Daily Tax Update - January 24, 2007

TAXPAYERS HAVE UNTIL APRIL 17TH TO FILE 2006 RETURNS: Today, the IRS announced that all taxpayers have until April 17th to file their 2006 returns, even though many IRS tax forms and publications show an April 16 due date. The IRS extended the deadline because the traditional April 15 deadline falls on a Sunday and the following day is a legal holiday in the District of Columbia.

  • IRS Commissioner Mark Everson said, "This year, taxpayers have additional time to file and pay beyond the traditional April 15th deadline. As we always do, we encourage taxpayers to get an early start on their taxes to make sure they have plenty of time to accurately prepare their return."
  • Additional information can be accessed via: http://www.steptoe.com/assets/attachments/2813.pdf

SENATE FAILS TO OBTAIN CLOTURE ON MINIMUM WAGE BILL PACKAGE WITHOUT TAX BREAKS: Today, the Senate failed to obtain cloture (54 - 43 vote) on a minimum wage bill without an accompanying package of small business tax breaks. 60 votes are needed to pass the procedural cloture vote in the Senate.

  • Senate Finance Committee Chairman Max Baucus (D-MT) expressed confidence that an agreement with the House could be reached. Baucus left open the possibility that the tax breaks would be stripped from the Senate bill and passed separately. The Constitution requires that all tax legislation must originate in the House. The House minimum wage bill does not contain the $8.3 billion in small-business tax breaks passed by the Senate. Baucus said, "There's no doubt in my mind we'll work it out."
  • House Speaker Nancy Pelosi (D-CA) supports moving a separate tax bill incorporating the small business tax breaks. Pelosi said, "We support many of the tax cuts for small businesses, but we think that should be in a tax bill, not in a minimum wage bill."

DEMOCRATS REACT TO PRESIDENT’S STATE OF THE UNION HEALTH INSURANCE PROPOSAL: Several members of the House and Senate tax-writing committees offered their assessment of President Bush’s proposal to establish a standard tax deduction for health insurance. House Ways and Means Health Subcommittee Chairman Pete Stark (D-CA) said that the Subcommittee would not consider the President’s proposal. Another Ways and Means Committee member Lloyd Doggett (D-TX) said, "He is proposing his first tax increase since he's been in office and that's to tax people who have good insurance." New Senate Finance Committee member Debbie Stabenow (D-MI) responded, "It hurts the middle class, it hurts people with good health care." Stabenow added, "Clearly he did not focus on how to help the middle class tonight. No question."

TAX BILLS INTRODUCED JANUARY 23rd CAN BE ACCESSED VIA: http://www.steptoe.com/assets/attachments/2812.pdf

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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