Daily Tax Update - December 7, 2006

AGREEMENT REACHED ON TAX EXTENDERS AND TRADE PACKAGE:
House and Senate negotiators have reached an agreement on a tax and trade package that also includes controversial offshore oil drilling language and a provision providing for a temporary Medicare payment fix for physicians. The bill extends for two years several expiring tax cuts, including the research and development tax credit and the deductions for state sales tax and college tuition.

  • The House is expected to pass the package later today followed by Senate action later tonight or Friday. Congress is expected to adjourn for the year on Friday. Efforts by lawmakers to load several controversial health and trade provisions on to the tax extenders package have stymied forward progress on the package all week.

BAUCUS REMOVES HOLD ON SOLOMON NOMINATION: Today, Ranking Senate Finance Committee member Max Baucus (D-MT) announced that he will lift his objection to the confirmation of Eric Solomon as Assistant Treasury Secretary for Tax Policy. Baucus said that he received a commitment from Treasury Secretary Henry Paulson to testify on the $345 billion tax gap at a Senate Finance Committee next year.  A Senate vote on Solomon’s nomination could occur today.

  • Baucus said, "I’m glad the Secretary agreed to testify before the Finance Committee about what I consider to be a vitally important economic issue, and I look forward to hearing from him about the solid goals and benchmarks that will make Treasury’s tax gap plan into a real strategy for action. As Eric Solomon continues his exemplary public service, I fully expect that he and the Secretary will turn over a new leaf at Treasury in tackling the tax gap.  I believe the Secretary and I have an understanding on the importance of this issue.  I’m committed to working closely with him in the coming year. "

TAX BILLS INTRODUCED DECEMBER 5:

  • H.R. 6385 sponsored by Rep. Peter DeFazio (D-OR) would modify the rate of the excise tax on certain wooden arrows.
  • H.R. 6389 sponsored by Rep. Louis Gohmert (R-TX) would allow taxpayers to designate income tax overpayments as contributions to the Federal Government on their income tax returns.
  • S. 4085 sponsored by Sen. Gordon Smith (R-OR) would modify the rate of the excise tax on certain wooden arrows.
  • S. 4087 sponsored by Sen. Mike Crapo (R-ID) would provide a tax credit to individuals who enter into agreements to protect the habitats of endangered and threatened species.

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
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