Daily Tax Update - June 11, 2009

FINANCE COMMITTEE MARK UP OF HEALTH CARE REFORM BILL EXPECTED TO BEGIN JUNE 23:  Finance Committee Chairman Max Baucus said today that the committee will hold four days of mark ups on a health care reform bill beginning June 23. A draft mark is expected to be released June 17 followed by the release of the Chairman’s mark on June 19 when the cost estimates are available. 

  • Today, House Speaker Nancy Pelosi suggested that she was open to raising taxes to help cover the costs of health care reform. Pelosi said, “Everything is on the table.” However, Pelosi said that House Ways and Means Chairman Charlie Rangel “has not been receptive” to taxing health care benefits. When asked if taxes would go up because of health care reform, Pelosi said, “No. But I’m saying that everything is on the table.”

JOINT TAX COMMITTEE RELEASES REVENUE ESTIMATES FOR FY 2010 BUDGET PROPOSAL:  Today, the Joint Committee on Taxation issued revenue estimates on the tax proposals in President Obama's fiscal year 2010 budget proposal. Several of the provisions, including the international provisions, are scored by the Joint Tax Committee at lower levels than previously estimated  by the Administration. 

CAR TAX DEDUCTION AVAILABLE IN STATES WITH NO SALES TAX: The IRS and Treasury announced yesterday that a tax break for the purchase of new motor vehicles is available in states that do not have a state sales tax. Under the American Recovery and Reinvestment Act of 2009, taxpayers who buy a new motor vehicle this year are entitled to deduct state or local sales or excise taxes paid on the purchase. The IRS and Treasury said that  purchases made in states without a sales tax—such as Alaska, Delaware, Hawaii, Montana, New Hampshire and Oregon—can also qualify for the deduction.

  • According to the IRS, “The fees or taxes that qualify must be assessed on the purchase of the vehicle and must be based on the vehicle’s sales price or as a per unit fee.” The IRS added, “To qualify for this deduction, the vehicle must be purchased after Feb. 16, 2009, and before Jan. 1, 2010. Taxpayers can claim this special deduction only on their 2009 tax returns to be filed next year. The deduction is limited to the fees or taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle. The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.”
  • IRS Commissioner Doug Shulman said, “This special tax break is available for people purchasing a new car this year, and that can include people in states without a sales tax. This means that more people can take advantage of this deduction when they file their tax returns next year.”

TAX BILLS INTRODUCED JUNE 10TH:
H.R.2779: To amend the Internal Revenue Code of 1986 to provide transparency with respect to fees and expenses charged to participant-directed defined contribution plans, and to improve participant communication.
Sponsor: Rep Neal, Richard E. [MA-2] (introduced 6/9/2009)      Cosponsors (4)

S.1213: A bill to amend title XI of the Social Security Act to provide for the conduct of comparative effectiveness research and to amend the Internal Revenue Code of 1986 to establish a Patient-Centered Outcomes Research Trust Fund, and for other purposes.
Sponsor: Sen Baucus, Max [MT] (introduced 6/9/2009)      Cosponsors (1)

S.1222: A bill to amend the Internal Revenue Code of 1986 to extend and expand the benefits for business operating in empowerment zones, enterprise communities, or renewal communities, and for other purposes.
Sponsor: Sen Lincoln, Blanche L. [AR] (introduced 6/9/2009)      Cosponsors (8)

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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