Daily Tax Update - October 28, 2009

RANGEL: ESTATE TAX VOTE AFTER HEALTH CARE AND JOBS BILLS: House Ways and Means Chairman Charles Rangel said yesterday that the House will not vote to extend the estate tax until after it finishes health care reform and a jobs initiative bill. Rangel said, “It will be after health care and after jobs. I don't know how fast a legislative agenda we're going to be on...it's just we're going to do health care first, and jobs, and then we're going to do estate tax.”

• The House Democratic leadership had planned to bring up an estate tax bill next week to set the estate tax at the 2009 rate of 45 percent, with an exemption for the first $3.5 million of inherited assets. Regarding efforts to permanently fix the estate tax, Ways and Means member Jim McDermott said, “Those people who want a permanent fix are talking about a huge problem, because it hasn't been counted in the budget.”
• Rangel said it was unclear what form a proposal would take to help stimulate the economy. Rangel said, “It's hard really to do what the members want and find the pay-fors to do it; you know, you raise the taxes at the same time you're trying to create jobs, so there's a whole lot of thinking that's going on.” Rangel added, “Some of us will be meeting with Summers to see what the White House is thinking about in terms of a big jobs bill and whether or not there's any feeling about this being enough of an emergency” that a package may not require offsets.

IRPAC RELEASES RECOMMENDATIONS: Today, the Information Reporting Program Advisory Committee (IRPAC) released the advisory group’s recommendations on a wide range of tax administration issues. Based on its findings and discussions, IRPAC made more than 50 recommendations on a broad array of issues and concerns Internal Revenue Service-wide, key among them:

• Creating a new form and modified rules on information reporting of payments made in settlement of payment card and third party network transactions.
• Providing guidance on tax information reporting and withholding.
• Reporting of customer’s basis in securities transactions.
• Creating online Form W-4 instructions for non-resident aliens.
• Withholding on certain payments made by government entities
• Providing additional guidance to government entities that must comply with the withholding provisions.
• Permitting payers to issue payee statements showing only the last four digits of a payee’s TIN.  

MISCELLANEOUS GUIDANCE ISSUED TODAY:
Notice 2009-86 states that the IRS and Treasury intend to extend the time by which a governmental plan must comply with final regulations on distributions from a pension plan upon attainment of normal retirement age (“the NRA regulations”) beyond the date previously announced in Notice 2008-98, 2008-2 C.B. 1080. These regulations were published in the Federal Register as T.D. 9325 (72 FR 28604) on May 22, 2007. Taking into account this extension, the NRA regulations will be effective for a governmental plan (as defined in § 414(d) of the Internal Revenue Code) for plan years beginning on or after January 1, 2013. This notice does not change the effective date of the NRA regulations for a plan that is not a governmental plan or modify the relief previously provided in Notice 2007-69, 2007- 2 C.B. 468.   

TAX BILLS INTRODUCED OCTOBER 27th:
H.R.3933: To amend the Internal Revenue Code of 1986 to prevent the avoidance of tax on income from assets held abroad, and for other purposes.
Sponsor: Rep Rangel, Charles B. [NY-15] (introduced 10/27/2009)      Cosponsors (7)
Committees: House Ways and Means

H.R.3936: To amend the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 to allow time for pensions to fund benefit obligations in light of economic circumstances in the financial markets of 2008, and for other purposes.
Sponsor: Rep Pomeroy, Earl [ND] (introduced 10/27/2009)      Cosponsors (1)

H.R.3941: To amend the Internal Revenue Code of 1986 to eliminate the temporary increase in unemployment tax.
Sponsor: Rep Burgess, Michael C. [TX-26] (introduced 10/27/2009)      Cosponsors (None)

S.1934: A bill to amend the Internal Revenue Code of 1986 to prevent the avoidance of tax on income from assets held abroad, and for other purposes.
Sponsor: Sen Baucus, Max [MT] (introduced 10/27/2009)      Cosponsors (2)

S.1937: A bill to amend the Internal Revenue Code of 1986 to allow a 5-year carryback of operating losses, and for other purposes.
Sponsor: Sen Brownback, Sam [KS] (introduced 10/27/2009)      Cosponsors (None)

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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