Daily Tax Update - February 5, 2009

SENATE APPROVES HOME BUYER TAX CREDIT-- VOTE ON BILL COULD OCCUR LATER TODAY:  During yesterday’s Senate action on the stimulus bill, an amendment sponsored by Sen. Johnny Isakson (R-GA) was approved that would provide for a new $15,000 tax credit toward home purchases. The proposal would let anyone who buys a new or existing home within one year of the enactment of the economic stimulus bill to get a credit on his or her tax return of $15,000 or 10 percent of the home’s purchase price, whichever is less. It would only apply to the buyer’s principal residence, and the buyer would have to stay in the home for a minimum of two years. The House-passed bill does not contain this provision. 

  • Among the amendments under consideration today include: a provision to strip as much as $100 billion from the package sponsored by Sens. Ben  Nelson (D-NE) and Susan Collins (R-ME) and an amendment sponsored by Sen. Byron Dorgan (D-ND) that would prevent controlled foreign corporations from deferring taxes on income earned from goods imported and sold in the United States.
  • Today, Senate Majority Leader Harry Reid said that he has the 60 votes needed to pass the bill. Reid said, “We hope to have the vote today. I think we will have the votes. Would I like to get more votes? Of course I would. But my No. 1 goal is to pass this bill.”
  • Although the Senate is hopeful to finish the stimulus bill later today, there are a number of amendments pending that could slow down the process. It is unclear whether the House and Senate bills will go to conference to reconcile the differences or get passed by the House and Senate again. Senate Majority Leader Reid said, “The stark reality is that we need to complete this bill…Our intention was to go to conference…but that is sometimes a little slow and a little bit tedious.”
  • Ways and Means Committee Chairman Charles Rangel added, “The big thing is with the spending part of the bill, the time they don't have, the outside believing we have to finish this thing by Thursday and we're coming back Monday, which is an unscheduled day. It's all this idea that the President has to sign it during the presidential holiday. The squeezing, the squeezing process, in a way that we've never had to deal with it before.” When asked about extending the bill beyond the Presidents’ Day February 16th deadline, Rangel said, “Forget about an extension. Even if they were considering it, they couldn't say it. I mean, everything should be done last week.”
  • Today, President Obama again urged Congress to pass the stimulus bill. Obama said, “The time for talk is over. The time for action is now. Because we know that if we don’t act, a bad situation will become dramatically worse. Crisis could turn into catastrophe for families and businesses across our country. I refuse to let that happen. We can’t delay and we can’t go back to the same worn ideas that led us here in the first place. In the last few days, we’ve seen proposals arise from some in Congress that you may not have read, but would be very familiar to you. They’re rooted in the idea that tax cuts alone can solve our problems. That half-measures and tinkering are somehow enough. That we can afford to ignore our most fundamental economic challenges – the crushing cost of health care, the inadequate state of so many schools, and our dangerous dependence on foreign oil.” Obama added, “Let me be perfectly clear: those ideas have been tested, and they have failed. They have taken us from surpluses to an annual deficit of over a trillion dollars, and they have brought our economy to a halt. And that’s precisely what the election we just had was all about. The American people have rendered their judgment. Now is the time to move forward, not back. Now is the time for action.”

TAX BILLS INTRODUCED FEBRUARY 4TH:
H.R.863: To amend the Internal Revenue Code of 1986 to allow employees to receive transportation fringe benefits for the same month both in the form of transit passes and reimbursement of bicycle commuting expenses.
Sponsor: Rep Blumenauer, Earl [OR-3] (introduced 2/4/2009)      Cosponsors (1)

H.R.871: To amend the Internal Revenue Code of 1986 to provide that the taxable income limit on the allowance for depletion shall not apply in 2008 to domestic marginal oil or gas wells.
Sponsor: Rep Conaway, K. Michael [TX-11] (introduced 2/4/2009)      Cosponsors (16)
Committees: House Ways and Means

H.R.879: To amend the Internal Revenue Code of 1986 to allow individuals a refundable credit against income tax for the purchase of private health insurance.
Sponsor: Rep Granger, Kay [TX-12] (introduced 2/4/2009)      Cosponsors (None)
Committees: House Ways and Means

H.R.880: To amend the Internal Revenue Code of 1986 to allow tax-exempt bond financing for fixed-wing emergency medical aircraft.
Sponsor: Rep Hastings, Doc [WA-4] (introduced 2/4/2009)      Cosponsors (1)

H.R.882: To amend the Internal Revenue Code of 1986 to increase the age at which distributions from qualified retirement plans are required to begin from 70 1/2 to 75, and for other purposes.
Sponsor: Rep King, Peter T. [NY-3] (introduced 2/4/2009)      Cosponsors (None)

H.R.883: To amend the Internal Revenue Code of 1986 to repeal the 1993 increase in income taxes on Social Security benefits.
Sponsor: Rep King, Peter T. [NY-3] (introduced 2/4/2009)      Cosponsors (None)

H.R.884: To amend the Internal Revenue Code of 1986 to increase the limitation on the capital loss carryovers of individuals to $20,000.
Sponsor: Rep Kirk, Mark Steven [IL-10] (introduced 2/4/2009)      Cosponsors (None)

H.R.891: To amend the Internal Revenue Code of 1986 to equalize the exclusion from gross income of parking and transportation fringe benefits and to provide for a common cost-of-living adjustment, and for other purposes.
Sponsor: Rep McGovern, James P. [MA-3] (introduced 2/4/2009)      Cosponsors (31)

H.R.897: To amend the Internal Revenue Code of 1986 to allow individuals a deduction for qualified long-term care insurance premiums, use of such insurance under cafeteria plans and flexible spending arrangements, and a credit for individuals with long-term care needs.
Sponsor: Rep Putnam, Adam H. [FL-12] (introduced 2/4/2009)      Cosponsors (9)

H.R.907: To amend the Internal Revenue Code of 1986 to provide for a livestock energy investment credit.
Sponsor: Rep Terry, Lee [NE-2] (introduced 2/4/2009)      Cosponsors (None)

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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