Daily Tax Update - May 19, 2010

ACTION ON EXTENDERS PACKAGE MAY SLIP: Negotiations continue among House and Senate leaders over the offsets to fund a package of expiring tax provisions (H.R. 4213), and action on a final bill could be delayed past the Memorial Day target date. Congress is scheduled to leave May 28 for its Memorial Day recess and return June 7.

• Today, Senate Majority Leader Harry Reid said that he would start consideration of a supplemental defense spending bill this week and that the extenders bill would not be considered until at least next week. Reid said, “I would really like to get the supplemental started tomorrow, and then we have the extenders that we really have to do. We have to do those things before we take the Memorial Day break. We can't let the troops go unfunded, and we can't let the [tax] provisions expire.”
• However, House Ways and Means Committee Chairman Sander Levin said it was still his goal to complete action on the extenders bill this week. House Speaker Nancy Pelosi also said it was her goal for the House to take the bill up this week.
• One of the more controversial offsets under consideration is the imposition of higher taxes on carried interest profits. Sen. Ben Nelson said yesterday, “Look, carried interest is a challenge as well, because the real estate development industry says that will have an adverse impact on development ... and may adversely affect future jobs. So I'm trying to weigh this very carefully from every standpoint.”
• Meanwhile, disagreements in the Senate over the estate tax bill will likely delay action until after the Memorial Day recess. Senators were eyeing the small business tax incentives bill as a possible vehicle for the estate tax issue. Sen. Jon Kyl said, “We no longer have an agreement, because the Democratic side has decided that unless a matter has a guaranteed majority of Democratic votes going in, they're not going to allow it on the floor, at least not voluntarily.” Senate Finance member Orrin Hatch added, “It's very frustrating because we thought we had a deal. We thought we put it together in a way we thought was acceptable, and the Democrats are backing off on resolving it."
• Senate Finance Committee member Blanche Lincoln (D-AR) will face a June 8 runoff in the Democratic primary. Lincoln and Kyl have been working with Senators Baucus and Grassley on a possible compromise on the estate tax issue.

MISCELLANEOUS GUIDANCE RELEASED TODAY:
Revenue Ruling 2010-15 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274. The rates are published monthly for purposes of sections 42, 382, 412, 1288, 1274, 7520, 7872, and various other sections of the Internal Revenue Code.

TAX BILL INTRODUCED MAY 18^TH:
H.R.5328: To amend the Internal Revenue Code of 1986 to reduce international tax avoidance and restore a level playing field for American businesses.
Sponsor: Rep Doggett, Lloyd [TX-25] (introduced 5/18/2010)      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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