Daily Tax Update - February 12, 2007

WAYS & MEANS COMMITTEE EXPECTED TO APPROVE SMALL BUSINESS TAX INCENTIVES PACKAGE: Later today, the House Ways and Means Committee is expected to pass a small business tax incentives bill estimated to cost $4.6 billion over 5 years. The full House is expected to approve the bill Wednesday or Thursday.  After the House passes its bill, the House and Senate must reconcile the differences between the House and Senate passed bills.

  • The House bill contains three revenue offsets: (1) it provides that dependent children of wealthy taxpayers are subject to the regular 15 percent capital gains tax rate, not 5 percent as in current law or 0 percent as is scheduled to take effect next year and (2) it extends the period by which the IRS must notify delinquent taxpayers of their tax liability before penalties and interest are suspended and (3) it increases corporate estimated tax payments for the third calendar quarter of 2012.
  • The Senate bill combines $8.3 billion in tax incentives for small businesses with an increase in the minimum wage and is offset with numerous revenue raisers. The Senate revenue raisers include provisions that (1) limit the annual amount that may be deferred under a nonqualified deferred compensation plan to the lesser of $1 million or the individual's average taxable compensation for the previous five years; (2) modify the effective date of provisions in the American Jobs Creation Act of 2004 governing sale-in, lease-out transactions; (3) revise tax rules related to expatriations; and (4) increase a variety of tax-related penalties and fees.

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