Daily Tax Update - July 20, 2006

IRS RELEASES FINAL DRAFT SCHEDULES M-3 FOR 2006:
Today, the IRS released final drafts of Schedules M-3 and Form 8916 for the 2006 tax year, and a new Form 8916-A, "Reconciliation of Cost of Goods Sold Reported on Schedule M-3." The final draft Schedules M-3, dated 6/27/06, are for Forms 1120, 1120-L, 1120-PC, 1120S and 1065. Draft instructions for the forms were also released. Schedule M-3 is filed by corporations and partnerships that have $10 million or more in assets, and certain other partnerships.

  • Deborah Nolan, IRS Large and Mid-Size Business Division Commissioner, said, "Schedule M-3 will enable the IRS to focus more quickly on high risk issues and taxpayers requiring our attention, and reduce our time spent with compliant taxpayers. The level of external feedback and collaboration in helping develop this suite of forms helped us address our mutual interests."
  • Additional information can be accessed here.

PRELIMINARY AGREEMENT REACHED ON PENSION BILL, BUT NOT TAX PROVISIONS:
Yesterday, a "tentative oral agreement on the pension part" was reached by the conferees. However, no agreement had been reached on which tax provisions would be included. House Ways and Means Committee Chairman Bill Thomas (R-CA) and Senate Finance Committee Chairman Charles Grassley (R-IA) are negotiating which tax provisions will be included and details may be announced this week.

  • Today, House Majority Leader John Boehner (R-OH) said, "I'm very optimistic about getting a pension conference report. We don't have a commitment or agreement yet, but I think we are very close to having one." The full House and Senate still have to pass the final conference report bill.
  • Grassley said yesterday that the conferees "are getting some pressure from the leadership" to add an estate tax reduction to the final pension reform package. Grassley said, "It is a gamble to put it in. . . I think that on the estate tax we've got a problem of getting that 60th vote, and we're going to have that problem whether estate tax rides itself or whether it's part of a pension bill."

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