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Senate Gives Advice and Consent to Ratification of Four Bilateral Tax Treaties

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In July of 2019, the U.S. Senate gave advice and consent to protocols updating tax treaties with Spain, Switzerland, Japan, and Luxembourg, after a nearly decade-long period during which no tax treaties were approved by the Senate. This drought was primarily due to the privacy concerns of a single senator, Rand Paul of Kentucky, who deployed the Senate's procedural rules to increase the difficulty of the advice and consent process. Tax treaties with Hungary, Chile, and Poland, as well as a protocol to a multilateral tax convention, remained pending in the Senate Foreign Relations Committee as of mid-August of 2019.

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1 E.g., U.S. Senate Resolution of Advice and Consent to Ratification of the Tax Convention with Malta, 111th Cong., 156 Cong. Rec. S5976 (daily ed. July 15, 2010) (signed Aug. 8, 2008; advice and consent on July 15, 2010); U.S. Senate Resolution of Advice and Consent to Protocol Amending Tax Convention with New Zealand, 111th Cong., 156 Cong. Rec. S5976 (daily ed. July 15, 2010) (signed Dec. 1, 2008; advice and consent on July 15, 2010); U.S. Senate Resolution of Advice and Consent to Ratification of the Protocol Amending Tax Convention with France, 111th Cong., 155 Cong. Rec. S12350-S12351 (daily ed. Dec. 3, 2009) (signed Jan. 13, 2009; advice and consent on Dec. 3, 2009); U.S. Senate Resolution of Advice and Consent to Ratification of the Protocol Amending 1980 Tax Convention with Canada, 110th Cong., 154 Cong. Rec. S9332 (daily ed. Sept. 23, 2008) (signed Sept. 21, 2007; advice and consent on Sept. 23, 2008); U.S. Senate Resolution of Advice and Consent to Ratification of the Tax Convention and Protocol with Bulgaria with Proposed Protocol of Amendment, 110th Cong., 154 Cong. Rec. S9332 (daily ed. Sept. 23, 2008) (signed Feb. 26, 2008; advice and consent on Sept. 23, 2008); U.S. Senate Resolution of Advice and Consent to Ratification of the Tax Convention with Iceland, 110th Cong., 154 Cong. Rec. S9332 (daily ed. Sept. 23, 2008) (signed Oct. 23, 2007; advice and consent on Sept. 23, 2008); U.S. Senate Resolution of Advice and Consent to Ratification of the Tax Convention with Belgium, 110th Cong., 153 Cong. Rec. S15706 (daily ed. Dec. 14, 2007) (signed Nov. 27, 2006; advice and consent on Dec. 14, 2007); U.S. Senate Resolution of Advice and Consent to Ratification of the Protocol Amending Tax Convention with Germany, 110th Cong., 153 Cong. Rec. S15706 (daily ed. Dec. 14, 2007) (signed June 1, 2006; advice and consent on Dec. 14, 2007); U.S. Senate Resolution of Advice and Consent to Ratification of the Protocol Amending Tax Convention with Denmark, 110th Cong., 153 Cong. Rec. S14654 (daily ed. Nov. 16, 2007) (signed May 2, 2006; advice and consent on Nov. 16, 2007); U.S. Senate Resolution of Advice and Consent to Ratification of the Protocol Amending Tax Convention with Finland, 110th Cong., 153 Cong. Rec. S14654 (daily ed. Nov. 16, 2007) (signed May 31, 2006; advice and consent on Nov. 16, 2007).

2 See Ring, Diane M., When International Tax Agreements Fail at Home: A U.S. Example, 41 Brook. J. Int'l L. 1185, 1197–207 (2016) (describing Paul's concerns and his method of delaying the treaties); see also Jim Tankersley, Senate Approves Tax Treaties for First Time in Decade, N.Y. Times (July 17, 2019), at https://www.nytimes.com/2019/07/17/business/tax-treaties-vote.html (“Mr. Paul has long objected to those information-sharing provisions on privacy grounds, and he succeeded for years in holding up approval of the treaties.”).

3 Letter from Rand Paul, U.S. Senator, to Harry Reid, U.S. Senate Majority Leader (May 7, 2014), available at http://online.wsj.com/public/resources/documents/PaulLetter050714.pdf [https://perma.cc/5HT9-FPNP].

4 Id.; see also Letter from Coalition of 23 Groups to Congress (Mar. 21, 2017), available at http://freedomandprosperity.org/files/2017-FATCA_repeal_coalition_ltr.pdf [https://perma.cc/GWW4-MLAU] (expressing concerns similar with respect to Paul's); see also Wisiackas, John S., Comment, Foreign Account Tax Compliance Act: What It Could Mean for the Future of Financial Privacy and International Law, 31 Emory Int'l L. Rev. 585, 606 (2017) (noting that Senator Paul's court case against this domestic law was dismissed for lack of standing and that the underlying information sharing policies of this law have not been ruled unconstitutional to date).

