. Senator From Oregon
    The Finance Committee meets this morning to consider the 
nominations of Justin Muzinich to be Deputy Secretary of the Treasury 
and Michael Desmond to be Chief Counsel at IRS. I'll begin my remarks 
with this.

    This committee is facing levels of stonewalling from the 
administration on letters and policy issues that I never expected I'd 
see. We'd get similar answers from the Treasury if we posed our 
questions to the statue of Alexander Hamilton outside Department 
headquarters. And it goes back to Secretary Mnuchin's very first 
appearance before this committee. I asked that he work with me to crack 
down on the abuse of shell companies, a magnet for all manner of 
shadowy, illicit conduct. He told me the Treasury would get right on 
it. But a year and a half have passed, and it's business as usual at 
the Treasury on shell companies. And let's be clear, this wasn't some 
wacky proposition out of left field. I wrote a bill on this issue with 
Senator Rubio, a Republican.

    Today we'll ask Mr. Muzinich what he will do to end this Treasury 
stonewalling if he's confirmed. He told me in our meeting earlier this 
week that he'd simply be a ``building manager'' as Deputy Secretary. 
But based on the glowing quotes in the newspapers from Treasury 
officials praising his financial expertise and previewing his expansive 
role on tax policy, debt management, and more, it's clear people in the 
building have a different perspective. Their accounts suggest that 
calling Mr. Muzinich the ``building manager'' is a little like saying 
an NBA all-star will be a nice role-player off the bench. It's clear 
he's the Secretary's right-hand man, and that's why we expect answers 
on how he's going to fix these long-running problems.

    Bottom line on the stonewalling issue: committee members and I 
aren't firing off nasty-grams demanding the resignation of everybody 
who's ever come within 25 feet of Paul Manafort. We're not asking for 
anybody's high school diaries. This committee is attempting to pursue 
information that's key to uncovering corruption and protecting our 
democracy from foreign interference.

    That includes working to determine the extent of the relationship 
between Alexander Torshin, a Russian national with close ties to Putin, 
and the NRA. It includes a request for information that would help 
determine the extent of Michael Cohen's influence-peddling. And because 
the President refuses to release his tax returns, it includes a request 
for information that would help shed light on questionable Trump real 
estate deals with Russian individuals. The list goes on from there.

    At some point, this ceases to be a case of Treasury being slow to 
respond, and it looks more like actively abetting the coverup of 
corruption and illegal activity.

    This committee also needs to know whether Mr. Muzinich agrees with 
the recent decision to open the floodgates to more dark money in our 
politics. This was a tax-policy change, and Mr. Muzinich says he's a 
tax-policy guy. You can try to downplay the significance of this 
decision, and you can try to spin it as a harmless policy update. But 
here's my view: if your dark money policy gives oligarchs in Moscow 
reason to throw back celebratory vodkas, and if their friends at the 
NRA have a green light to flood the airwaves with even more election 
secrecy, you made the wrong call. Last Monday night, the Trump 
administration wrested even more control of our democracy from the 
hands of American citizens.

    Furthermore, if the Trump White House is ordering hasty changes to 
tax administration policies without public debate in ways that threaten 
the legitimacy of our elections, are those changes going to stand? 
After all, Mr. Desmond, as IRS Chief Counsel, will be responsible for 
carrying out this decision, and any proposed changes to IRS rules will 
have to go through him. Mr. Desmond must demonstrate to this committee 
that he will remain independent and unswayed by political pressure from 
the Trump White House on this and other issues.

    In closing, there's one final tax policy issue to discuss. A year 
ago, the Treasury Department and Republicans in Congress made it clear 
they didn't want to work on tax reform in a bipartisan way. Now 
Americans are learning there's a new effort to update the partisan tax 
playbook with another plan that will benefit the wealthy. The House is 
already working on it, apparently uninterested in learning from the 
mistakes they made the first time around.

    The Trump tax law has been in place for months, and the quarterly 
numbers from the Bureau of Labor Statistics show real wages fell over 
the first half of this year. Now it's looking like Trump tax cut 2.0 is 
going to be yet another massive windfall for high flyers. Even more 
goodies for the most fortunate while typical families are having a 
harder time making ends meet.

    It's another plan that does nothing to resolve the fact that our 
tax code is split in two. There's one strict, punishing set of rules 
for factory workers and cops on the beat, and another loose set of 
rules that allows high flyers to pay what they want, when they want.

    Going down the partisan road yet again makes it harder for this 
committee and the Congress to return to a point where bipartisanship on 
taxes is possible. So I'll have questions for Mr. Muzinich on that 
issue today as well.

                                 ______
                                 

                              NEWS RELEASE

                       Bureau of Labor Statistics

                        u.s. department of labor
Transmission of material in this release is embargoed      USDL-18-1279
until 8:30 a.m. (EDT), Friday, August 10, 2018

Technical Information: (202) 691-6555  [email protected]  www.bls.gov/
ces
Media Contact: (202) 691-5902  [email protected]

                        REAL EARNINGS--JULY 2018

All employees

Real average hourly earnings for all employees were unchanged from June 
to July, seasonally adjusted, the U.S. Bureau of Labor Statistics 
reported today. This result stems from a 0.3-percent increase in 
average hourly earnings combined with a 0.2-percent increase in the 
Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings decreased 0.2 percent over the month due 
to no change in real average hourly earnings combined with a 0.3-
percent decrease in the average workweek.

