Daily Tax Update - December 21, 2006

THE DAILY TAX UPDATE WILL BE PUBLISHED ON A PERIODIC BASIS UNTIL THE 110TH CONGRESS CONVENES ON JANUARY 4TH.

IRS TO BEGIN PROCESSING SUSPENDED CASH BALANCE PLAN CONVERSION APPLICATIONS
Today, the IRS announced it is lifting a moratorium on determination letter applications for conversions from traditional defined benefit pension plans to so-called cash balance plans.

  • Notice 2007-06 announces that the IRS is beginning to process determination letter and examination cases in which an application for a determination letter or a plan under examination involves an amendment to change a traditional defined benefit plan into a cash balance plan.  This notice also provides transitional guidance on the requirements of sections 411(a)(13) and 411(b)(5) of the Internal Revenue Code (Code), as added by section 701(b) of the Pension Protection Act of 2006 with respect to cash balance plans and other hybrid defined benefit pension plans and to amendments that convert defined benefit pension plans to hybrid defined benefit pension plans. 
  • The notice can be accessed here.
  • For additional information, contact Anne E. Moran via email.

NATIONAL ASSOCIATION OF MANUFACTURERS CALLS FOR 25 PERCENT CORPORATE INCOME TAX RATE
The National Association of Manufacturers (NAM) released its 2007 agenda yesterday. NAM President John Engler called the agenda "ambitious and realistic" which includes cutting the corporate income tax rate to 25 percent. NAM Vice President of Tax and Domestic Economic Policy Dorothy Coleman said, "We've always supported lower corporate tax rates, but based on our cost study it becomes glaringly apparent that ours is significantly higher than most of our competitors."

  • NAM’s agenda also calls for "reducing the federal statutory corporate tax rate to 25 percent and repealing the corporate alternative minimum tax, with expedited refunds of prepaid taxes; strengthening and making permanent the R&D credit; reforming tax laws to reduce the ‘double tax’ and costly compliance burden on U.S. companies doing business overseas; maintaining lower income tax rates for individuals and small businesses, and significantly reducing the burden of the federal estate and gift tax; and maintaining lower tax rates on investment income and lowering the tax rates on corporate capital gains."
  • NAM’s 2007 agenda can be accessed here.

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