Look what’s in the tax bill

Bryan J. Dziedziak, a reader and a CPA in Henderson, sends this along with a disturbing question: What's legislation authorizing the president to reduce missiles doing in the tax bill?

Take a look at this note and you tell me.

Dear Friends:

As most of you already know by now, Congress passed the American Taxpayer Relief Act of 2012 yesterday. I’ll be sending out another e-mail providing information on the TAX aspects of that legislation soon.

In this e-mail, I want you to know what was slipped into the tax law that no one in the media appears yet to have focused. If you followed the process, on January 1, 2013 the U.S. Senate voted on the law with only about 3 minutes notice. No Senator could have possible read, let alone understood what was in the 157 page document. The next day, the House passed that law in violation of its vow to put legislation on the internet for all to read 72 hours before any vote. Consequently, it is unlikely any member of the House had a chance to read and understand the bill prior to voting and, of course, NONE of us had a chance to read it either!

I believe section 901 of the American Taxpayer Relief Act of 2012 increases the President’s authority to reduce the number of our strategic delivery systems. It reads as follows:

SEC. 901. STRATEGIC DELIVERY SYSTEMS.

(a) IN GENERAL.—Paragraph 3 of section 495(c) of title 10, United States Code,, as added by section 1035 of the National Defense Authorization Act for Fiscal Year 2013, is amended—

(1) by striking ‘‘that’’ before ‘‘the Russian Federation’’ and inserting ‘‘whether’’; and
(2) by inserting ‘‘strategic’’ before ‘‘arms control obligations’’.

(b) EFFECTIVE DATE.—The amendments made by subsection (a) shall take effect as if included in the enactment of the National Defense Authorization Act for Fiscal Year 2013.

Just by reading that provision and without knowing what section 1035 of the National Defense Authorization Act for Fiscal Year 2013 says, you really cannot understand the significance of the amendment.

Well this is how 495(c) (3) of Title 10 now reads (I edited it to show what was changed).

Section 495. Prior Notification- Not later than 60 days before the date on which the President carries out any reduction to the number of strategic delivery systems, the President shall--

(1) make the certification under subsection (a) for the fiscal year for which the reductions are proposed to be carried out;
(2) transmit the additional report matters under subsection (b) for such fiscal year, if such additional report matters are so required; and
(3) certify to the congressional defense committees that whether the Russian Federation is in compliance with its strategic arms control obligations with the United States and is not engaged in activity in violation of, or inconsistent with, such obligations.

So, prior to the enactment of the Tax bill, the President was authorized to reduce the number of strategic delivery systems only if he could certify to the congressional defense committees THAT Russia is in compliance with all of its arms control obligations with the U.S. Now, the President Obama can reduce our strategic delivery systems whether or not Russia is in compliance; he must only tell the congressional defense committees WHETHER Russia is in compliance.

To put this change into context, recall the following as reported by Fox News on March 26, 2012:

President Obama assured Russian President Dmitry Medvedev Monday that he'd have "more flexibility" after the November election, during a conversation that appeared to focus on the touchy issue of missile defense. Obama, during a sit-down with Medvedev in Seoul, urged Moscow to give him "space" until after November. The conversation was relayed by a TV pool producer who listened to the recording from a Russian journalist. "This is my last election. After my election, I have more flexibility," Obama told Medvedev.

Obama appeared to be asking Medvedev to relay this point to Vladimir Putin, who recently won election to return to the Russian presidency. "On all these issues, but particularly missile defense ... this can be solved but it's important for him to give me space," Obama said.

Medvedev told the president he understood the "message about space. Space for you ..." After Obama noted he'd have more flexibility in the future, Medvedev told him: "I understand. I will transmit this information to Vladimir."

I’d be interested in hearing from any of my friends who may be more knowledgeable about foreign relations whether I am making too much of this. In almost 35 years in tax practice, I don’t ever recall a military law being amended in a TAX bill.

Bryan