Daily Tax Update - October 22, 2008

THE DAILY TAX UPDATE WILL BE PUBLISHED ON A PERIODIC BASIS UNTIL CONGRESS RETURNS JANUARY 4, 2009.

GRASSLEY SUGGESTS TAX CUTS COULD BE INCLUDED IN SECOND STIMULUS PACKAGE:  Yesterday, Ranking Senate Finance Committee member Charles Grassley (R-IA) commented on the possibility of including tax cuts in the stimulus proposal. Grassley said, “I think one of the best economic stimulus packages we can have would be some reductions of taxes, because that encourages investment. We want more jobs, so we need to tax job creation less.” 

• House Minority Leader John Boehner (R-OH) sent a letter to House Speaker Nancy Pelosi last week advocating lowering taxes on capital gains and corporate income and other stimulus recommendations. White House press secretary Dana Perino said yesterday that although Boehner put forth “some really good principles” in his proposal, she was noncommittal as to whether the President would support any additional stimulus plan. Perino said administration officials remain “open to ideas” to help the economy, but added that they think the ideas now on the table would be of little benefit. Perino added, “What's been called a second stimulus package is a series of proposals that actually would not stimulate the economy.”
• Details and timing for another stimulus package remain unclear and is dependent upon the election results. Although the Senate plans to return for a lame-duck session November 17^th, the House has not announced its plans. House Speaker Nancy Pelosi has said that she supports a $150 billion package mainly containing infrastructure improvements and unemployment insurance. Pelosi has also suggested that she is open to adding tax incentives.

TREASURY PUBLISHES EXECUTIVE COMPENSATION RULES FOR TROUBLED ASSETS RELIEF PROGRAM:  On October 14, the Department of the Treasury published much-awaited details concerning the executive compensation limits and corporate governance standards that will apply to participants in each of the three programs created under the Troubled Assets Relief Program (“TARP”). As we previously reported, these standards generally apply to the chief executive officer and chief financial officer as well as the next three most highly compensated executive officers. The compensation limits differ depending on which TARP program a financial institution  participates in: the Troubled Assets Auction Program, Capital Purchase Program, or Program for Systematically Significant Failing Institutions. Separate Treasury Notices were issued for each program, and each notice requests comment from the public concerning the topics addressed therein. Treasury also issued Notice 2008-94 setting forth guidance concerning corresponding revisions to the Internal Revenue Code.

• The notice can be accessed here.

MISCELLANEOUS GUIDANCE ISSUED THIS WEEK:
Notice 2008-102 sets forth certain cost-of-living adjustments effective January 1, 2009, applicable to the dollar limitations on benefits and contributions under qualified retirement plans. Other limitations applicable to deferred compensation plans are also affected by these adjustments. This notice also contains cost-of-living adjustments for several pension-related amounts in restating the data in IR-2008-118 issued October 16, 2008.

Announcement 2008-103 informs taxpayers how to claim a refund of the excise tax on exported coal under section 114 of the Energy and Extension Act of 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
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