Daily Tax Update - January 29, 2008

HOUSE APPROVES ECONOMIC STIMULUS BILL:  Today, by a vote of 385 to 35, the House passed its $146 billion economic stimulus bill. The House bill provides rebate checks worth $600 to individuals and $1,200 for families, plus $300 per child, while providing business tax breaks.

  • House Speaker Nancy Pelosi (D-CA) said, “I would hope that the timely aspect of this is recognized by my colleagues in the Senate. We have to have a stimulus. There's just no question. Once you understand that, then you have a responsibility to work back to that and find common ground. I would hope that what the Senate does is respectful of the focus that we have on middle class and lower-income people."
  • A summary of the tax provisions in the bill can be accessed via: http://waysandmeans.house.gov/media/pdf/110/hr5140/128%20Summary%20of%20Tax%20Provisions.pdf 
  • A description of the bill can be accessed via: http://www.house.gov/jct/x-5-08.pdf

FINANCE COMMITTEE TO MARK UP ECONOMIC STIMULUS PROPOSAL TOMORROW:  On January 30, the Senate Finance Committee will consider a proposed economic stimulus package providing a flat $500 rebate to any American with $3000 of qualifying income to report on a 2007 tax return sponsored by Committee Chairman Max Baucus (D-MT). Different from the House proposal, the definition of qualifying income will include Social Security benefits as well as wages, allowing many more Americans to get a check. The Baucus plan extends Federal unemployment insurance benefits for jobless Americans in all states by 13 weeks, with additional benefits for workers in states with high unemployment. Committee members are expected to offer numerous amendments during the mark up.

  • The Chairman’s Mark would extend a provision allowing corporations to apply excess net operating losses to tax returns from prior profitable years and receive any applicable refunds. For 2006 and 2007 losses, the “net operating loss (NOL) carryback” would be extended to five years (back to 2001) from the two years currently in the law. The Chairman’s Mark also expands Section 179 expensing of equipment for small businesses and bonus depreciation for business property that is purchased and placed into service by large companies during 2008, similar to the House-Administration proposal.
  • Rangel responded to Baucus’ proposal yesterday. Rangel said, “By eliminating the income cap, we would only further grow the divide between rich and poor that has already grown so much under President Bush's tax policies. I am concerned that this expansion would jeopardize the entire stimulus package. So, while I understand that the Senate may not want to immediately accept the House bill, they are walking on very thin ice."
  • A description of the Chairman’s Mark can be accessed via: http://www.house.gov/jct/x-8-08.pdf

BUSH CALLS FOR PERMANENT EXTENSION OF TAX CUTS IN STATE OF THE UNION :  Last night, President Bush called for permanent extension of his 2001 and 2003 tax cuts and passage of the economic stimulus package. The President said, “With all the other pressures on their finances, American families should not have to worry about the federal government taking a bigger bite out of their paychecks. There is only one way to eliminate this uncertainty: make the tax relief permanent.” The President added, “And members of Congress should know: If any bill raises taxes reaches my desk, I will veto it.”

  • The President also urged Congress to pass the economic stimulus package. The President said, “So last week, my administration reached agreement with Speaker Pelosi and Republican Leader Boehner on a robust growth package that includes tax relief for individuals and families and incentives for business investment. The temptation will be to load up the bill. That would delay it or derail it, and neither option is acceptable. This is a good agreement that will keep our economy growing and our people working. And this Congress must pass it as soon as possible.”
  • The President did not call for comprehensive tax reform. House Ways and Means Committee Chairman Charles Rangel (D-NY) responded last night, “Reducing the corporate tax rate would help keep our companies competitive internationally, but it is only achievable if we view the elimination of unfair provisions as closing loopholes, rather than raising taxes.”
  • The President’s remarks can be accessed via: http://www.whitehouse.gov/news/releases/2008/01/20080128-13.html

IRS COMMISSIONER NOMINEE TESTIFIES BEFORE COMMITTEE:  Today, the Senate Finance Committee held a hearing on Douglas Shulman’s nomination to become the next IRS Commissioner. Shulman said, “Since I've been nominated, many people have asked me if I would emphasize service or enforcement. But to be forced to choose between the two is a false choice. In order to execute its mission, the IRS must do both.” Shulman added, “Any effort to improve services must include a commitment to IRS modernization. IRS employees must have timely access to taxpayer data so assistance is quick and accurate. This will require focusing on and investing in IRS processes, as well as the IRS's information technology systems. If confirmed as Commissioner, I would make this one of my top priorities.”

TAX BILLS INTRODUCED JANUARY 28TH:
H.R.5141: To amend the Internal Revenue Code of 1986 to encourage investment in high productivity property, and for other purposes.
Sponsor: Rep English, Phil [PA-3] (introduced 1/28/2008)      Cosponsors (None)

H.R.5142: To amend the Internal Revenue Code of 1986 to provide an economic stimulus for individuals.
Sponsor: Rep English, Phil [PA-3] (introduced 1/28/2008)      Cosponsors (None)

H.R.5150: To amend the Internal Revenue Code of 1986 to increase the child tax credit for taxable years beginning in 2008 and provide for the advance payment thereof.
Sponsor: Rep Yarmuth, John A. [KY-3] (introduced 1/28/2008)      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.

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