WAYS AND MEANS ACTIVITY ON FIRPTA NOTICE

Rep. Kenny Marchant:

“Mr. Secretary, from unemployment to labor force participation to real wages, working Americans are doing better today than they were three years ago. Thank you for your leadership. There is an area where we can still improve. It relates to the way we tax foreign investors. I know you agree, we want to attract capital and investment from abroad to improve our productivity and create jobs here at home. Regrettably, the Foreign Investment in Real Property Tax Act continues to impose a discriminatory tax on foreign investment in U.S. real estate and infrastructure. No other asset class is subject to the FIRPTA burden. It was created decades ago and has outlived its usefulness. Its main function today is to divert global capital to other countries, reducing jobs and growth in construction and related industries. Two weeks ago, three-quarters of the Republican Members on this Committee sent you a letter asking you to use your administrative authority to withdraw an old and discredited IRS Notice that extended FIRPTA to previously untaxed transactions involving domestically controlled REITs. The 2007 Notice promised that formal regulations would follow to implement the IRS position. That was 12 years ago and the regulations never came. That’s not the way the system should work. You received a similar letter from 11 Senate Finance Committee Members in December and a bipartisan letter from 32 Members of this Committee in 2017 asking for withdraw of the FIRPTA Notice. I understand you have had your hands full with implementing TCJA. But this is an area where relief will generate real benefits for American workers. Mr. Secretary, can you unleash greater capital and investment in United States real estate and infrastructure by withdrawing IRS Notice 2007-55?“

 

 

Secretary Mnuchin’s response:

“Let me just say it was the result of receiving that letter that I was briefed on this issue this week.  I share your concerns.  I think it makes no sense that we discriminate against foreign investors.  I think that is something that we are going to look at what capability we have on these regulations.  Many people just try to structure around the FIRPTA issue.  But in my mind, anything we can do legally to encourage those investments we will do.  So thank you for the letter.  We are reviewing it.  It is at the top of my list.”