Daily Tax Update - February 26, 2009

ADMINISTRATION RELEASES $3.55 TRILLION BUDGET BLUEPRINT – WITH NUMEROUS REVENUE OFFSETS:  Today, the Office of Management and Budget released the FY 2010 budget outline.  The full details are expected in April. The President’s budget would reinstate the 36 percent and 39.6 percent rates for taxpayers earning over $200,000 for single filers and $250,000 for joint filers. It would also reinstate the personal exemption phase-out and limitation on itemized deductions; and impose a 20-percent rate on capital gains and dividends for the same group of taxpayers.

  • The budget would eliminate capital gains taxation on small businesses, make the research and experimentation tax credit permanent, expand net operating loss carryback, and modify Federal Aviation Administration financing.
  • The budget contains numerous revenue raisers which include:  reinstating Superfund taxes, taxing carried interest as ordinary income, codifying the economic substance doctrine, repealing LIFO, implementing international enforcement, "reforming deferral, and other tax reform policy", repealing the tax code Section 199 manufacturing deduction for oil and natural gas companies, and repealing the percentage depletion for oil and natural gas from marginal properties.  
  • The tax provisions are highlighted on pages 122 & 123 of this document here

IRS RELEASES INFORMATION TO HELP EMPLOYERS CLAIM COBRA MEDICAL COVERAGE CREDIT ON PAYROLL TAX FORM:  Today, the IRS released new detailed information that will help employers claim credit for the COBRA medical premiums they pay for their former employees.  The IRS also released a new set of questions and answers for employers.  In addition, the IRS Web site contains a revised version of the quarterly payroll tax return that employers will use to claim credit for the COBRA medical premiums they pay for their former employees.

  • Additional information can be accessed here

TAX BILLS INTRODUCED FEBRUARY 25TH
H.R.1192: To amend the Internal Revenue Code of 1986 to provide more help to Alzheimer's disease caregivers.
Sponsor: Rep Johnson, Eddie Bernice [TX-30] (introduced 2/25/2009)      Cosponsors (1)

H.R.1194: To amend the Internal Revenue Code of 1986 to classify automatic fire sprinkler systems as 5-year property for purposes of depreciation.
Sponsor: Rep Langevin, James R. [RI-2] (introduced 2/25/2009)      Cosponsors (55)

H.R. 1203: To amend the Internal Revenue Code of 1986 to allow Federal civilian and military retirees to pay health insurance premiums on a pretax basis and to allow a deduction for TRICARE supplemental premiums.
Sponsor: Rep Van Hollen, Chris [MD-8] (introduced 2/25/2009)      Cosponsors (16)

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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