Daily Tax Update - February 13, 2007

IRS TO WAIVE ESTIMATED TAX PENALTY FOR US CITIZENS OR RESIDENTS LIVING AND WORKING ABROAD: Today, the IRS and Treasury Department released guidance on the estimated tax penalty for citizens or residents of the United States living and working abroad. Notice 2007-16 explains the changes made by the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) to the foreign earned income exclusion and housing cost amount under section 911. TIPRA changes to section 911 were enacted in May 2006, but they are effective retroactive for tax years beginning January 1, 2006. Individuals relying on the existing law before the retroactive change may have underpaid their 2006 estimated tax liabilities. Notice 2007-16 provides that, under certain circumstances, the IRS will waive section 6654 penalties for underpayment of estimated tax by certain citizens and residents of the United States living abroad.

TAX BILLS INTRODUCED FEBRUARY 12th:

http://www.steptoe.com/attachment.html/2874/feb12tax.doc

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.