Daily Tax Update - April 18, 2007

IRS COMMISSIONER MARK EVERSON LEAVING IRS TO TAKE OVER AS HEAD OF THE AMERICAN RED CROSSThe American Red Cross Board of Governors announced today it has unanimously approved Mark Everson to become their next president and CEO, effective May 29, 2007.

  • Bonnie McElveen-Hunter, Chairman of the Red Cross, said “On behalf of the entire Board, the Red Cross is delighted to welcome such a capable and compassionate leader whose proven experience and leadership skills will bring valuable expertise to better prepare the American Red Cross to prevent, prepare and respond to the nation’s critical needs.”
  • In a message to IRS employees, Everson wrote that he looks back over the last four years “with great pride and satisfaction.”  He went on to say that “together, we have rebalanced the organization, bringing to life the equation: Service + Enforcement = Compliance.  This has been no small feat, and I thank all of you for doing your part to restore credibility to our enforcement programs while continuing to improve taxpayer service over this period.”
  • Everson has served as the 46th Commissioner of the Internal Revenue Service since May 5, 2003. 

HOUSE PASSES TAXPAYER PROTECTION BILLYesterday, the House passed the Taxpayer Protection Act of 2007 (H.R. 1677) by a vote of 407-7.

  • The bill seeks to protect taxpayers against tax fraud and identity theft as well as predatory refund anticipation loans.  The Act requires the IRS to notify taxpayers if their identity has been used in a tax scam, increases penalties on sponsors of misleading Web sites that seek to present themselves as the IRS's Web site, and increases penalties for those who use mass e-mails to dupe taxpayers into giving up personal information.
  • House Ways and Means Oversight Subcommittee Chairman John Lewis (D-GA) called the bill an important first step that moves Congress towards tax simplification.

LEVIN, COLEMAN INTRODUCE BILL TO CREATE PUBLIC LIEN REGISTRY:  Yesterday, Sens. Carl Levin (D-MI) and Norm Coleman (R-MN) introduced legislation that would allow the IRS to process liens through a "national tax lien registry" that would be accessible by the public through the Internet at no cost.

  • According to a statement issued by the Senators, the bill would save the IRS $570 million over 10 years by eliminating state filing fees, IRS personnel costs, travel costs related to local filing problems, and costs caused by IRS errors.
  • "Outdated laws are forcing the IRS to waste taxpayer dollars on an old-fashioned, inefficient, and burdensome paper tax lien filing system that could be easily replaced by a modern electronic filing system," Levin said. "Using a centralized, electronic filing system instead of a decentralized system requiring tax liens to be filed on paper in over 4,000 local recording offices across the country would save millions of taxpayer dollars."

BAUCUS SAYS TREASURY PLAN MUST ASSURE 90 PERCENT TAX COMPLIANCE BY 2017:  Today, the Senate Finance Committee held a hearing on “Examining the Administration’s Plan for Reducing the Tax Gap:  What are the Goals, Benchmarks, and Timetables?”  Chairman Max Baucus (D-MT) said that the Treasury Department must deliver to Congress by July 18 a plan to reduce the tax gap, with a goal of 90 percent voluntary compliance by 2017.

  • "It is up to the Treasury Department to develop and present to this committee a plan that will achieve this 90 percent compliance goal,"  Baucus said in a statement prepared for the hearing.  “I am setting a goal of 90 percent voluntary compliance by the year 2017.  That is six percentage points higher than today’s rate.  This is a realistic goal.  It is achievable, within 10 years.  When it is reached, collections of taxes legally owed will increase by at least $150 billion each year.”
  • But today Treasury Secretary Paulson declined to support Chairman Baucus in his goal.  Paulson said he is hesitant to agree to that target because the steps needed to achieve that result could punish honest taxpayers.  "It's a mirage to say that that 90 percent is out there without some pain," Paulson said in response to committee member questions.  "The steps that need to be taken are very, very onerous steps if people are going to get there."

TAX INCENTIVES FOR ALTERNATIVE ENERGY SOURCES TO BE CONSIDERED:  House Ways and Means Select Revenue Measures Subcommittee Chairman Richard E. Neal (D-MA) and Senate Finance Chairman Max Baucus (D-MT) will both hold hearings on energy tax credits.

  • Rep. Neal announced today that the Subcommittee on Select Revenue Measures will hold a hearing on Tuesday, April 24th, on specific Member proposals on tax incentives for alternative energy sources that have been introduced in the 109th and 110th Congress, and is expected to hear testimony from officials representing the wind, biomass, geothermal, solar, clean coal, and fuel cell industries.
  • On Thursday, the Finance Committee will hold its third energy tax hearing this year, focusing on tax incentives for alternative fuels and vehicles.  Senate Finance Chairman Baucus said he might not be ready to meet Majority Leader Reid's goal to take up energy legislation on the floor by Memorial Day.  "It's going to be difficult to get something done by June, I think," Baucus said yesterday.  "We've got to do it right. We've got a number of hearings lined up."  He said he is not sure when he'd have an energy tax package drafted and moved through his committee.