Chart 1: Over-the-month percentage change in real average hourly 
earnings for all employees, seasonally adjusted, July 2017-July 2018

    Percent Change
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    
Real average hourly earnings decreased 0.2 percent, seasonally 
adjusted, from July 2017 to July 2018. Combining the change in real 
average hourly earnings with the 0.3-percent increase in the average 
workweek resulted in a 0.1-percent increase in real average weekly 
earnings over this period.

Production and nonsupervisory employees

Real average hourly earnings for production and nonsupervisory 
employees decreased 0.1 percent from June to July, seasonally adjusted. 
This result stems from a 0.1-percent increase in average hourly 
earnings combined with a 0.1-percent increase in the Consumer Price 
Index for Urban Wage Earners and Clerical Workers (CPI-W).

After combining the change in real average hourly earnings with no 
change in average weekly hours, real average weekly earnings were 
unchanged over the month.
Chart 2: Over-the-month percentage change in real average hourly 
earnings for production and nonsupervisory employees, seasonally 
adjusted, July 2017-July 2018

    Percent Change
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
    
From July 2017 to July 2018, real average hourly earnings decreased 0.4 
percent, seasonally adjusted. Combining the change in real average 
hourly earnings with a 0.3-percent increase in the average workweek 
resulted in a 0.1-percent decrease in real average weekly earnings over 
this period.

``Real Earnings for August 2018'' is scheduled to be released on 
Thursday, September 13, 2018 at 8:30 a.m. (EDT).

  Table A-1. Current and real (constant 1982-1984 dollars) earnings for
     all employees on private nonfarm payrolls, seasonally adjusted
------------------------------------------------------------------------
                                                    June 2018  July 2018
                              July 2017   May 2018      p          p
------------------------------------------------------------------------
Real average hourly earnings    $10.78     $10.75     $10.76     $10.76
 \1\........................
Real average weekly earnings   $370.99    $370.98    $372.13    $371.38
 \1\........................
Consumer Price Index for All   244.236    250.535    250.857    251.286
 Urban Consumers............
Average hourly earnings.....    $26.34     $26.94     $26.98     $27.05
Average weekly hours........      34.4       34.5       34.6       34.5
Average weekly earnings.....   $906.10    $929.43    $933.51    $933.23
 
OVER-THE-MONTH PERCENT
 CHANGE
Real average hourly earnings       0.2        0.1        0.1        0.0
 \1\........................
Real average weekly earnings       0.2        0.1        0.3       -0.2
 \1\........................
Consumer Price Index for All       0.1        0.2        0.1        0.2
 Urban Consumers............
Average hourly earnings.....       0.3        0.3        0.1        0.3
Average weekly hours........       0.0        0.0        0.3       -0.3
Average weekly earnings.....       0.3        0.3        0.4        0.0
 
OVER-THE-YEAR PERCENT CHANGE
Real average hourly earnings       0.7        0.0        0.0       -0.2
 \1\........................
Real average weekly earnings       0.7        0.4        0.5        0.1
 \1\........................
Consumer Price Index for All       1.7        2.7        2.8        2.9
 Urban Consumers............
Average hourly earnings.....       2.5        2.8        2.7        2.7
Average weekly hours........       0.0        0.3        0.6        0.3
Average weekly earnings.....       2.5        3.1        3.3        3.0
------------------------------------------------------------------------
\1\ The Consumer Price Index for All Urban Consumers (CPI-U) is used to
  deflate the earnings series for all employees.
p Preliminary.


  Table A-2. Current and real (constant 1982-1984 dollars) earnings for
  production and nonsupervisory employees on private nonfarm payrolls,
                         seasonally adjusted \1\
------------------------------------------------------------------------
                                                    June 2018  July 2018
                              July 2017   May 2018      p          p
------------------------------------------------------------------------
Real average hourly earnings     $9.27      $9.23      $9.24      $9.23
 \2\........................
Real average weekly earnings   $312.44    $312.04    $312.15    $312.11
 \2\........................
Consumer Price Index for       237.939    244.587    244.931    245.287
 Urban Wage Earners and
 Clerical Workers...........
Average hourly earnings.....    $22.06     $22.58     $22.62     $22.65
Average weekly hours........      33.7       33.8       33.8       33.8
Average weekly earnings.....   $743.42    $763.20    $764.56    $765.57
 
OVER-THE-MONTH PERCENT
 CHANGE
Real average hourly earnings       0.1        0.0        0.1       -0.1
 \2\........................
Real average weekly earnings       0.1        0.0        0.0        0.0
 \2\........................
Consumer Price Index for           0.1        0.2        0.1        0.1
 Urban Wage Earners and
 Clerical Workers...........
Average hourly earnings.....       0.2        0.3        0.2        0.1
Average weekly hours........       0.0        0.0        0.0        0.0
Average weekly earnings.....       0.2        0.3        0.2        0.1
 
