Daily Tax Update - April 1, 2009

IRS RELEASES ADDITIONAL GUIDANCE ON COBRA SUBSIDY:  Yesterday, the IRS issued Notice 2009-27, which provides additional guidance on the new COBRA premium reduction program. The guidance consists of a short explanation of the law and 58 questions and answers. One of the most welcome portions of the guidance describes what constitutes an “involuntary termination”. See Q/As 1-9. The Notice makes it clear that the interpretation only applies to the COBRA premium reduction program, but not for any other purposes under the Code or other law. The complete summary can be accessed here.  

HOUSE TO CONSIDER ANOTHER BAILOUT BILL:  Today, the House is expected to pass its second bill dealing with bailout bonuses. The bill (H.R. 1664) would prohibit certain compensation payments by companies that have received direct capital investments under the TARP program and the Housing and Economic Recovery Act until these investments are repaid. Specifically, the bill prohibits any compensation payments that are unreasonable or excessive, restricts all non-performance based bonuses, and effectively repeals a controversial provision in the American Recovery and Reinvestment Act. Last month, the House passed legislation (H.R. 1586) that would impose a 90 percent excise tax on bonus payments made by companies receiving more than $5 billion in government assistance. 

  • It is unclear when the Senate might act on the issue. The Senate and House are expected to adjourn for a two-week spring recess by April 3rd. Yesterday, at a Senate hearing, Senate Finance Committee Chairman Max Baucus said, “Senator [Charles] Grassley and I introduced legislation to reclaim those bonuses for the taxpayers and we are looking forward to bringing that legislation to the floor.”

TAX BILLS INTRODUCED MARCH 31TH:
H.R.1805: To amend the Internal Revenue Code of 1986 to make permanent the deduction for State and local sales tax, the deduction for qualified tuition and related expenses, and the deduction for mortgage interest premiums, and to modify to the homebuyer credit.
Sponsor: Rep Wamp, Zach [TN-3] (introduced 3/31/2009)      Cosponsors (None)

H.R.1806: To amend the Internal Revenue Code of 1986 to provide incentives to encourage investment in the expansion of freight rail infrastructure capacity and to enhance modal tax equity.
Sponsor: Rep Meek, Kendrick B. [FL-17] (introduced 3/31/2009

H.R.1808: To amend the Internal Revenue Code of 1986 to provide for consumer rebates for purchases of certain new passenger motor vehicles.
Sponsor: Rep Speier, Jackie [CA-12] (introduced 3/31/2009)      Cosponsors (1)

H.R.1812: To amend the Internal Revenue Code of 1986 to reduce the recovery periods for certain energy production and distribution facilities.
Sponsor: Rep Bachmann, Michele [MN-6] (introduced 3/31/2009)      Cosponsors (2)

H.R.1831: To amend the Internal Revenue Code of 1986 to make permanent the special rule for contributions of qualified conservation contributions.
Sponsor: Rep Thompson, Mike [CA-1] (introduced 3/31/2009)      Cosponsors (93)

S.744: A bill to amend the Internal Revenue Code of 1986 to exclude from an employee's gross income any employer-provided supplemental instructional services assistance, and for other purposes.
Sponsor: Sen Snowe, Olympia J. [ME] (introduced 3/31/2009)      Cosponsors (1)

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
Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country. The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court. The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving. Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them. Read more information on Steptoe's tax practice.