Daily Tax Update - June 15, 2005

THOMAS BACKS AWAY FROM HIGHWAY BILL COMPROMISE:
Yesterday, House Ways and Means Committee Chairman Bill Thomas (R-CA) said that he would not support a compromise on the funding levels of the highway reauthorization bill as he suggested last week. Instead, Thomas said that the conferees should accept the funding level in the House-passed bill and supported by the Administration. Thomas suggested last week that he might be willing to consider some of the $11 billion in revenue raisers in the Senate bill, which include a provision codifying the economic substance doctrine and a provision requiring that the corporate chief executive officer (CEO) sign a declaration that the corporation’s income tax return complies with federal tax laws.

  • Republican leaders, including House Speaker Dennis Hastert (R-IL) and Majority Leader Tom DeLay (R-TX), have continued to uphold the Administration’s stance in not supporting any bill costing more than the $284 billion in the House bill. Thomas said that the conferees should craft a bill that the President would sign.
  • This is the second week that the House and Senate highway bill conferees have met to try to work out their differences.

TAX BILLS INTRODUCED JUNE 14:

  • H.R. 2893 sponsored by Rep. Alcee Hastings (D-FL) would allow a nonrefundable credit against income tax liability for gasoline and diesel fuel used in highway vehicles for nonbusiness purposes.
  • H.R. 2899 sponsored by Rep. Dennis Moore (D-KS) would extend and modify the credit for producing fuel from a nonconventional source.
  • S. 1230 sponsored by Sen. Chuck Grassley (R-IA) would provide for the extension of the Highway Trust Fund and the Aquatic Resources Trust Fund expenditure authority and related taxes and provide for excise tax reform and simplification.
  • S. 1240 sponsored by Sen. Gordon Smith (R-OR) would allow an investment tax credit for the purchase of trucks with new diesel engine technologies.
  • S. 1244 sponsored by Sen. Chuck Grassley (R-IA) would allow individuals a deduction for qualified long-term care insurance premiums, use of such insurance under cafeteria plans and flexible spending arrangements, and a credit for individuals with long-term needs.

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.

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