Daily Tax Update - August 28, 2007

THE DAILY TAX UPDATE WILL BE PUBLISHED ON A PERIODIC BASIS UNTIL CONGRESS RETURNS ON SEPTEMBER 4TH

TREASURY, IRS ISSUE PROPOSED REGULATIONS OUTLINING NEW RULES  RESTRICTING BENEFITS IN UNDERFUNDED PENSION PLANS:  Today, the Treasury Department and IRS issued proposed regulations to provide guidance on new rules enacted as part of the Pension Protection Act of 2006 (PPA) that restrict benefits in pension plans that are underfunded.

  • According to the Treasury Department, “The restrictions on benefits will apply next year to underfunded pension plans under section 436 of the Internal Revenue Code.   The proposed regulations reflect the new law and include a number of transition rules.  The proposed regulations also include guidance under section 430(f) of the Internal Revenue Code regarding the treatment of an employer’s contributions in excess of the minimum required contribution for a plan year that results in a credit or funding balance.  PPA generally requires such a balance to be excluded in determining a plan’s funded percentage for purposes of applying the limitations of section 436. The proposed regulations will apply to plan years beginning after December 31, 2007, and can be relied on for qualification purposes pending the final regulations.”
  • For additional information, contact - Anne E. Moran - amoran@steptoe.com
  • The regulations can be accessed via: http://www.ustreas.gov/press/releases/reports/reg11389107.pdf

STEPTOE’S UK AUGUST 2007 TAX LAW UPDATE CAN BE ACCESSED VIA:
http://www.steptoe.com/assets/attachments/3109.pdf

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.