Daily Tax Update - April 4, 2007

THE DAILY TAX UPDATE WILL BE PUBLISHED ON A PERIODIC BASIS UNTIL CONGRESS RETURNS FROM ITS SPRING RECESS ON APRIL 16TH

IRS ISSUES FINAL REGS ON LIMITATION ON QUALIFIED PLAN BENEFITS, CONTRIBUTIONS: Today, the IRS issued final regulations regarding the maximum benefit and contribution limitations of section 415 of the Internal Revenue Code, including updates to the regulations for numerous statutory changes since comprehensive final regulations were last published under section 415 in 1981.  The regulations provide an anticipated explanation of the circumstances under which severance payments are considered compensation for purposes of section 415, as well as limitations on the deferral of severance payments under a section 401(k) plan.  They include guidance on certain changes made to section 415 under the Pension Protection Act of 2006.  The final regulations also make conforming changes to regulations under sections 401(a), 401(a)(9), 401(k), 402, 416, and 457.  The final regulations are generally effective for limitation years (and, in the case of section 401(k) plan rules, plan years) beginning on or after July 1, 2007.  These regulations affect administrators of, participants in, and beneficiaries of qualified employer plans and certain other retirement plans.

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.