Daily Tax Update - April 5, 2006

IRS RELEASES DRAFT SCHEDULES M-3 FOR 2006:
Today, the IRS released an updated draft of Schedules M-3 for the 2006 tax year and a new Form 8916 that will be filed by certain insurance-related corporations to reconcile taxable income reported on their Schedules M-3 with taxable income reported on their tax returns. Comments on the draft Schedule M-3 and Form 8916 should be submitted by June 1, 2006.

  • Deborah Nolan, IRS Large and Mid-Size Business Division Commissioner, said, "The tax accounting disclosure provided by Schedule M-3 enables IRS to more readily distinguish returns with higher compliance risk from those with lower compliance risk. The ability to determine more quickly which returns require examination will lead to reduced examination cycle time and increased currency. Ultimately that translates to reduced taxpayer burden and improved tax compliance."
  • Additional information can be accessed here

SENATE MAJORITY LEADER URGES COMPLETION OF TAX RECONCILIATION CONFERENCE THIS WEEK:
Today, Senate Majority Leader Bill Frist (R-TN) urged the tax reconciliation conferees to finish their work so a vote could be held this week on a conference report before Congress leaves for its two-week spring recess. Frist said, "I'd really like for it to come to the floor in the next 48 hours." Frist added, "Members have been hard at work on the tax reconciliation conference report. Both Chairman Grassley and Chairman Thomas share my passion to extend lower tax rates on capital gains and dividends so that we can continue to see strong economic growth and healthy job creation in years to come. As April 15 comes near and we are all reminded of the tax burdens Americans face, I urge the conference to quickly conclude its work and send the Speaker and me legislation to pass and send to the President."

TAX BILLS INTRODUCED APRIL 4:

  • H.R. 5075 sponsored by Rep. Pete Stark (D-CA) would clarify the restriction on disclosures and use of information by tax return preparers.
  • H.R. 5081 sponsored by Rep. John Carter (R-TX) would make employers of spouses of military personnel eligible for the work opportunity credit.
  • H.R. 5084 sponsored by Rep. John Dingell (D-MI) would restrict the disclosure information by tax return preparers to third party entities and prohibit private tax collection contracts.
  • S. 2498 sponsored by Sen. Craig Thomas (R-WY) would prohibit the disclosure of tax return information by tax return preparers to third parties.
  • S. 2503 sponsored by Sen. Blanche Lincoln (D-AR) would provide for an extension of the period of limitation to file claims for refunds on account of disability determinations by the Department of Veterans Affairs.

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