Daily Tax Update - December 15, 2015: Negotiations Continue on Omnibus Bill and Tax Extenders

Negotiations Continue on Omnibus Bill and Tax Extenders:  Negotiations between Democratic and Republican leaders continued today over an omnibus spending bill and permanent tax extenders legislation.  Senate Minority Leader Sen. Harry Reid (D-NY) released a statement saying that “we’re continuing to work towards a bipartisan compromise on the omnibus and the tax extenders.”  Senator Reid stated that “the only major outstanding issue . . . [is] raising the export ban on crude oil,” which Democrats would only consider if adopted alongside policies intended to reduce carbon emissions and encourage use of renewable energy.  Mr. Reid also stated that: “We don’t have the legislative language yet on the tax package . . . .  At this pace, we’re going to be here through Christmas.”

Senate Majority Leader Mitch McConnell (R-KY) said, in a statement to the press, that he hoped to conclude negotiations over the omnibus bill and tax extenders package today and expected that bills would be posted later tonight.

Meanwhile, Democratic House leaders offered negative reactions to the proposed extenders bill.  Representative Steny Hoyer (D-MD), the Democratic whip, said in a floor statement today that he would oppose a permanent, unpaid-for tax extenders package, including the tax extenders bill that has been proposed by Republicans.

Sixth Circuit Upholds Decision Finding Mo Vaughn Liable for Tax Penalties:  The US Court of Appeals for the Sixth Circuit upheld a district court decision finding Mo Vaughn liable for failure to timely file returns and pay income tax.  Vaughn, a former Major League first baseman, was the American League’s most valuable player in 1995 but received only 1.1% of the vote in his first year of hall-of-fame eligibility in 2009, dropping off the ballot.  From 2004 to 2008, Vaughn entrusted a financial manager and an accountant with the tasks of filing and paying his taxes.  Instead of fulfilling these tasks, they embezzled millions of dollars from his bank accounts and left Vaughn with a significant unpaid tax liability.  The Sixth Circuit held that Vaughn’s statutory duty to make sure his taxes were properly filed and paid was non-delegable and is not excused because of the felonious actions of his financial agents.  The court further held that because the circumstances that led to Vaughn’s late filing and payment were under his control and subject to his oversight, he did not satisfy the “reasonable cause” exception to the penalties in section 6651(a)(1).