Daily Tax Update - March 20, 2009

SENATE MAY CONSIDER BONUS CLAWBACK BILL NEXT WEEK:  Next week, the Senate may consider the “Compensation Fairness Act of 2009” (S. 651), which was introduced yesterday by Senators Max Baucus, Charles Grassley, Ron Wyden, and Olympia Snowe. The Senate bill would impose a 35% excise tax on both employers and employees on retention bonuses and other bonuses paid this year. It would apply to all firms that have received Troubled Asset Relief Program funds, except community banks or other firms that took less than $100 million. Additionally, employees of affected companies could only defer up to $1 million of compensation tax free.

  • Baucus said, “We must act quickly on this proposal -- for the sake of the American taxpayer, for the sake of what's right to do. I will work with my colleagues in both the House and Senate to make sure that's what happens.”
  • Snowe said, “If Washington is serious about ensuring that AIG’s gluttonous bonuses are the last corporate abuse of taxpayer rescue dollars, then we must act swiftly to enact meaningful and effective legislation that includes some real teeth. This bipartisan compromise ensures that money paid out under the TARP program will not be funneled into obscene bonuses. In order to restore confidence in our financial institutions, we must end the arrogant culture that has ignored the hardship of Main Street and imposed further abuse on the American people.”
  • After yesterday’s House passage of its bill, President Obama said, “Today's vote rightly reflects the outrage that so many feel over the lavish bonuses that AIG provided its employees at the expense of the taxpayers who have kept this failed company afloat...Now this legislation moves to the Senate, and I look forward to receiving a final product that will serve as a strong signal to the executives who run these firms that such compensation will not be tolerated.”
  • A summary of S. 651 can be accessed here

TAX BILLS INTRODUCED MARCH 19TH:
H.R.1609: To amend the Food Security Act of 1985 to require the Administrator of the Internal Revenue Service to verify income for purposes of determining the eligibility of persons for certain Department of Agriculture payments and benefits, and for other purposes.
Sponsor: Rep Kind, Ron [WI-3] (introduced 3/19/2009)      Cosponsors (1)

H.R.1613: To amend the Internal Revenue Code of 1986 to make the research credit permanent, increase expensing for small businesses, reduce corporate tax rates, and for other purposes.
Sponsor: Rep Carney, Christopher P. [PA-10] (introduced 3/19/2009)      Cosponsors (1)

H.R.1619: To amend title I of the Employee Retirement Income Security Act of 1974, title XXVII of the Public Health Service Act, and the Internal Revenue Code of 1986 to prohibit preexisting condition exclusions for children in group health plans and health insurance coverage in the group and individual markets.
Sponsor: Rep Schwartz, Allyson Y. [PA-13] (introduced 3/19/2009)      Cosponsors (82)

H.R.1624: To amend the Internal Revenue Code of 1986 to exclude from the gross income of members of the uniformed services of the United States certain amounts of military basic pay.
Sponsor: Rep Bilirakis, Gus M. [FL-9] (introduced 3/19/2009)      Cosponsors (1)

H.R.1628: To amend the Internal Revenue Code of 1986 to permit hardship loans from certain individual retirement plans.
Sponsor: Rep McCotter, Thaddeus G. [MI-11] (introduced 3/19/2009)      Cosponsors (8)

H.R.1629: To amend the Internal Revenue Code of 1986 to provide penalty free distributions and loans from certain retirement plans for the purchase and refinancing of principal residences.
Sponsor: Rep McCotter, Thaddeus G. [MI-11] (introduced 3/19/2009)      Cosponsors (1)

H.R.1632: To amend the Internal Revenue Code of 1986 to provide an exclusion from gross income of long-term capital gains on property purchased before the end of 2009.
Sponsor: Rep Campbell, John [CA-48] (introduced 3/19/2009)      Cosponsors (29)

H.R.1644: To amend the Internal Revenue Code of 1986 to provide for a tax credit for qualified donations of employee services.
Sponsor: Rep Lewis, John [GA-5] (introduced 3/19/2009)      Cosponsors (None)

H.R.1646 : To amend the Internal Revenue Code of 1986 to allow a credit against income tax for the purchase of hearing aids.
Sponsor: Rep McCarthy, Carolyn [NY-4] (introduced 3/19/2009)      Cosponsors (37)

H.R.1647: To amend the Internal Revenue Code of 1986 to allow employers a credit against income tax for hiring veterans.
Sponsor: Rep McCotter, Thaddeus G. [MI-11] (introduced 3/19/2009)      Cosponsors (None)

H.R.1654: To amend the Internal Revenue Code of 1986 to provide credits against income tax for qualified stem cell research, the storage of qualified stem cells, and the donation of umbilical cord blood.
Sponsor: Rep Paul, Ron [TX-14] (introduced 3/19/2009)      Cosponsors (1)

S.643: A bill to amend title I of the Employee Retirement Income Security Act of 1974, title XXVII of the Public Health Service Act, and the Internal Revenue Code of 1986 to prohibit preexisting condition exclusions for children in group health plans and health insurance coverage in the group and individual markets.
Sponsor: Sen Lautenberg, Frank R. [NJ] (introduced 3/19/2009)      Cosponsors (2)

S.651: A bill to amend the Internal Revenue Code of 1986 to impose an excise tax on excessive bonuses paid by, and received from, companies receiving Federal emergency economic assistance, to limit the amount of nonqualified deferred compensation that employees of such companies may defer from taxation, and for other purposes.
Sponsor: Sen Baucus, Max [MT] (introduced 3/19/2009)      Cosponsors (11) 

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.

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