Tax Notes Quotes David Rosenbloom on the U.S. Model Tax Treaty

Tax Notes spoke with H. David Rosenbloom concerning the small impact the full U.S. model tax treaty will make once the treaty is released at the end of the year. For the complete article, please visit Tax Notes's website (subscription required). 
 
Excerpt taken from the article "What to Look for in the U.S. Model Tax Treaty" by Marie Sapirie for Tax Notes.
  
"My overriding feeling is that these changes are not a huge deal. I'd like to see the model completely rethought," said H. David Rosenbloom of Caplin & Drysdale Chtd. He said that building in flexibility so as not to have to go back to Congress with a protocol to address new developments in treaty partners' laws may be a response to the lack of movement on treaties in the Senate, but that it also points to Treasury and the IRS's desire to show participation in the OECD's base erosion and profit-shifting project.

However, the changes represent a step in the direction of greater assertion of tax at the source, said Rosenbloom. "The U.S. should begin to think of itself as a source country," he said. The preference for residence-based taxation over source-based taxation in the current model is a formula for a lose-lose situation for the United States when other countries tax more at source and the United States does not tax at source, he said

Treasury suggested that release of the selected provisions of the model treaty in May was attributable to the BEPS project. "I think what they are trying to do is to participate in BEPS by doing something that is consistent with it," said Rosenbloom. The United States is hampered from participating in the BEPS project because of the legislative reluctance to pass sensible laws, approve negotiated treaties, or adequately fund the IRS, he said.