Daily Tax Update - September 5, 2008

McCAIN: “I WILL KEEP TAXES LOW”:  Last night, Republican presidential nominee Senator John McCain delivered his acceptance speech. On the issue of taxes, McCain said, “We believe in low taxes, spending discipline and open markets. We believe in rewarding hard work and risk-takers and letting people keep the fruits of their labor. . .We believe in a government that unleashes the creativity and initiative of Americans, government that doesn't make your choices for you, but works to make sure you have more choices to make for yourself. I will keep taxes low and cut them where I can. My opponent will raise them. . .I will cut government spending. He will increase it. My tax cuts will create jobs; his tax increases will eliminate them.” McCain added, “We all know that keeping taxes low helps small businesses grow and create new jobs. Cutting the second-highest business tax rate in the world will help American companies compete and keep jobs from going overseas. Doubling the child tax exemption from $3,500 to $7,000 will improve the lives of millions of American families. Reducing government spending and getting rid of failed programs will let you keep more of your own money to save, spend and invest as you see fit. Opening new markets and preparing workers to compete in the world economy is essential to our future prosperity.”

• The Tax Policy Center has prepared a summary of the Presidential candidates' tax proposals. 

MISCELLANEOUS GUIDANCE ISSUED THIS WEEK:

• Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates:  Notice 2008-75 released September 5^th, provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under § 412(b)(5)(B)(ii)(II) of the Internal Revenue Code. It also provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), the 24-month average segment rates, and the funding transitional segment rates under § 430(h)(2). In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, and the minimum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007.   
• Qualified Transportation Fringes:  Notice 2008-74 issued September 3^rd, delays the effective date of Rev. Rul. 2006-57, which provides guidance to employers on the use of smartcards, debit, or credit cards, or other electronic media to provide qualified transportation fringes under sections 132(a)(5) and (f) of the Code. This guidance is intended to provide relief to mass transit providers that are currently finding it difficult to update their present systems in order to comply with the Rev. Rul. guidelines prior to the current effective date of January 1, 2009. The effective date of Rev. Rul. 2006-57 is further delayed until January 1, 2010.  
• Transition Guidance for New Funding Rules and Funding-Related Benefit Limitations under PPA '06:  Notice 2008-73 issued September 3^rd, expands the availability of the transition relief for certain small pension plans that was originally provided in Notice 2008-21, 2008-7 I.R.B. 431. This expanded transition relief is needed because technical corrections to the Pension Protection Act of 2006, Public Law 109-280 (PPA), have not yet been enacted. This guidance will expand the transition relief provided in Notice 2008-21 to apply to plans with end-of-year valuation dates for 2006 and 2007, regardless of the valuation date used for 2008. 
• Hurricane Gustav Victims Qualify for IRS Disaster Relief:  The IRS announced September 3^rd that it is providing tax relief to victims of Hurricane Gustav in affected areas of Louisiana. The IRS is postponing until Jan. 5, 2009 deadlines for taxpayers who reside or have a business in the disaster area. The postponement applies to return filing, tax payment and other time-sensitive acts otherwise due between September 1, 2008 and January 5, 2009. 
  • This includes:
    • Individual estimated tax payments due September 15, 2008.
    • Corporate extended 1120 tax returns due September 15, 2008.
    • Individual extended 1040 tax returns due October 15, 2008.

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE:
As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

STEPTOE & JOHNSON LLP - TAX PRACTICE
Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country. The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court. The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving. Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them. Read more information on Steptoe's tax practice.

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