Daily Tax Update - January 18, 2006

Today, the Senate convened the second session of the 109th Congress. The House will return in session on January 31st. Once the House returns, conferees to the House and Senate tax reconciliation bills have to be appointed and a formal conference convened. In reference to the tax reconciliation conference, Senate Finance Committee Chairman Charles Grassley (R-IA) said recently, "We’re going to get it done. It would be nice to get it done before our February break. The latest, I would think, would be the March break." Among the most contentious issues that the tax reconciliation conferees have to resolve are the capital gains and dividend provision in the House bill and differing proposals dealing with the alternative minimum tax.

  • The chief Senate supporter of estate tax repeal, Sen. Jon Kyl (R-AZ), said he will ask Majority Leader Bill Frist (R-TN) for a vote on a permanent estate tax solution early in the year. Kyl said, "It's a bit of unfinished business from last year. I would prefer to get it done before things get too heated up." Kyl added, "A lot of people in the business community are still very desirous of having permanent repeal. But if they see that the votes aren't there, realistically they would see that certain types of compromise would be almost as good as full repeal."

Today, the IRS notified taxpayers that some taxpayers will be sending their returns to a different service center than last year. Taxpayers who received a tax instruction booklet from the IRS in the mail and use the labels included with the booklet can be assured that their tax returns will go to the correct address. Taxpayers who e-file are not affected by these changes.

  • According to the IRS, "For tax year 2005, the mailing changes affect returns, with or without payments, from the District of Columbia and 11 states – Colorado, Delaware, Kansas, Maryland, Mississippi, Nebraska, New Mexico, Ohio, South Dakota, Virginia, and West Virginia.

Taxpayers should send:

  • Returns from Delaware and Virginia to the IRS Center in Atlanta, Georgia;
  • Returns from the District of Columbia and Maryland to the IRS Center in Andover, Massachusetts;
  • Returns from Ohio to the IRS Center in Kansas City, Missouri;
  • Returns from Kansas, Mississippi and West Virginia to the IRS Center in Austin, Texas;
  • Returns from Colorado, Nebraska, New Mexico, and South Dakota to the IRS Center in Fresno, California."

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.

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