Daily Tax Update - July 13, 2006 (2)

NATIONAL TAXPAYER ADVOCATE RELEASES REPORT TO CONGRESS:
Today, National Taxpayer Advocate Nina Olson released the annual report to Congress that identifies the priority issues the Office of the Taxpayer Advocate will address in the coming fiscal year. These issues include the rules governing the use or disclosure of tax return information by return preparers, a recently imposed requirement that taxpayers submitting lump-sum offers in compromise make a down payment of 20 percent of the amount of the offer, IRS guidelines in evaluating "non-hardship effective tax administration" offers in compromise, and the importance of safeguarding taxpayer rights as the IRS rolls out its private debt collection initiative.

  • The report can be accessed here.

WAYS AND MEANS SUBCOMMITTEE HOLDS HEARING ON PATENTING OF TAX ADVICE:
Today, the House Ways and Means Select Revenue Measures Subcommittee heard from various government and private sector witnesses on issues relating to the patenting of tax advice.

  • IRS Commissioner Mark Everson addressed four main areas. Everson said, "As the Subcommittee focuses on the larger issue of tax patent strategies (TPSs), I think it is important to properly frame the issue and understand IRS’ role or lack thereof in the patent process. First, we need to draw a distinction between the granting of patents to tax products or strategies that are in compliance with the tax laws, and to abusive tax shelters or other products that may not be."  Everson continued, "Second, we recognize that there are substantial policy issues as to whether or not business methods involving tax strategies or products should be granted protection by the government.  Granting patent protection to such strategies could limit the use of that particular tax strategy by other taxpayers and have a negative impact on their ability to comply with the tax law. . . Third, we recognize that taxpayers may attempt to patent abusive tax schemes. . . Finally, patented tax strategies place an increased burden on practitioners who, while simply developing good gift, estate or business planning strategies for their clients, would be obligated to conduct ‘due diligence’ searches for existing patents on such strategies." Everson concluded by stating that "the cooperative efforts between the USPTO and the IRS have resulted in significant strides in monitoring and reviewing tax strategy patents."   Everson also encouraged practitioners to take an active role in assisting the patent office with this evolving area.

TAX BILLS INTRODUCED JULY 12:

  • H.R. 5765 sponsored by Rep. Rodney Alexander (R-LA) would allow employers a credit against income tax for employing members of the Ready Reserve or National Guard.
  • H.R. 5775 sponsored by Rep. Tom Osborne (R-NE) would provide a credit to certain concentrated animal feeding operations for the cost of complying with environmental protection regulations.

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