Daily Tax Update - December 16, 2005

SENATE PASSES HURRICANE RELIEF TAX LEGISLATION:
Today, the Senate approved legislation providing tax incentives to help rebuild the Gulf Coast region. The legislation contains a partial exclusion of tax benefits for some Gulf Coast businesses, including casinos, liquor stores and other "sin" businesses. However, businesses such as hotels and restaurants would not be excluded from the tax benefits simply because they are attached to casinos. The bill also includes some minor tax extensions and tax technical correction provisions related to the American Jobs Creation Act of 2004 and other tax legislation.  The House is expected to approve the bill later today.

  • Ranking Senate Finance Committee member Max Baucus (D-MT) said,"Congress is one step away from finally doing the right thing by Katrina victims on tax relief, and the House needs to act right away. The compromises have been made, the deal has been struck, and it’s long past time to get this help to communities on the Gulf Coast."

HOUSE APPROVES PENSION REFORM BILL:
Last night, the House passed the "Pension Protection Act of 2005" by a vote of 294 - 132. H.R. 2830 would address the growing problem of employers underfunding their pension plans.  Among other things, this bill requires employers to fully fund their pension obligations and gives them seven years to fund shortfalls.  It also includes provisions to prevent employers from using bankruptcy to walk away from pension obligations. It is uncertain when a conference will meet to reconcile the differences between the House and Senate passed pension bills.

  • House Ways and Means Chairman Bill Thomas (R-CA) said, "For far too long, outdated pension funding rules have put in jeopardy the hard-earned retirement benefits of millions of Americans. The legislation approved today would make great strides in strengthening pension plans and providing retirement security for millions of Americans."
  • A summary of the House bill can be accessed here.

TAX BILLS INTRODUCED DECEMBER 15:

  • S. 2105 sponsored by Sen. Norm Coleman (R-MN) would modify the credit for nonbusiness energy property so that the amount of the credit is determined based on the amount of energy savings achieved by the taxpayer.
  • S. 2107 sponsored by Sen. Max Baucus (D-MT) would provide additional appropriations for the Low-Income Home Energy Assistance Act of 1981 for fiscal year 2006 and provide a refundable tax credit for residential energy cost assistance.
  • S. 2111 sponsored by Sen. Evan Bayh (D-IN) would provide a credit for small business employee training expenses, increase the exclusion of capital gains from small business stocks, and extend expensing for small businesses.

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