Daily Tax Update - January 26, 2007

IRS ANNOUNCES ADDITIONAL EXCEPTIONS TO THE CONTRACTUAL PROTECTION CATEGORY OF REPORTABLE TRANSACTIONS: Today, the IRS issued Rev. Proc. 2007-20, which provides that certain transactions with contractual protection are not reportable transactions for purposes of the disclosure rules under Treas. Reg. § 1.6011-4(b)(4).

  • Rev. Proc. 2007-20 modifies and supersedes Rev. Proc. 2004-65, which provides that the following transactions are not considered transactions with contractual protection for purposes of the disclosure rules under Treas. Reg. § 1.6011-4(b)(4): (1) the work opportunity credit under section 51 of the Code; (2) the welfare-to-work credit under section 51A of the Code; and (3) the Indian employment credit under section 45A(a) of the Code.
  • Rev. Proc. 2007-20 includes the exceptions in Rev. Proc. 2004-65 and adds the following exceptions: (1) the low-income housing credit under section 42(a) of the Code; (2) the new markets tax credit under section 45D(a) of the Code; (3) the empowerment zone employment credit under section 1396(a) of the Code; (4) the renewal community employment credit under section 1400H of the Code; and (5) the employee retention credit under section 1400R(a), (b), or (c) of the Code.
  • For additional information, contact Mark J. Silverman - msilverman@steptoe.com, Matthew D. Lerner - mlerner@steptoe.com
  • The revenue procedure can be accessed via: http://www.irs.gov/pub/irs-drop/rp-07-20.pdf

MINIMUM WAGE / TAX BILL EXPECTED TO PASS SENATE NEXT WEEK: Today, Senate Majority Leader Harry Reid (D-NV) filed cloture on a minimum wage hike/tax package. The cloture vote will occur Tuesday with final Senate passage expected Tuesday or Wednesday. The House wants a "clean" minimum wage bill without the small business tax breaks attached.

IRS OFFERS ONLINE ALTERNATIVE MINIMUM TAX CALCULATOR: Today, the IRS announced that it has updated its online tool to help taxpayers determine within 5 to 10 minutes whether they owe the alternative minimum tax. IRS Commissioner Mark Everson said, "Nobody likes the AMT. But this tool helps people learn quickly whether they’re going to be paying this tax. We also remind taxpayers that AMT calculations are automatic when you use e-file rather than filing a paper return."

TAX BILLS INTRODUCED JANUARY 25th CAN BE ACCESSED VIA: http://www.steptoe.com/assets/attachments/2820.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.

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