Daily Tax Update - March 04, 2005

FY 2006 Budget Resolutions Expected to Contain Around $106 Billion in Tax Cuts
Next week, the House and Senate Budget Committees are expected to mark-up their versions of the Fiscal Year 2006 budget resolutions. The budget resolutions are expected to contain approximately $106 billion in tax cuts protected under the reconciliation process. Reconciliation protection is used to protect Senate legislation from procedural hurdles that require 60 votes to overcome and can be used to cut spending or to move tax cuts.

  • Senate Finance Chairman Charles Grassley (R-IA) said that the specific numbers for reconciliation in the budget have not been finalized. Grassley added, "The question of even having a figure is not final, and for sure a specific figure would not be final."
  • The budget reconciliation process only sets a figure for the amount in tax cuts that receive special reconciliation procedural protections. The Senate Finance and House Ways and Means Committees must determine specifically which tax cuts should move inside the package.

Tax Bills Introduced March 3:

  • H.R. 1091 sponsored by Rep. Phil English (R-PA) would provide for small business tax incentives, amend the Fair Labor Standards Act of 1938 to increase the minimum wage and increase the exemption for annual gross volume of sales made or business done by an enterprise.
  • H.R. 1094 sponsored by Rep. Vito Fosella (R-NY) would allow individuals who served in a combat zone as a member of the Armed Forces of the United States to make distributions from qualified retirement plans beginning at age 55 without being subject to the 10-percent additional tax for early withdrawal.
  • H.R. 1095 sponsored by Rep. Vito Fossella (R-NY) would establish and provide a checkoff for a World Trade Center Memorial Fund.
  • H.R. 1097 sponsored by Rep. Scott Garrett (R-NJ) would reduce the Federal tax on fuels by the amount of any increase in the rate of tax on such fuel by the States.
  • H.R. 1098 sponsored by Rep. Virgil Goode, Jr, (R-VA) would allow individuals to designate any portion of a refund for use by the Secretary of Health and Human Services in providing catastrophic health coverage to individuals who do not otherwise have health coverage.
  • H.R. 1113 sponsored by Rep. Jim McCrery (R-LA) would provide that natural gas distribution lines are 15-year property for depreciation purposes.
  • H.R. 1114 sponsored by Rep. Jim McCrery (R-LA) would modify the small refiner exception to the oil depletion deduction.
  • H.R. 1120 sponsored by Rep. Jim Ramstad (R-MN) would provide that a deduction equal to fair market value shall be allowed for charitable contributions of literary, musical, artistic, or scholarly compositions created by the donor.
  • H.R. 1128 sponsored by Rep. Mac Thornberry (R-TX) would allow a credit for carbon dioxide captured from anthropogenic industrial sources and used as a tertiary injectant in enhanced oil and natural gas recovery.
  • H.R. 1131 sponsored by Rep. Curt Weldon (R-PA) would classify automatic fire sprinkler systems as 5-year property for purposes of depreciation.
  • S. 512 sponsored by Sen. Rick Santorum (R-PA) would classify automatic fire sprinkler systems as 5-year property for purposes of depreciation.

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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