Daily Tax Update - May 18, 2010

SENATE DEAL ON ESTATE TAX FIX REMAINS ELUSIVE: Despite indications yesterday that an agreement had been reached on an estate tax proposal in the Senate, key Senators said today that no deal has been reached. Senate Finance members Jon Kyl, Blanche Lincoln, Chairman Max Baucus, and ranking member Charles Grassley have been working to try to come up with a solution on extending the estate tax.

• Yesterday, Kyl had said that he and Baucus had agreed to extend the estate tax at a 35 percent top rate and a $5 million exemption level, indexed for inflation. Today, Kyl said, “We had an agreement on the substance of the proposal, subject only to certain offset limitations; other than that, we were in agreement.” However, Kyl added, “I'm not sure that that agreement still exists.” Senate Finance Chairman Max Baucus said, “There is no agreement on the estate tax in either substance or process. None whatsoever.”

IRS POSTS PAYROLL TAX EXEMPTION FORM FOR HIRING NEW WORKERS: Today, the IRS said that it has posted on its website the newly-revised payroll tax form that most eligible employers can use to claim the special payroll tax exemption that applies to many new workers hired during 2010. According to the IRS, “Employers who hire unemployed workers this year (after Feb. 3, 2010, and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive, in effect exempting them from the employer’s share of Social Security tax on wages paid to these workers after March 18. This reduction will have no effect on the employee’s future Social Security benefits. The employee’s 6.2 percent share of Social Security tax and the employer and employee’s shares of Medicare tax still apply to all wages. In addition, for each qualified employee retained for at least a year whose wages did not significantly decrease in the second half of the year, businesses may claim a new hire retention credit of up to $1,000 per worker on their income tax return.”

• Additional information can be accessed here. 

TAX BILL INTRODUCED MAY 17^TH:
S.3380: A bill to amend the Internal Revenue Code of 1986 to provide for the treatment of securities of a controlled corporation exchanged for assets in certain reorganizations.
Sponsor: Sen Rockefeller, John D., IV [WV] (introduced 5/17/2010)      Cosponsors (1)

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