Daily Tax Update - June 17, 2008

SENATE FAILS AGAIN TO OBTAIN CLOTURE ON EXTENDERS BILL:  Today, the Senate once again fell short (by a 52-44 vote) of invoking cloture on the House-passed tax extenders bill (H.R. 6049). The cloture vote was originally scheduled for yesterday but was postponed until today. It is unclear what will happen next.

  • Ranking Finance Committee member Charles Grassley said, “The Democratic leadership is stuck in the part of the film (Groundhog Day) where Bill Murray relives the same day because he is doing the wrong thing and refuses to change behavior.”

RANGEL INTRODUCES AMT PATCH BILL:  Today, House Ways and Means Committee Chairman Charles Rangel introduced the Alternative Minimum Tax Relief Act of 2008 (H.R. 6275). The Committee will mark up the bill tomorrow. The offsets include changing the taxation of carried interest, denying the Section 199 manufacturing deduction for certain major integrated oil companies, setting a limitation on treaty benefits for certain deductible payments, and requiring information returns for merchant credit card payments.

IRS ISSUES PROPOSED REGULATIONS ON DEFINED BENEFIT ACCRUAL RULES FOR PLANS WITH MORE THAN ONE FORMULA:  Today, the IRS issued proposed regulations providing guidance on the application of the accrual rules for defined benefit plans under section 411(b)(1)(B) of the Code, in cases where plan benefits are determined on the basis of the greatest of two or more separate formulas. Under the proposed regulations, in certain cases, the separate formulas can be separately tested for purposes of the accrual rules. 

IRS REMINDS TAXPAYERS OF UPCOMING DEADLINE TO REPORT CERTAIN FOREIGN BANK AND FINANCIAL ACCOUNTS:  Today, the IRS reminded US persons who have bank and other financial accounts in a foreign country that they may be required to report those accounts to the Treasury Department by the June 30 deadline.

  • According to the IRS, “US persons are required to file a Report of Foreign Bank and Financial Accounts (FBAR), Form TD F 90-22.1, each year if they have a financial interest in or signature authority or other authority over any financial accounts, including bank, securities or other types of financial accounts, in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year.”
  • IRS Commissioner Doug Shulman said, “There are responsibilities that go along with owning such foreign bank and financial accounts. Foreign account owners must remember that they may have to report their accounts to the government, even if the accounts do not generate any taxable income.”

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.