Daily Tax Update - April 12, 2007

IRS Reconsidering 'Policy of Restraint' on Requests for Some Work PapersIRS Large and Mid-Size Business Commissioner Deborah Nolan, speaking at a District of Columbia Bar program today, said the IRS is currently considering whether its longstanding "policy of restraint" regarding its requests for some taxpayers' accrual work papers should be changed.  Nolan also said that IRS examination agents will review disclosures taxpayers make under the Financial Accounting Standards Board's Interpretation No. 48 (FIN 48), but added she has not developed a position on whether taxpayers should disclose a list of uncertain tax positions to the IRS.

No Progress on Small Business Tax PackageSenators and aides reported no progress today on reconciling the small business tax relief and minimum wage packages included in the House and Senate versions of supplemental spending legislation (H.R. 1591).  Finance Committee Chairman Max Baucus (D-MT) told reporters that the issue remains "high on the agenda.”  But Senate Finance Committee ranking minority member Chuck Grassley (R-IA) said yesterday that because President Bush intends to veto pending war funding supplemental legislation, there is no rush to wrap up negotiations over a package of small-business tax incentives included in the bill.

  • President Bush has threatened to veto the supplemental legislation because of troop withdrawal language included in the bill as well as extraneous provisions such as the wage and tax provisions.  A Senate GOP Finance Committee aide cautioned that if the supplemental is vetoed, negotiations on the tax and wage portion would have to "start from scratch."
  • Before the annual congressional spring recess, the House and Senate passed separate supplemental bills with significantly different packages of tax relief for small businesses.  While the House bill contained only $1.3 billion in tax incentives, the Senate legislation included over $12 billion.

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