Daily Tax Update - January 14, 2009

Congressional COMMITTEES TO MARK UP STIMULUS BILL NEXT WEEK:  The House Ways and Means and Senate Finance Committees are scheduled to mark up the economic stimulus package on January 22nd.  

  • Today, House Speaker Nancy Pelosi said that an announcement outlining details of an economic stimulus package could come within 24 hours. Pelosi said the blueprint would be ready, “if not later today then tomorrow.”

IRS EXPANDS THE APPLICATION OF RECENT GUIDANCE PROVIDING RELIEF UNDER SECTION 956:  Today, the IRS issued Notice 2009-10 to extend the application of recent relief set forth in Revenue Procedure 2008-26 and Notice 2008-91 concerning section 956. In general, a US shareholder of a controlled foreign corporation (a “CFC”) must include in gross income the shareholder's pro rata share of any increase in the CFC's investment of earnings in US property. Section 956(c) defines the term “US property” to include obligations of a US person. 

  • Revenue Procedure 2008-26 set forth circumstances in which the IRS would not challenge whether a security qualified for the exception to US property for “readily marketable securities” under section 956(c)(2)(J). Notice 2009-10 extends the application of Revenue Procedure 2008-26 to any day during calendar year 2009 in addition to any day during calendar year 2007 or 2008. 
  • Notice 2008-91 announced that regulations will be issued to extend the time period in which (i) a CFC can retire an obligation after the close of its taxable year and exclude that obligation from being treated as US property from 30 days to 60 days and (ii) the CFC could hold obligations of US persons during the taxable year without forfeiting the exclusion from 60 days from 180 days. Notice 2009-10 provides that regulations described in Notice 2008-91 will apply to the CFC's three consecutive taxable years, including short taxable years, that end after October 3, 2008, and that end on or before December 31, 2008. 
  • For additional information, contact Philip R. West - pwest@steptoe.com
  • The notice can be accessed here

GEITHNER’S CONFIRMATION HEARING POSTPONED:  The Senate Finance Committee said it would now hold a confirmation hearing for Treasury Secretary Timothy Geithner on January 21st after some senators objected to holding the hearing on Friday because of disclosures that Geithner paid some taxes for past years late. A spokeswoman for Senate Finance Committee Chairman Max Baucus said that the hearing would proceed on Friday, as originally planned, if the objection was withdrawn. It was reported that Geithner recently paid a total of $43,200 in back taxes and interest for underpayments from 2001 to 2004. 

  • Yesterday, the Committee released several documents related to Geithner’s tax returns. The documents can be accessed here.  

FINANCE COMMITTEE SELECTS NEW DEMOCRATIC MEMBERS:  Senate Democrats announced that three members have been added to the Senate Finance Committee. The new members are: Sens. Bill Nelson (D-FL), Robert Menendez (D-NJ), and Thomas Carper (D-DE).

H.R.460: To amend the Internal Revenue Code of 1986 to increase the credit for employers establishing workplace child care facilities, to increase the child care credit to encourage greater use of quality child care services, to provide incentives for students to earn child care-related degrees and to work in child care facilities, and to increase the exclusion for employer-provided dependent care assistance.
Sponsor: Rep Ruppersberger, C. A. Dutch [MD-2] (introduced 1/13/2009)      Cosponsors (1)

H.R.470: To amend the Internal Revenue Code of 1986 to provide for permanent tax incentives for economic growth.
Sponsor: Rep Garrett, Scott [NJ-5] (introduced 1/13/2009)      Cosponsors (2)

H.R.473: To amend the Internal Revenue Code of 1986 to extend eligibility under the new markets tax credit for community development entities created or organized in American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, and the Virgin Islands.
Sponsor: Rep Bordallo, Madeleine Z. [GU] (introduced 1/13/2009)      Cosponsors (4)

H.R.474: To amend the Internal Revenue Code of 1986 to permanently extend the Indian employment credit and the depreciation rules for poverty used predominantly within an Indian reservation.
Sponsor: Rep Boren, Dan [OK-2] (introduced 1/13/2009)      Cosponsors (1)

H.R.475: To amend the Internal Revenue Code to qualify formerly homeless youth who are students for purposes of low income housing tax credit.
Sponsor: Rep Ellison, Keith [MN-5] (introduced 1/13/2009)      Cosponsors (3)

S.222: A bill to amend the Internal Revenue Code of 1986 to increase the national limitation on qualified energy conservation bonds and to clarify that certain programs constitute a qualified conservation purpose, and for other purposes.
Sponsor: Sen Feingold, Russell D. [WI] (introduced 1/13/2009)      Cosponsors (None)

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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