Daily Tax Update - November 9, 2009

HOUSE PASSES HEALTH CARE BILL WITH ONE REPUBLICAN DEFECTOR: On Saturday, the House passed its trillion-dollar health care overhaul bill (The “Affordable Health Care for America Act”, H.R. 3962) by a vote of 220-215. House Speaker Nancy Pelosi said, “For generations, the American people have called for affordable, quality health care for their families. Today that call will be answered.” Rep. Joseph Cao was the only Republican vote in support of the bill.

• The bill: 1) imposes a surtax on the income of individuals who do not obtain health care coverage and on employers (other than small business employers) who fail to satisfy health coverage participation requirements; (2) allows a new tax credit for small business employers who provide health care coverage to their employees; (3) increases the penalty for distributions from health savings accounts not used for qualified medical expenses; (4) modifies rules and contribution limits for certain employee benefit plans; (5) allows an exclusion from gross income for the value of certain medical care provided to members of Indian tribes; (6) imposes a 5.4% surtax on individuals whose adjusted gross income exceeds $500,000 ($1 million for married couples filing joint returns); (7) imposes a 2.5% excise tax on medical devices; (8) repeals the worldwide allocation of interest rules; (9) sets forth rules for the application of the economic substance doctrine and imposes penalties for underpayments of tax due to transactions lacking economic substance; (10) extends the tax exemption for employer-provided health care benefits to certain eligible beneficiaries of the taxpayer; and (11) contains a provision aimed at banning “black liquor” from a biofuels tax credit.
• House Ways and Means Committee Republican member Rep. Kevin Brady said, “Big government doesn't mean better health care. This is not the reform families need. This is all about taking a giant first step toward a single-payer national health-care system. Washington will ultimately decide what doctors you can see, what treatments you deserve...and, when you're sick, will you be worth their cost?"
• A summary of the Manager’s Amendment that was incorporated into the bill can be accessed here. 
• Additional information on the House bill can be accessed here. 
• A summary of the revenue provisions (before the inclusion of the Manager’s amendment) can be accessed here. 
• Meanwhile, Republican Senator Lindsey Graham declared the House bill “dead on arrival.” It is unclear when the Senate may begin debating its version.

MISCELLANEOUS GUIDANCE RELEASED TODAY:
Notice 2009-87 invites public comment on possible modifications to the conditions established in Rev. Proc. 80-59, under which a trustee of a blind trust that meets the requirements of section 102(f)(3) of the Appendix to Title 5 of the United States Code may execute and file an income tax return on behalf of any individual described in section 101(f) of the Appendix to Title 5 of the United States Code.

TAX BILLS INTRODUCED NOVEMBER 6th:
H.R.4042: To amend the Internal Revenue Code of 1986 to extend the employer wage credit for employees who are active duty.
Sponsor: Rep Klein, Ron [FL-22] (introduced 11/6/2009)      Cosponsors (36)

H.R.4052: To amend the Internal Revenue Code of 1986 to make certain disaster relief provisions permanent.
Sponsor: Rep Kind, Ron [WI-3] (introduced 11/6/2009)      Cosponsors (6)

H.R.4056: To amend the Internal Revenue Code of 1986 to allow small businesses a credit against income tax for increasing employment.
Sponsor: Rep Sestak, Joe [PA-7] (introduced 11/6/2009)      Cosponsors (None)

S.2748: A bill to amend the Internal Revenue Code of 1986 to extend for one year the employer wage credit for employees who are active duty members of the uniformed services.
Sponsor: Sen Kerry, John F. [MA] (introduced 11/6/2009)      Cosponsors (2)

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.

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