Daily Tax Update - March 16, 2005

IRS COMMISSIONER DISCUSSES ENFORCEMENT ISSUES:
In a speech to the National Press Club yesterday afternoon, IRS Commissioner Mark Everson said that the agency’s first priority is to "discourage and deter non-compliance by corporations, high-income individuals and other contributors to the tax gap." Everson said, "The centerpiece of our enforcement strategy is combating abusive tax shelters, both for corporations and high-income individuals." The IRS Commissioner also said that the settlement initiatives regarding the Son of Boss tax shelter and executive stock options were key areas of focus. Everson said that the results from the Son of Boss settlement initiative would be announced next week.

  • Everson highlighted other enforcement objectives: "Our second enforcement priority is to assure that attorneys, accountants and other tax practitioners adhere to professional standards and follow the law." Everson continued, "Our third enforcement objective is to detect and deter domestic and off-shore based criminal tax activity, our traditional area of emphasis, and related financial criminal activity. . . . Our fourth enforcement priority is to discourage and deter noncompliance within tax exempt and government entities, and misuse of such entities by third parties for tax avoidance purposes. " Everson added, "While we have made progress over the past year, there is much to be done.  And we will continue to do it.  The Administration has called for a 4.3 percent increase in IRS funding in the President’s ’06 budget, with a nearly 8 percent increase for enforcement." 
  • The speech can be accessed here.

TAX BILLS INTRODUCED MARCH 15:

  • H.R. 1303 sponsored by Rep. Lloyd Doggett (D-TX) would prevent corporations from exploiting tax treaties to evade taxation of United States income and prevent manipulation of transfer prices by deflection of income to tax havens.
  • H.R. 1304 sponsored by Rep. Lloyd Doggett (D-TX) would require disclosure of lobbying activities by certain organizations.
  • H.R. 1305 sponsored by Rep. Rahm Emanuel (D-IL) would make permanent and refundable, and expand the saver's credit.
  • H.R. 1306 sponsored by Rep. Phil English (R-PA) would reduce the tax on beer to its pre-1991 level.
  • S. 621 sponsored by Sen. Kent Conrad (D-ND) would permanently extend the 15-year recovery period for the depreciation of certain leasehold improvements.
  • S. 625 sponsored by Sen. Charles Schumer (D-NY) would allow a $1,000 refundable credit for individuals who are bona fide volunteer members of volunteer firefighting and emergency medical service organizations.
  • S. 627 sponsored by Sen. Orrin Hatch (R-UT) would permanently extend the research credit, increase the rates of the alternative incremental credit, and provide an alternative simplified credit for qualified research expenses.

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