Daily Tax Update - April 29, 2009

HOUSE PASSES FY 2010 BUDGET RESOLUTION: On President Obama’s 100th day in office, the House passed Congress’s budget resolution in a 233-193 vote. The Senate could vote on the resolution this afternoon, but Senate Republicans would have to agree to waive a rule requiring that conference reports be available to the public for 48 hours before a vote. If the rule is not waived, the earliest the Senate could vote on the resolution is late Thursday night. Yesterday, Senate Budget Committee Chairman Kent Conrad described the budget resolution as “meeting President Obama’s goals of reducing our dependence on foreign energy, striving for excellence in education, reforming our health care system, and providing middle-class tax relief – all while still cutting the deficit substantially.” In total, the resolution will provide $764 billion in tax cuts over the next five years, including:

  • $512 billion to extend middle-class tax cuts, such as the 10% bracket, the child tax credit, marriage penalty relief, education incentives, and other 2001 and 2003 tax cuts for taxpayers making under $250,000;
  • $214 billion for three years of AMT reform;
  • $72 billion to match the President’s estate tax reform proposal, which would permanently extend the 2009 level of a $7 million exemption for couples and $3.5 million for individuals; and
  • $63 billion for two years of extenders.

IRS PROPOSES GRADUATED RETAINED INTEREST REGULATIONSToday, the Internal Revenue Service proposed estate tax regulations under section 2036 that provide guidance on the portion of trust property includible in the grantor’s gross estate if the grantor has retained the use of the property, the right to an annuity, unitrust, graduated retained interest, or other payment from such property for life, for any period not ascertainable without reference to the grantor’s death, or for a period that does not in fact end before the grantor’s death. The regulations, if finalized, will affect estates that file Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. 

TAX BILLS INTRODUCED APRIL 28th:
H.R.2137: To amend the Public Health Service Act, the Employee Retirement Income Security Act of 1974, the Internal Revenue Code of 1986, and title 5, United States Code, to require individual and group health insurance coverage and group health plans and Federal employees health benefit plans to provide coverage for routine HIV screening.
Sponsor: Rep Waters, Maxine [CA-35] (introduced 4/28/2009)      Cosponsors (5)

H.R.2140: To amend the Internal Revenue Code of 1986 to modify the withholding requirement with respect to proceeds from certain pari-mutuel wagers.
Sponsor: Rep Yarmuth, John A. [KY-3] (introduced 4/28/2009)      Cosponsors (1)

H.R.2143: To amend the Internal Revenue Code of 1986 to allow the Secretary of the Treasury to not impose a penalty for failure to disclose reportable transactions when there is reasonable cause for such failure, to modify such penalty, and for other purposes.
Sponsor: Rep Donnelly, Joe [IN-2] (introduced 4/28/2009)      Cosponsors (3)

H.R.2146: To amend the Internal Revenue Code of 1986 to extend the additional standard deduction for State and local real property taxes.
Sponsor: Rep Halvorson, Deborah L. [IL-11] (introduced 4/28/2009)      Cosponsors (None)

H.R.2158: To amend the Internal Revenue Code of 1986 to provide a Federal income tax credit for the purchase of certain nonroad equipment with alternative power sources.
Sponsor: Rep Welch, Peter [VT] (introduced 4/28/2009)      Cosponsors (None)

S.913: A bill to amend the Internal Revenue Code of 1986 to expand workplace health incentives by equalizing the tax consequences of employee athletic facility use.
Sponsor: Sen Cornyn, John [TX] (introduced 4/28/2009)      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.