OVER-THE-YEAR PERCENT CHANGE
Real average hourly earnings       0.5       -0.2       -0.2       -0.4
 \2\........................
Real average weekly earnings       0.9        0.4        0.0       -0.1
 \2\........................
Consumer Price Index for           1.7        2.9        3.0        3.1
 Urban Wage Earners and
 Clerical Workers...........
Average hourly earnings.....       2.2        2.7        2.7        2.7
Average weekly hours........       0.3        0.6        0.3        0.3
Average weekly earnings.....       2.5        3.3        3.0        3.0
------------------------------------------------------------------------
\1\ Data relate to production employees in mining and logging and
  manufacturing, construction employees in construction, and
  nonsupervisory employees in the service-providing industries. These
  groups account for approximately four-fifths of the total employment
  on private nonfarm payrolls.
\2\ The Consumer Price Index for Urban Wage Earners and Clerical Workers
  (CPI-W) is used to deflate the earnings series for production and
  nonsupervisory employees.
p Preliminary.

Technical Note

The earnings series presented in this release are derived from the 
Bureau of Labor Statistics' Current Employment Statistics (CES) survey, 
a monthly establishment survey of employment, payroll, and hours. The 
deflators used for constant dollar earnings series presented in this 
release come from the Consumer Price Indexes Program. The Consumer 
Price Index for All Urban Consumers (CPI-U) is used to deflate earnings 
for the all employees series, while the Consumer Price Index for Urban 
Wage Earners and Clerical Workers (CPI-W) is used to deflate earnings 
for the production and nonsupervisory employees series. Seasonally 
adjusted data are used for estimates of percent change from the same 
month a year ago for current and constant average hourly and weekly 
earnings. Special techniques are applied to the CES hours and earnings 
data in the seasonal adjustment process to mitigate the effect of 
certain calendar-related fluctuations. Thus, over-the-year changes of 
these hours and earnings are best measured using seasonally adjusted 
series. A discussion of the calendar-related fluctuations in the hours 
and earnings data and the special techniques to remove them is 
available in the February 2004 issue of Employment and Earnings or at 
www.bls.gov/ces/cesfltxt.htm.

Earnings series from the monthly establishment survey are estimated 
arithmetic averages (means) of the hourly and weekly earnings of all 
jobs in the private nonfarm sector of the economy, as well as of all 
production and nonsupervisory jobs in the private nonfarm sector of the 
economy. Average hourly earnings estimates are derived by dividing the 
estimated industry payroll by the corresponding paid hours. Average 
weekly hours estimates are similarly derived by dividing estimated 
aggregate hours by the corresponding number of jobs. Average weekly 
earnings estimates are derived by multiplying the average hourly 
earnings and the average weekly hours estimates. This is equivalent to 
dividing the estimated payroll by the corresponding number of jobs. The 
weekly and hourly earnings estimates for aggregate industries, such as 
the total private sector averages printed in this release, are derived 
by summing the corresponding payroll, hours, and employment estimates 
of the component industries. As a result, each industry receives a 
``weight'' in the published averages that corresponds to its current 
level of activity (employment or total hours). This further implies 
that fluctuations and varying trends in employment in high-wage versus 
low-wage industries as well as wage rate changes influence the earnings 
averages.

There are several characteristics of the series presented in this 
release that limit their suitability for some types of economic 
analyses. (1) The denominator for the all employee weekly earnings 
series is the number of private nonfarm jobs. Similarly, the 
denominator of the production and nonsupervisory employee weekly 
earnings series is the number of private nonfarm production and 
nonsupervisory employee jobs. This number includes full-time and part-
time jobs as well as the jobs held by multiple jobholders in the 
private nonfarm sector. These factors tend to result in weekly earnings 
averages significantly lower than the corresponding numbers for full-
time jobs. (2) Annual earnings averages can differ significantly from 
the result obtained by multiplying average weekly earnings times 52 
weeks. The difference may be due to factors such as turnovers and 
layoffs. (3) The series are the average earnings of all employees or 
all production and nonsupervisory jobs, not the earnings average of 
``typical'' jobs or jobs held by ``typical'' workers. Specifically, 
there are no adjustments foroccupational, age, or schooling variations 
or for household type or location. Many studies have established the 
significance of these factors and that their impact varies over time.

Seasonally adjusted data are preferred by some users for analyzing 
general earnings trends in the economy since they eliminate the effect 
of changes that normally occur at the same time and in about the same 
magnitude each year and, therefore, reveal the underlying trends and 
cyclical movements. Changes in average earnings may be due to seasonal 
changes in the proportion of workers in high-wage and low-wage 
industries or occupations or to seasonal changes in the amount of 
overtime work, and so on.

For more information, see Thomas Gavett, ``Measures of Change in Real 
Wages and Earnings,'' Monthly Labor Review, February 1972. Information 
in this release will be made available to sensory impaired individuals 
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