Daily Tax Update - January 26, 2005

President Bush Discusses Social Security and Tax Reform
Today, in a press conference, President Bush was asked about the possibility of moving Social Security and tax reform at the same time and whether he would consider alternatives such as a value-added tax to the current payroll tax for financing Social Security. The President responded, "I look forward to working with the Congress to move the process forward. I appreciate people bringing forth ideas. I think it is a constructive part of the process. I'll have my own -- I'll be a little more specific as time goes on, and perhaps at the State of the Union, talking about how to -- how I think we can have a real, long-term solution." The President continued, "But I think it's constructive that Chairman Thomas, who will be charged with having a bill come out of the Ways and Means, is thinking creatively, is willing to figure out ways to bring people along. I am -- and you'll find, as this process unfolds, that there will be a lot of different suggestions -- some of them valid, some of them not valid. But the idea that people are bringing forth ideas is a really good sign." The President added, "The threshold question is, will Congress -- is Congress willing to say we have a problem. We do have a problem. The math shows we have a problem. And now is the time to act on the problem. And once people realize there's a problem, then I believe there's an obligation for all sides to bring forth ideas. And that's what you're seeing with Chairman Thomas. And I appreciate that. I'm looking forward to my visit with him this afternoon."

  • The President is scheduled to deliver the State of the Union address on February 2. At today‚Äôs press conference, the President said, "Next week, I will report to Congress on the state of the union and describe in more detail a legislative agenda to serve the goals I have outlined. I'll ask the House and Senate to act soon on the issue of Social Security, so that we don't pass a bankrupt system on to our children and our grandchildren. I'm open to good ideas from members of Congress. I'll work with both parties to get results. Any solution must confront the problem fully and directly by making the system permanently solvent and providing the option of personal accounts."

Tax Bills Introduced January 25:

  • H.R. 305 sponsored by Rep. Joe Wilson (R-SC) would repeal the sunset of the Economic Growth and Tax Relief Reconciliation Act of 2001 with respect to the expansion of the adoption credit and adoption assistance programs
  • H.R. 320 sponsored by Rep. Randy Cunningham (R-CA) would provide tax incentives to encourage manufacturers of computer, cell phone, and television equipment to operate an environmentally sound recycling program for use by consumers who want to discard the equipment.
  • H.R. 321 sponsored by Rep. Jo Ann Emerson (R-MO) would allow a refundable credit to certain senior citizens for premiums paid for coverage under Medicare Part B.
  • H.R. 322 sponsored by Rep. Jo Ann Emerson (R-MO) would allow a refundable credit to military retirees for premiums paid for coverage under Medicare part B.
  • H.R. 330 sponsored by Rep. J.D. Hayworth (R-AZ) would exempt certain sightseeing flights from taxes on air transportation.
  • H.R. 331 sponsored by Rep. J.D. Hayworth (R-AZ) would clarify that federally recognized Indian tribal governments are to be regulated under the same government employer rules and procedures that apply to Federal, State, and other local government employers with regard to the establishment and maintenance of employee benefit plans. 
  • H.R. 339 sponsored by Rep. Jim McCrery (R-LA) would allow a deduction for contributions to individual investment accounts.
  • H.R. 345 sponsored by Rep. Todd Platts (R-PA) would suspend the running of periods of limitation for credit or refund of overpayment of Federal income tax by veterans while their service-connected compensation determinations are pending with the Secretary of Veterans Affairs.
  • H.R. 346 sponsored by Rep. Todd Platts (R-PA) would allow volunteer firefighters a deduction for personal safety clothing.
  • H.R. 347 sponsored by Rep. Todd Platts (R-PA) would provide that the credit for adoption expenses shall be permanent and repeal the 5-year limitation on carryforwards of unused credit.
  • H.R. 348 sponsored by Rep. Todd Platts (R-PA) would provide for an enhanced deduction for qualified residence interest on acquisition indebtedness for heritage homes.
  • H.R. 349 sponsored by Rep. Todd Platts (R-PA) would allow a full deduction for meals and lodging in connection with medical care.
  • H.R. 350 sponsored by Rep. Todd Platts (R-PA) would allow certain individuals who have attained age 50 and who are unemployed to receive distributions from qualified retirement plans without incurring a 10 percent additional tax.
  • H.R. 351 sponsored by Rep. Todd Platts (R-PA) would repeal the sunset on the increased assistance pursuant to the dependent care tax credit provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 and make the credit refundable.
  • H.R. 352 sponsored by Rep. Todd Platts (R-PA) would increase the standard mileage rate for charitable purposes to the standard mileage rate established by the Secretary of the Treasury for business purposes.
  • H.R. 364 sponsored by Rep. Joe Wilson (R-SC) would extend bonus depreciation for 2 years.
  • H.R. 365 sponsored by Rep. Joe Wilson (R-SC) would exclude working capital in applying the accumulated earnings tax. 
  • S. 157 sponsored by Sen. Herb Kohl (D-WI) would permit interest on Federally guaranteed water, wastewater, and essential community facilities loans to be tax exempt.
  • S. 160 sponsored by Sen. Lisa Murkowski (R-AK) would allow individuals a refundable credit against income tax for the purchase of private health insurance.
  • S. 162 sponsored by Sen. Jay Rockefeller (D-WV) would amend chapter 99 of the Internal Revenue Code of 1986 to clarify that certain coal industry health benefits may not be modified or terminated.

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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