Daily Tax Update - April 22, 2005

Yesterday, Senate Finance Committee Chairman Charles Grassley (R-IA) sent a letter to the Secretary of Transportation seeking details of any corporate tax shelters involving leasing  transactions that might be grandfathered under the American Jobs Creation Act of 2004. Grassley also urged the Transportation Secretary to discourage these deals.

  • Grassley's letter stated, "We exerted great effort in Congress to shut down this abuse, but the transition relief in the American Jobs Creation Act is a sop to shelter promoters and an insult to the American taxpayer. Corporations have no right to claim tax deductions for bridges, subways, and sewage pipes that were built with taxpayer dollars. As part of our continuing effort to stop this abuse, I ask that the Department of Transportation submit to the Committee on Finance copies of all LILOs [lease-in-lease-out], SILOs [sale-in-lease-out], QTE  [qualified technology equipment]  leases, and similar transactions that had been submitted for approval by the FTA  [Federal Transit Administration]  after June 30, 2003, and before March 13, 2004. I also request a list of all such transactions that have been ‘approved’ by the FTA as of the date of your response. Notwithstanding the grandfathering provisions of the American Jobs Creation Act, we would welcome assurances that FTA no longer approves SILO transactions, effective as of the date of the letter you received from the Assistant Secretary of Tax Policy. We also seek assurances that FTA has not approved any LILO transaction since the release of Revenue Ruling 99-14 in March 1999." 


  • H.R. 1756 sponsored by Rep. Robert Andrews (D-NJ) would make the Hope and Lifetime Learning Credits refundable and allow taxpayers to obtain short-term student loans by using the future refund of such credits as collateral for the loans.
  • H.R. 1761 sponsored by Rep. Xavier Becerra (D-CA) would coordinate the threshold requirement for coverage of domestic employees under Social Security with the amount required for a quarter of coverage.
  • H.R. 1762 sponsored by Rep. Eric Cantor (R-VA) would allow look-through treatment of payments between related foreign corporations.
  • H.R. 1765 sponsored by Rep. Tom Davis (R-VA) would exclude from gross income amounts paid on behalf of Federal employees under Federal student loan repayment programs.
  • H.R. 1766 sponsored by Rep. Phil English (R-PA) would simplify the determination and deduction of interest on qualified education loans.
  • H.R. 1771 sponsored by Rep. Charles Gonzalez (D-TX) would clarify that a NADBank guarantee is not considered a Federal guarantee for purposes of determining the tax-exempt status of bonds.
  • H.R. 1772 sponsored by Rep. J.D. Hayworth (R-AZ) would treat gold, silver, platinum, and palladium, in either coin or bar form, in the same manner as equities and mutual funds for purposes of the maximum capital gains rate for individuals.
  • H.R. 1791 sponsored by Rep. Ron Lewis (R-KY) would reduce the rate of tax on distilled spirits to its pre-1985 level.
  • H.R. 1803 sponsored by Rep. Edward Royce (R-CA) would allow amounts in a health flexible spending arrangement that are unused during a plan year to be carried over to subsequent plan years or deposited into certain health or retirement plans.
  • H.R. 1809 sponsored by Rep. Dave Weldon (R-FL) would repeal the 1993 income tax increase on Social Security benefits to increase the age at which distributions must commence from certain retirement plans from 70 1/2 to 80.
  • S. 875 sponsored by Sen. Jeff Bingaman (D-NM) would increase participation in section 401(k) plans through automatic contribution trusts.

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