Daily Tax Update - July 19, 2007

NATIONAL TAXPAYER ADVOCATE RELEASES REPORT FOR FISCAL YEAR 2008:  Today, the National Taxpayer Advocate released a report to Congress identifying priority challenges and issues for the upcoming fiscal year.  The three areas of focus in fiscal year 2008 will be improving taxpayer services, ensuring that taxpayer rights are protected in the IRS's private debt collection initiative, and making the offer-in-compromise program more accessible to taxpayers who are unable to pay their tax debts in full.

HOUSE JUDICIARY COMMITTEE VOTES TO PROHIBIT PATENTS OF TAX PLANNING METHODS:  Yesterday, the House Judiciary Committee approved language to prohibit patents of tax planning methods.  The language would define a tax planning method as "a plan, strategy, technique or scheme that is designed to reduce, minimize, or defer" a taxpayer's tax liability.  The provision would not prohibit patents for tax preparation software or other tools used solely to perform or model mathematical calculations or prepare tax or information returns.

TRANSFER PRICING DOCUMENTATION DEADLINE ON SEPTEMBER 15, 2007 FOR CALENDAR YEAR TAXPAYERS:  To avoid penalties, taxpayers should have appropriate documentation of their transfer pricing methodologies and results by the time they file their tax returns.  For calendar year taxpayers, this means that the documentation must be completed by September 15.  IRS agents have been instructed to look critically at this documentation, so companies may want to reconsider the standards they have used in the past for determining whether their documentation is rigorous and specific enough.  Steptoe's transfer pricing group is available and particularly well-situated to assist with that work.  Click here for more information 

TAX BILLS INTRODUCED JULY 18TH:
H.R. 3080: To amend the Internal Revenue Code of 1986 to provide tax incentives for the remediation of contaminated sites.
Sponsor: Rep. Turner, Michael R. [OH-3] (introduced 7/18/2007)      Cosponsors (1)

H.R. 3088: To amend the Internal Revenue Code of 1986 to provide that distributions from an individual retirement plan, a section 401(k) plan, a section 403(b) contract, or a section 457 plan shall not be includible in gross income to the extent used to pay long-term care insurance premiums.
Sponsor: Rep. Terry, Lee [NE-2] (introduced 7/18/2007)      Cosponsors (4)

S. 1809: A bill to amend the Internal Revenue Code of 1986 to provide that distributions from an individual retirement plan, a section 401(k) plan, a section 403(b) contract, or a section 457 plan shall not be includible in gross income to the extent used to pay long-term care insurance premiums.
Sponsor: Sen. Thune, John [SD] (introduced 7/18/2007)      Cosponsors (None)

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.