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.

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.