Daily Tax Update - February 17, 2012: Congress Passes Payroll Tax Conference Report
CONGRESS PASSES PAYROLL TAX CONFERENCE REPORT – SENDS BILL TO PRESIDENT: Today, both the House and Senate passed the conference report extending the payroll tax cut through the end of this year. The House voted 293-132 to pass the bill and the Senate approved the bill by a 60 to 36 vote. President Obama has said that he will sign the legislation. The current reduction in the employee’s share of the Social Security payroll tax — from 6.2 percent to 4.2 percent of wages — will be continued to the end of the year. The bill is partially paid for by the sale of radio spectrum licenses and federal worker pension benefit changes.
- House Ways and Means Chairman Dave Camp said, "As a result of a lot of long hours, hard work, and determination on both sides of the aisle, and both sides of the Capitol, this agreement shows the American people that Congress can govern and Washington can work." Camp added, "I understand this is a compromise and not everyone likes everything in here."
- Sen. Ben Cardin (D-MD), a conferee, voted against the bill. Cardin said, "I voted no for a couple of reasons. The primary reason was that the unemployment insurance was offset in large part by federal employee additional contribution, which I think is just wrong." Cardin added, "I also felt that the lack of balance in not offsetting the tax cut and requiring emergency unemployment insurance to be offset is not right."
- A summary of the bill can be accessed here.
MISCELLANEOUS GUIDANCE RELEASED:
Revenue Procedure 2012-21 provides the list of countries for tax year 2011 for which the minimum time requirements are waived, because taxpayers had to leave a foreign country because of war, civil unrest, or similar adverse conditions in that country. Generally, US citizens or resident aliens living and working abroad are taxed on their worldwide income. However, if their tax home is in a foreign country and they meet either the bona fide residence test or the physical presence test, they can choose to exclude from their income a limited amount of their foreign earned income ($91,500 for 2010). Both the bona fide residence test and the physical presence test contain minimum time requirements. The minimum time requirements can be waived for the reasons stated above.
Notice 2012-21 allows certain estates of married individuals who died during the first six months of 2011 an extension of the deadline to make the portability election.
TAX BILLS INTRODUCED FEBRUARY 16TH:
1. [112nd] H.R.4049 : To amend the Internal Revenue Code of 1986 to expand personal saving and retirement savings coverage by enabling employees not covered by qualifying retirement plans to save for retirement through automatic IRA arrangements, and for other purposes.
Sponsor: Rep Neal, Richard E. [MA-2] (introduced 2/16/2012) Cosponsors (1)
Committees: House Ways and Means; House Education and the Workforce
Latest Major Action: 2/16/2012 Referred to House committee. Status: Referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
2. [112nd] H.R.4064 : To amend the Internal Revenue Code of 1986 to repeal certain tax increases.
Sponsor: Rep Mulvaney, Mick [SC-5] (introduced 2/16/2012) Cosponsors (14)
Committees: House Ways and Means; House Energy and Commerce
Latest Major Action: 2/16/2012 Referred to House committee. Status: Referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
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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