Daily Tax Update - March 30, 2010

THE DAILY TAX UPDATE WILL BE PUBLISHED ON A PERIODIC BASIS UNTIL CONGRESS RETURNS FROM ITS SPRING RECESS ON APRIL 12^TH

PRESIDENT SIGNS HEALTH CARE RECONCILIATION BILL: Today, President Obama signed “The Health Care and Education Reconciliation Act of 2010" (H.R. 4872) into law. The bill makes several changes to “The Patient Protection and Affordable Care Act” (P.L. 111-148) that was signed into law on March 23.

• For the first time, the Medicare payroll tax will be applied to investment income, beginning in 2013. A new 3.8-percent tax will be imposed on interest, dividends, capital gains, and other investment income for individuals making more than $200,000 a year and couples making more than $250,000. The act also increases the Medicare payroll tax by 0.9 percentage points to 2.35 percent on wages above $200,000 for individuals and $250,000 for married couples filing jointly.
• Other provisions in the new law include:
• Tax on High-Cost Health Insurance Plans. The 40-percent excise tax on so-called Cadillac health insurance plans will begin in 2018, be indexed to the consumer price index (CPI) plus one for 2019, and then rise annually by the CPI beginning in 2020.
• Economic Substance Doctrine. The act clarifies the application of the economic substance doctrine so that transactions will be treated as having economic substance only if they change the taxpayer's economic position in a meaningful way and the taxpayer has a substantial purpose for the transaction, other than changing federal income tax liability.
• Time for payment of corporate estimated taxes. Provides an increase to 15.4 percent in corporate estimated tax payments for firms owing at least $1 billion in payments due in July, August, and September 2014.
• Tax on Medical Devices. The act creates a new excise tax on medical device sales equal to 2.9 percent of the price of the device.
• The Joint Committee on Taxation’s description of the revenue provisions can be accessed here.
• A summary of the act can be accessed here.

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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