Daily Tax Update - December 11, 2015: House Passes Bill With Ban on Internet Tax and Increase in Late Return Penalty

House Passes Bill With Ban on Internet Tax and Increase in Late Return Penalty:  Today the House passed the Trade Facilitation and Trade Enforcement Act of 2015 (H.R. 644) that contains provisions to prohibit state and local taxes for Internet access and to increase the late filing penalties for some taxpayers.  The increase in penalties would raise $202 million over the next 10 years, according to a Joint Committee on Taxation report

Senate Bill Introduced to Block Donor Reporting Regulations:  Today Sen. Pat Robert (R-KS) introduced a bill to block proposed IRS regulations (REG-138344-13) to implement the exception to the “contemporaneous written acknowledgement” requirement for substantiating charitable contribution deductions of $250 or more.  The proposed regulations would require charities to file specific-use information returns for donor reporting that include personal donor information including Social Security numbers.

House Approves Continuing Resolution:  The House approved a short-term spending bill to keep the federal government open through December 16.  Negotiations toward a yearlong spending bill are ongoing. 

Interim Government Contracting Rule Regarding Delinquent Tax Liabilities and Felony Convictions Raises Specter of Debarment:  On December 4, the Department of Defense (DoD), the General Services Administration (GSA), and the National Aeronautics and Space Administration (NASA) issued an interim rule amending the Federal Acquisition Regulation (FAR) to implement sections of the Consolidated and Further Continuing Appropriations Act, 2015, to prohibit the federal government from entering into a contract with any corporation having a delinquent federal tax liability or a felony conviction under federal law, unless suspension or debarment has been considered and there has been a determination that this further action is not necessary to protect the interests of the government.  Comments are due on February 2, 2016.  The rule becomes effective as of February 26, 2016.

A copy of the interim rule is available here.  Because it raises a number of nuanced issues, including tax issues, for contractors, procuring agencies, and suspension and debarment offices, tax departments should also be aware of this new rule and its potential impact.  We anticipate providing a more detailed advisory shortly.  

For information regarding the rule, please contact Andy Irwin, Tom Barletta, or Mike Mutek.  For more information about our Tax Practice, please contact Lisa Zarlenga.