Daily Tax Update - August 6, 2008

THE DAILY TAX UPDATE WILL BE PUBLISHED ON A PERIODIC BASIS UNTIL CONGRESS RETURNS FROM ITS AUGUST RECESS ON SEPTEMBER 8TH. 

IRS OFFERS SETTLEMENT PROGRAM FOR LILO, SILO TRANSACTIONS:  Today, the Internal Revenue Service announced a program giving taxpayers 30 days to accept a settlement for lease-in/lease-out (LILO) and sale-in/sale-out (SILO) transactions.

  • Commissioner of Internal Revenue Douglas Shulman, in prepared remarks, stated “Under this initiative, more than 45 of the nation’s largest corporations that participated in these shelters will receive a letter with an offer. Shelter participants will have 30 days to make a decision to accept the offer.”  
  • Under the program, taxpayers have until December 31 to terminate the transactions.
  • In addition to terminating the leases, the taxpayers will be required to concede 80% of the issue, to report 80% of the OID accrued with respect to the transactions, and to pay termination gain (on an actual termination or deemed termination basis).
  • If the taxpayer agrees to the settlement, the taxpayer will not be liable for any penalties under sections 6662 and 6662A. 
  • A taxpayer must be invited to participate in the settlement initiative.  If the taxpayer is invited to participate with respect to both LILO and SILO transactions, the taxpayer must enter agree to participate in the initiative with respect to both the LILO transactions and the SILO transactions.   
  • For additional information, contact Arthur L. Bailey - abailey@steptoe.com or J. Walker Johnson - wjohnson@steptoe.com   
  • The documents can be provided via:  http://www.steptoe.com/attachment.html/3496.PDF 

TREASURY, IRS ISSUE RULING PREVENTING CERTAIN PENSION TRANSFERS: Today, the Treasury Department and the IRS issued Revenue Ruling 2008-45, which states that a transfer of a tax-qualified pension plan from an employer to an unrelated taxpayer when the transfer is not connected with a transfer of significant business assets, operations, or employees, is not permissible under current law.

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.