At a Senate Finance Committee hearing on Tuesday, Sen. Marsha Blackburn (R-TN) questioned Brian Morrissey, Jr., nominee to be General Counsel for the Department of the Treasury, about auditing of small businesses from the Department of Treasury.
00:00Thank you and congratulations to each of you. We are pleased to have you
00:08before us today and hope that we can find bipartisan agreement in moving you
00:13swiftly so that you all can do the job that you've been nominated to do. Mr.
00:20Morrissey, let me come to you first. I want to talk about small business. In
00:27Tennessee, well over 75% of our employers are classified as small
00:35businesses and and they actually file as a pass-through entity and we want them to
00:43stay productive and healthy and grow and continue that good employment. We've
00:50during the Biden administration what we realized was that their Treasury, their
00:58IRS, their administration did not share our view of the importance of these
01:05businesses and in order to push a lot of their agenda they targeted for audits
01:11these small businesses. My service in the House, my service here in the Senate, we
01:18had never had so many questions and so many complaints as were coming in about
01:26the mistreatment and the targeting of these small businesses. So if you're
01:35confirmed, you would be called on to provide counsel to those at the Treasury
01:42Department on the matter. So how would you advise them and also does I guess first
01:52does it bother you and trouble you that there is this targeting and then how would
01:59you advise at Treasury and at the IRS in moving forward with this? Senator
02:08Blackburn, thank you very much for the question and for the time you and your
02:10staff took to meet with me and discuss some of these issues. I think it's
02:14highly important whenever the IRS is acting or any Bureau of the Treasury that
02:18has enforcement authority whether that be through audits or other authorities that
02:22the Department is acting impartially based on the facts and the evidence and
02:26using neutral and objective criteria. So on the enforcement side that's what I
02:31would be committed to do and you mentioned rulemaking as well. I think it's
02:35very important when Treasury and the IRS are considering rulemakings whether they
02:39apply to small business or others, one of the responsibilities we have under the
02:43Administrative Procedure Act is that we're responsibly assessing the costs and
02:47benefits and making sure that any statutory requirement has a cost-benefit
02:53rationale. So that's what I would be committed to advising if I were to confirm.
02:56Thank you for that. Also, we talked about Pillar 2 and the concerns that are there and as I told you, I had created a chart of who paid what in Pillar 2.
03:07of who paid what in Pillar 2 and it was astounding that what you have is U.S.
03:13companies responsible for nearly 40 percent and it's amazing that the Biden
03:19administration ever agreed to that. And you've got China over here with seven
03:26percent that they are paying on that. So how would you advise Secretary Besson and
03:34others in the administration about the importance of protecting U.S.
03:39companies in these negotiations?
03:43Thank you, Senator, and I appreciated our discussion of Pillar 2. I think whenever
03:49Treasury is representing the United States and international bodies like the OECD
03:53or others, there are two principles that are very important to keep in mind. The
03:57first is that our action should always respect the sovereignty of the United States
04:01and particularly the Congress to establish tax policy for the United States and not
04:06the international body. And second, that when proposals are made in those types of
04:11bodies that undermine U.S. interests, that we're acting proactively to make sure that
04:15we're using our seat at those bodies to stand up for American interests.
04:19Great. Mr. Barloon, let me come to you. We had quite a discussion on China and I appreciated that.
04:27I did want to ask you and get on the record how we deal with the WTO. And China is in violation,
04:37in my opinion, of so many provisions, whether it is that they're making industrial subsidies or they're
04:47stealing intellectual property, they are using forced labor. So there are so many violations that are there.
04:59How can we better utilize the WTO as we look at tariffs and non-tariff barriers, trade barriers to access different markets?
05:12Thank you, Senator. And I very much enjoyed our discussion as well. I agree that this is a significant issue.
05:18I think that to deal with the violations that we've seen from China, that has to be action on many fronts.
05:27But certainly at the WTO, two things in particular I would focus on would be to ensure that they actually
05:33abide by their notification obligations, number one, and number two, to stop taking advantage of special and differential treatment,
05:41to not play by the same rules as all the other members. And finally, I would work very closely with other members
05:49at the WTO like-minded members to address these issues.