TAX BILLS INTRODUCED APRIL 17:
H.R.1865: To amend title 31, United States Code, to allow certain local tax debt to be collected through the reduction of Federal tax refunds.
Sponsor: Rep. Davis, Tom [VA-11] (introduced 4/17/2007).  Cosponsors (4)
Committees: House Oversight and Government Reform; House Ways and Means
Latest Major Action: 4/17/2007 Referred to House committee. Status: Referred to the Committee on Oversight and Government Reform, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

H.R.1869: To enhance the ability of community banks to foster economic growth and serve their communities, boost small businesses, increase individual savings, and for other purposes.
Sponsor: Rep. Velazquez, Nydia M. [NY-12] (introduced 4/17/2007).  Cosponsors (None)
Committees: House Financial Services; House Ways and Means; House Small Business
Latest Major Action: 4/17/2007 Referred to House committee. Status: Referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means, and Small Business, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

H.R.1875: To amend the Internal Revenue Code of 1986 to permanently extend the Indian employment credit and the depreciation rules for property used predominantly within an Indian reservation.
Sponsor: Rep. Boren, Dan [OK-2] (introduced 4/17/2007).  Cosponsors (1)
Committees: House Ways and Means
Latest Major Action: 4/17/2007 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

H.R.1876: To amend the Internal Revenue Code of 1986 to exclude from gross income of individual taxpayers discharges of indebtedness attributable to certain forgiven residential mortgage obligations.
Sponsor: Rep. Andrews, Robert E. [NJ-1] (introduced 4/17/2007).  Cosponsors (1)
Committees:
House Ways and Means
Latest Major Action: 4/17/2007 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

H.R.1882: To amend the Internal Revenue Code of 1986 to authorize agricultural producers to establish and contribute to tax-exempt farm risk management accounts in lieu of obtaining federally subsidized crop insurance or noninsured crop assistance, to provide for contributions to such accounts by the Secretary of Agriculture, to specify the situations in which amounts may be paid to producers from such accounts, and to limit the total amount of such distributions to a producer during a taxable year, and for other purposes.
Sponsor: Rep. Everett, Terry [AL-2] (introduced 4/17/2007).  Cosponsors (4)
Committees:
House Ways and Means; House Agriculture
Latest Major Action: 4/17/2007 Referred to House committee. Status: Referred to the Committee on Ways and Means, and in addition to the Committee on Agriculture, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

H.R.1887: To amend the Internal Revenue Code of 1986 to extend the financing for Superfund for purposes of cleanup activities with respect to those Superfund sites for which removal and remedial action is estimated to cost more than $50 million, and for other purposes.
Sponsor: Rep. Hinchey, Maurice D. [NY-22] (introduced 4/17/2007).  Cosponsors (None)
Committees:
House Ways and Means; House Energy and Commerce; House Transportation and Infrastructure
Latest Major Action: 4/17/2007 Referred to House committee. Status: Referred to the Committee on Ways and Means, and in addition to the Committees on Energy and Commerce, and Transportation and Infrastructure, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

H.R.1888: To amend the Internal Revenue Code of 1986 to provide a shorter recovery period for the depreciation of certain systems installed in nonresidential buildings.
Sponsor: Rep. Hoekstra, Peter [MI-2] (introduced 4/17/2007).  Cosponsors (28)
Committees: House Ways and Means
Latest Major Action: 4/17/2007 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

H.R.1898: To amend the Internal Revenue Code of 1986 to allow individuals a credit against income tax for medical expenses for dependents.
Sponsor: Rep. Paul, Ron [TX-14] (introduced 4/17/2007).  Cosponsors (None)
Committees: House Ways and Means
Latest Major Action: 4/17/2007 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

S.1123: A bill to provide an extension for filing a refund for the excise tax on toll telephone service, and to provide for a safe harbor for businesses claiming such a refund.
Sponsor: Sen. Stabenow, Debbie [MI] (introduced 4/17/2007).  Cosponsors (None)
Committees: Senate Finance
Latest Major Action: 4/17/2007 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.

S.1124: A bill to amend the Internal Revenue Code of 1986 to simplify, modernize, and improve public notice of and access to tax lien information by providing for a national, Internet accessible, filing system for Federal tax liens, and for other purposes.
Sponsor: Sen. Levin, Carl [MI] (introduced 4/17/2007).  Cosponsors (1)
Committees: Senate Finance
Latest Major Action: 4/17/2007 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.

S.1125: A bill to amend the Internal Revenue Code of 1986 to provide incentives to encourage investment in the expansion of freight rail infrastructure capacity and to enhance modal tax equity.
Sponsor: Sen. Lott, Trent [MS] (introduced 4/17/2007).  Cosponsors (10)
Committees: Senate Finance
Latest Major Action: 4/17/2007 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.

S.1129: A bill to amend the Internal Revenue Code of 1986 to modify the definition of governmental plan with respect to Indian tribal governments.
Sponsor: Sen. Smith, Gordon H. [OR] (introduced 4/17/2007).  Cosponsors (1)
Committees: Senate Finance
Latest Major Action: 4/17/2007 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.

S.1130: A bill to amend the Internal Revenue Code of 1986 to restore, increase, and make permanent the exclusion from gross income for amounts received under qualified group legal services plans.
Sponsor: Sen. Smith, Gordon H. [OR] (introduced 4/17/2007).  Cosponsors (7)
Committees:
Senate Finance
Latest Major Action: 4/17/2007 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.

S.1132: A bill to amend the Internal Revenue Code of 1986 to allow Indian tribes to receive charitable contributions of apparently wholesome food.
Sponsor: Sen. Murkowski, Lisa [AK] (introduced 4/17/2007).  Cosponsors (None)
Committees: Senate Finance
Latest Major Action:
4/17/2007 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.

S.1133: A bill to provide additional protections for recipients of the earned income tax credit.
Sponsor: Sen. Akaka, Daniel K. [HI] (introduced 4/17/2007).  Cosponsors (2)
Committees: Senate Finance
Latest Major Action: 4/17/2007 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.

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.