TTC/EY Tax Reform Business Barometer marks shift in expectations

News provided by

Feb 09, 2015, 03:28 ET

WASHINGTON, Feb. 9, 2015 /PRNewswire/ -- In the first TTC/EY Tax Reform Business Barometer survey of 2015, leading tax professionals foresee a 52% chance that the US will see tax reform by the end of 2017. The Barometer periodically assesses business tax professionals' views on the prospects for and key aspects of federal tax reform.

Respondents offer a 59% likelihood that the reform will focus on business or corporate tax only (including income individual income from pass-through entities) – a reversal from the previous 50-70% likelihood of comprehensive tax reform in during 2013 and 2014. Most respondents (61%) expect tax reform will be revenue-neutral, which is generally consistent with the most recent Barometer from October 2014, but represents a significant shift from most prior Barometers whereby 50% to 60% of respondents expected tax reform to raise revenue.

Business tax professionals' average expectations for timing of tax reform enactment
Expected year of tax reform enactment	2014	2015	2016	2017	2018	No reform in 5 years
January 2015	NA	9%	10%	33%	21%	17%
October 2014	1%	14%	14%	27%	19%	26%
March 2014	1%	17%	14%	28%	16%	24%
February 2014	5%	18%	15%	24%	15%	23%
December 2013	9%	24%	15%	21%	11%	20%
November 2013	20%	23%	13%	18%	11%	15%

Anticipation of US reform sits well below the 60% likelihood of global income taxation changes led by the OECD Base Erosion and Profit Sharing project, which in turn is expected to influence US tax policy. For example, 57% think the US will adopt new rules in transfer pricing while 44% think Subpart F (controlled foreign corporation rules) will be influenced.

"These two tax reform efforts may influence each other, but are not likely to move in lock-step, so businesses need to keep their watchful eye on both movements," says Lynda Walker, Executive Director of The Tax Council.

Expectations for progress in 2015

Respondents say there's a 50-50 chance that the House Ways and Means and Senate Finance Committee Chairs will release a specific tax reform plan this year, but only 10% likelihood that either body will pass legislation this year.

"Even without enactment this year or next, various foundational steps can be expected to continue. As this process accelerates, input by the business community will become increasingly important," says Robert Carroll, National Director of the Quantitative Economics and Statistics (QUEST) practice of Ernst & Young LLP and a member of the EY Center for Tax Policy.

Perhaps with that in mind, 63% are already modeling the potential effect of federal tax reform on their organizations' tax liability.

"Steps where companies should be vigilant include hearings, debates, chairmen's drafts, committee legislation and additional tax plans and proposals," Carroll says. "It's useful to the debate that the Obama Administration has included additional details in some areas as part of its FY 2016 Budget, as 43% of those surveyed think it would help move the tax reform process forward."

About the TTC/EY Tax Reform Business Barometer

The Barometer measures the expected likelihood of the different stages and key elements of federal tax reform. It tracks trends in the views of business tax professionals as the US Congress debates and develops tax reform. Additionally, the January 2015 Barometer included questions addressing the Administration's upcoming budget release, the OECD BEPS project and expiring business tax provisions. This is the eighth Barometer; it tracks the views reported between January 14 and January 20, 2015, by 111 leading US tax executives and practitioners.

About The Tax Council

The Tax Council is a Washington, DC-based non-profit, membership organization promoting sound tax and fiscal policies since 1966. Its membership is comprised of (but not limited to) Fortune 500 companies, leading accounting and law firms, and major trade associations.

About EY

EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

This news release has been issued by Ernst & Young LLP, a member firm of EY serving clients in the US.

Logo - http://photos.prnewswire.com/prnh/20130701/NY40565LOGO-b

SOURCE EY