Daily Tax Update - December 5, 2006

IRS ANNOUNCES PROCEDURES FOR CLOSING CASES INVOLVING UNSETTLED LISTED TRANSACTIONS: Today, the IRS announced that it is updating its procedures relating to cases involving a listed transaction with respect to which the Office of Appeals and the taxpayer are unable to reach a satisfactory settlement. The new procedures take effect today.

  • According to the IRS, "When a settlement cannot be reached by the Office of Appeals in a case that is not docketed in the Tax Court, it is expected that the case will proceed to litigation. . . . Consequently, the Service is revising its procedures to provide that when the Office of Appeals and the taxpayer are unable to reach a satisfactory settlement in a nondocketed case involving a listed transaction, the Office of Appeals will close out its consideration, notifying the taxpayer, and send the case to the appropriate Operating Division for further handling." Furthermore, the operating division then will determine whether the unsettled adjustments relating to the listed transaction merit further development. If not, the operating division will issue a statutory deficiency notice to the taxpayer.
  • For additional information, contact Mark J. Silverman - msilverman@steptoe.com or Matthew D. Lerner - mlerner@steptoe.com.
  • The notice can be accessed here.

CONGRESS EXPECTED TO PASS EXTENDERS SOON: This week, Congress is expected to pass a package of expiring tax provisions. The exact composition of the tax package is uncertain at this time. Among the expired provisions likely to be extended in the final package are the research credit, the deduction for state and local sales taxes, and the college tuition tax deduction.

  • There has also been some discussion about attaching to the extenders package a one-year extension of the alternative minimum tax "patch." However, the $40 billion price tag for a one-year AMT "patch" would exceed the Senate‚Äôs "pay as you go" rules and would make the extenders subject to a budget point of order.
  • The House and Senate are also expected to pass a continuing resolution to fund the government until February 15th.

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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