Daily Tax Update - June 12, 2009

WAYS AND MEANS MEMBERS CONTINUE TO MEET ON HEALTH CARE FINANCING OPTIONS:  House Ways and Means Committee members met again today to discuss possible options for financing health care reform. Committee Chairman Charles Rangel said Democrats are searching for $1 trillion in offsets to pay for health care. Rangel said about $600 billion will come from raising taxes and $400 billion will come from cuts to healthcare providers. Rangel said the financing options are still being discussed. Rangel added, “No one's leaving here today saying that we've decided anything.” The Committee is expected to release a draft by June 19, the same day as the Finance Committee releases its Chairman's mark.  

  • Yesterday, President Obama discussed funding for health care. The President said, “Now, covering more Americans is obviously going to require some money up front. We'll save money when they stop going to the emergency room and getting regular checkups, but it's going to cost some money up front. Helping families lower their costs, there's going to be a cost to this. And it comes at a time when we don't have a lot of extra money to spend, let's be honest. When I came in we had a $1.3 trillion deficit.  And with the economic recession that we're going through, tax revenues are down . . . more people are seeking help from the state. So we've got a lot of pressure on our budget.” The President added, “So that's why I've already promised that reform cannot add to our deficit over the next 10 years. And to make that happen, we've already identified hundreds of billions of dollars worth of savings in our budget--savings that will come from steps like reducing Medicare overpayments to insurance companies and rooting out waste and fraud and abuse in both Medicare and Medicaid. And I'll be outlining hundreds of billions of dollars more in savings in the days to come. And I'll be honest, even with these savings, reform will require some additional up front resources. And that's why I've proposed that we scale back how much the highest-income Americans can deduct on their taxes back--take it back to the rate that existed under the Reagan years, and we could use some of that money to help finance health care reform. In all these reforms, our goal is simple:  the highest-quality health care at the lowest-possible cost.  Let me repeat what I said before: We want to fix what's broken, build on what works.”
  • The President has said that he wants to sign a health care reform bill by October 1.

MISCELLANEOUS GUIDANCE ISSUED TODAY:
Notice 2009-54 sets forth a process that allows manufacturers to certify to the Internal Revenue Service that a particular vehicle meets the requirements of § 30D of the Internal Revenue Code.  Taxpayers purchasing such vehicles can rely on the domestic manufacturer’s (or, in the case of a foreign manufacturer, its domestic distributor’s) certification that both a particular make, model, and model year of vehicle qualifies as a plug-in electric drive motor vehicle under § 30D, and the amount of the credit allowable with respect to the vehicle. 

Notice 2009-50 provides guidance on the maximum face amount of recovery zone economic development bonds and recovery zone facility bonds, two new types of bonds enacted in the American Recovery and Reinvestment Act of 2009 that may be issued by each State, and the counties and large municipalities within such State, before January 1, 2011.  The reallocations of bond volume cap to counties and large municipalities may be accessed here. Recovery zone bonds provide tax incentives for State and local governmental borrowing at lower borrowing costs to promote job creation and economic recovery that is targeted to areas particularly affected by employment declines. 

TAX BILLS INTRODUCED JUNE 11TH:
H.R.2826: To amend the Internal Revenue Code of 1986 to allow employers a credit against income tax for the cost of teleworking equipment and expenses.
Sponsor: Rep Bean, Melissa L. [IL-8] (introduced 6/11/2009)      Cosponsors (6)

H.R.2839: To amend the Internal Revenue Code of 1986 to make residents of Puerto Rico eligible for the earned income tax credit.
Sponsor: Rep Pascrell, Bill, Jr. [NJ-8] (introduced 6/11/2009)      Cosponsors (6)

H.R.2841: To amend the Internal Revenue Code of 1986 to make permanent the enhanced charitable deduction for contributions of food inventory.
Sponsor: Rep Space, Zachary T. [OH-18] (introduced 6/11/2009)      Cosponsors (1)

S.1235: A bill to amend the Public Health Act, the Employee Retirement Income Security Act of 1974, and the Internal Revenue Code of 1986 to require that group and individual health insurance coverage and group health plans provide coverage for treatment of a minor child's congenital or developmental deformity or disorder due to trauma, infection, tumor, or disease.
Sponsor: Sen Landrieu, Mary L. [LA] (introduced 6/11/2009)      Cosponsors (3)

S.1245: A bill to amend the Internal Revenue Code of 1986 to provide a tax credit for property owners who remove lead-based paint hazards.
Sponsor: Sen Whitehouse, Sheldon [RI] (introduced 6/11/2009)      Cosponsors (1)

S.1250: A bill to amend the Internal Revenue Code of 1986 to expand the definition of cellulosic biofuel to include algae-based biofuel for purposes of the cellulosic biofuel producer credit and the special allowance for cellulosic biofuel plant property.
Sponsor: Sen Nelson, Bill [FL] (introduced 6/11/2009)      Cosponsors (6)

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.