Daily Tax Update - May 26, 2010

ACTION ON EXTENDERS PACKAGE MAY BE POSTPONED:  With opposition mounting to the overall $192 billion cost of the bill and some of the controversial revenue offsets used to pay for it, it appears increasingly unlikely that the House and Senate votes on the extenders bill (H.R. 4213) will be held this week. If a vote is held this week, it may be on a scaled down bill. Congress is scheduled to take a week-long recess at the end of this week and return June 7.

• While key Democratic leaders have been predicting that the bill would pass earlier this week, other Democrats have voiced displeasure with the overall size of the bill and some of the offsets. Democratic member Rep. Jane Harman (D-CA) said yesterday, “The conversation I'm hearing on the floor is, 'make it smaller, make it shorter.’” Rep. Jared Polis (D-CO) said, “I'm not going to vote for the bill in its present form. I don’t think the extenders bill has the votes now, otherwise they would have brought it to the floor, so there's still room for negotiations. Also, many House members want to see what the Senate's going to do." Rep. Bill Pascrell (D-NJ) said that while the bill contained important job creation provisions, there were also a lot of extra provisions in the bill. Pascrell said, “I wouldn't use the word 'extraneous.' I just think how they contorted the bill makes everyone confused. It's not just extenders; it's not just jobs; it's not just extensions of unemployment insurance, COBRA, helping states with Medicaid. And that's what confuses people.”

• Meanwhile, Senate Majority Leader Harry Reid said today that the Senate could still be in session Saturday to complete work on the war supplemental bill and the extenders. Reid said that the Senate must ”wait and see what the House sends us.” Reid added, “We're obligated to do these two things.” However, House Democratic Congressional Campaign Committee Chairman Chris Van Hollen said that House members need to be assured that the bill can pass in the Senate. Van Hollen said, “There's no doubt that remains an important issue, that members want adequate assurances from the Senate that they will pass this bill in its current form.”

• If the votes are lacking to pass the extenders/jobs bill, Congress could take up a short-term extension of the unemployment and health benefits and the Medicare physician fix provisions in the bill before they recess.

TAX BILLS INTRODUCED MAY 25^TH

H.R.5396: To amend the Internal Revenue Code of 1986 to provide for the depreciation of certain roof systems.
Sponsor: Rep Pascrell, Bill, Jr. [NJ-8] (introduced 5/25/2010) Cosponsors (6)

H.R.5398: To amend the Internal Revenue Code of 1986 to allow the first-time homebuyer credit for the purchase of a principal residence to replace a principal residence damaged or destroyed in a Federally declared disaster, and for other purposes.
Sponsor: Rep Paul, Ron [TX-14] (introduced 5/25/2010)      Cosponsors (None)

H.R.5400: To amend the Internal Revenue Code of 1986 to extend the work opportunity credit to certain recently discharged veterans.
Sponsor: Rep Walz, Timothy J. [MN-1] (introduced 5/25/2010) Cosponsors (1)

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.

• Learn more about the members of the tax practice group.