Daily Tax Update - January 21, 2009

GEITHNER TESTIFIES BEFORE SENATE FINANCE COMMITTEE:  Today, Timothy Geithner, President Obama's nominee for Treasury Secretary testified before the Senate Finance Committee. Geithner apologized to Senate Finance Committee members for previous failures to pay certain taxes and said his “[mistakes] were careless, avoidable, but completely unintentional.” The Committee is scheduled to vote on his nomination tomorrow.

  • Senate Finance Committee Chairman Max Baucus said, “I said today that the Secretary’s challenges are formidable, but I’m convinced that Mr. Geithner is capable of helping restore our economy to a position of stability and prosperity. I have every confidence that he will oversee the Treasury and its TARP program with honesty and transparency, and will stay mindful and respectful of Main Street and potential conflicts of interest as he goes about protecting and accounting for spent tax dollars. I look forward to working with Mr. Geithner and will make sure this Committee gives him the support needed to get us out of the woods, get the job done now, and get it done right.” After today's hearing, Baucus said, “He's going to be confirmed so we might as well confirm him right away.”
  • Geithner's remarks can be accessed here.

WAYS AND MEANS COMMITTEE TO MARK UP STIMULUS BILL TOMORROW:  The House Ways and Means Committee will mark up the $275 billion tax title of the “American Recovery and Tax Reinvestment Act of 2009” (H.R. 598) on January 22nd. The bill includes:

  • Tax Relief for Individuals:
    • “Making Work Pay Credit”
    • Expand Earned Income Tax Credit (EITC)
    • Increase in child tax credit, $0 floor
  • Business Tax Provisions:
    • Bonus depreciation
    • 5-year carryback of net operating losses (excluding companies receiving TARP benefits, Fannie Mae, and Freddie Mac)
    • Extension of increased small business expensing
    • Expand work opportunity tax credit for disconnected youth and unemployed, recently-discharged veterans
    • Prospectively repeal Treasury Section 382 ruling
  • State and Local Governments: 
    • Allow financial institutions to purchase State and local bonds and other changes
    • Repeal AMT limits on new private activity bonds
    • Taxable bond option for governmental bonds
    • School construction bonds
    • One year deferral of withholding tax on government contractors
  • Summaries of the bill can be accessed here.

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
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