Daily Tax Update - January 7, 2009

NATIONAL TAXPAYER ADVOCATE RELEASES ANNUAL REPORT TO CONGRESS:  Today, National Taxpayer Advocate Nina Olson released the annual report to Congress, urging simplification of the tax code and recommending measures to reduce the burden on taxpayers who are struggling to pay their tax bills.

  • The report designates the complexity of the tax code as the most serious problem facing taxpayers. According to data compiled by Olson’s office, US taxpayers and businesses spend about 7.6 billion hours a year complying with tax-filing requirements. “If tax compliance were an industry, it would be one of the largest in the United States,” the report says. “To consume 7.6 billion hours, the ‘tax industry’ requires the equivalent of 3.8 million full-time workers.”
  • The report includes a series of recommendations, including recommendations to repeal the Alternative Minimum Tax; streamline education and retirement savings tax incentives; simplify the family status provisions of the tax code; simplify the rules under which workers are classified as employees or independent contractors; reduce sunset and phase-out provisions; and revise the overall penalty structure.
  • Additional information can be accessed here

HOUSE EASES PAY-GO REQUIREMENTS:  Yesterday, the House passed a resolution (H. Res. 5) that included new language that would automatically waive the pay-go requirement for any spending or revenue bill "expressly designated as an emergency" measure. House Democrats are considering waiving pay-go on several major bills in the new Congress, beginning with the economic stimulus package. Pay-go was waived last Congress for the one-year "patch" of the alternative minimum tax and the Emergency Economic Stabilization Act of 2008.

  • Today, House Majority Leader Steny Hoyer said that fiscal balance “obviously will not be possible in the short term” because of the “deep distress our economy is in.” Hoyer added, “In the short term, because of the crisis we confront, we will not be able to meet [pay-as-you-go] requirements.” Hoyer stated that fiscally responsible policies have not “been abandoned. It just means the reality is, at this point in time, we will not be able to effect them.”

Revenue Procedure 2009-15 provides temporary guidance regarding certain stock distributions by publicly traded real estate investment trusts (REITs). This revenue procedure amplifies and supersedes Rev. Proc. 2008–68 to extend the same treatment to publicly traded regulated investment companies (RICs).

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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