5 Protocol Amending Tax Convention with Luxembourg, S. Treaty Doc. No. 111-8 (2010).

6 See Ring, supra note 2, at 1205.

7 Standing Rules of the Senate, Rule XXII(2), S. Doc. No. 113-18 (2013), at https://www.rules.senate.gov/rules-of-the-senate; Ring, supra note 2, at 1197–207.

8 See Ring, supra note 2, at 1197–207.

9 Senate Committee on Foreign Relations, Chairman's Press Release, Four Tax Treaties Approved in Foreign Relations Committee Business Meeting (June 26, 2019), at https://www.foreign.senate.gov/press/chair/release/four-tax-treaties-approved-in-foreign-relations-committee-business-meeting- (quoting the Chair, Senator Jim Risch, as saying: “[T]hese treaties have languished and awaited ratification for nearly a decade, and are incredibly important to our own citizens. I appreciate Leader McConnell's commitment to moving these treaties. I look forward to working with him to see that they are ratified by the full Senate.”).

10 See, e.g., Letter from Business Roundtable et al. to James Risch, Chairman, Senate Comm. on Foreign Relations (Apr. 11, 2019), available at https://www.semiconductors.org/wp-content/uploads/2019/04/2019-Trade-Association-Letter-on-Tax-Treaties-to-all-Senate-Leadership-Risch-Letter-Final.pdf [https://perma.cc/SQ5U-QJEV]; Letter from Neil L. Bradley, Exec. Vice President, Chamber of Commerce of the United States, to James E. Risch & Bob Menendez, Senate Comm. on Foreign Relations (June 20, 2019), available at https://www.uschamber.com/letters-congress/us-chamber-letter-tax-treaties [https://perma.cc/PHU2-FHAB].

11 116th Cong., 165 Cong. Rec. S4795-S4797 (daily ed. July 11, 2019).

12 116th Cong., 165 Cong. Rec. S4847 (daily ed. July 16, 2019).

13 U.S. Senate Resolution of Advice and Consent to Protocol Amending Tax Convention with Spain, 116th Cong., 165 Cong. Rec. S4850 (daily ed. July 16, 2019).

14 165 Cong. Rec. S4795-S4797 Supra note 12 (statement of Sen. Risch and the noted lack of objection to his request for unanimous consent). Senator Risch also noted that the Senate would have an opportunity to vote on an amendment proposed by Paul to the resolution of advice and consent for the Spain protocol. Id. The amendment was rejected by an overwhelming majority. 116th Cong., 165 Cong. Rec. S4849 (daily ed. July 16, 2019) (rejecting Paul's proposed amendment, with the vote being four in favor and ninety-two against).

15 116th Cong., 165 Cong. Rec. S4875-S4878 (daily ed. July 17, 2019) (including the roll call for the treaties, which passed 95–2 (Japan), 95–2 (Switzerland), and 93–3 (Luxembourg)). The “no” votes on the treaties were Paul and Lee and, for the Luxembourg treaty, Senator Dick Durbin of Illinois. Id. Durbin had previously expressed skepticism about the importance of the Luxembourg treaty measured against other legislative priorities. 116th Cong., 165 Cong. Rec. S4830 (daily ed. July 16, 2019) (statement of Sen. Durbin).

16 116th Cong., 165 Cong. Rec. S4872-S4873 (daily ed. July 17, 2019) (statement of Sen. McConnell).

17 See U.S. Dep't of State, Treaties Pending in the Senate (July 17, 2019), at https://www.state.gov/treaties-pending-in-the-senate [https://perma.cc/FF4Z-2ZDV].

18 For the earlier actions of the Senate Foreign Relations Committee reporting these treaties out of committee, see Tax Convention with Hungary, S. Exec. Rep. No. 112-4 (2011), at https://www.congress.gov/congressional-report/112th-congress/executive-report/4 [https://perma.cc/HM2P-GDDW]; Tax Convention with Chile, S. Exec. Rep. No. 113-9 (2014), at https://www.congress.gov/congressional-report/113th-congress/executive-report/9 [https://perma.cc/PG53-Z529]; Tax Convention with Poland, S. Exec. Rep. No. 113-11 (2014), at https://www.congress.gov/congressional-report/113th-congress/executive-report/11 [https://perma.cc/GE35-BUVC]; Protocol Amending Multilateral Convention on Mutual Administrative Assistance in Tax Matters, S. Exec. Rep. 113-8 (2014), at https://www.congress.gov/congressional-report/113th-congress/executive-report/8.

19 See Letter from Robert Menendez, Ranking Member, Senate Comm. on Foreign Relations, to Steven T. Mnuchin, Sec'y, U.S. Dep't Treasury (June 11, 2019), available at https://www.foreign.senate.gov/imo/media/doc/06-11-19%20RM%20letter%20to%20Mnuchin%20re%20Tax%20Treaties.pdf [https://perma.cc/4PYE-LXHJ] (expressing concern and confusion about a reservation the Treasury Department sought to add concerning the “base erosion anti-abuse tax” and enquiring whether this addition would require the international renegotiation of these treaties).

Senate Gives Advice and Consent to Ratification of Four Bilateral Tax Treaties

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