Daily Tax Update - June 23, 2009

PRESIDENT CALLS ON CONGRESS TO PASS HEALTH CARE REFORM:  Today, during a press conference, President Obama described controlling health care costs as the Administration’s “top priority.” The President added, “If any bill arrives from Congress that is not controlling costs, that is not a bill I can support.” The President also said that health care costs were the “primary driver” of the federal deficit. Obama said, “This is legislation that will be paid for. It will not add to our deficits over the next decade. We will find the money through savings and efficiencies within the health care system.” The President said that he was “very optimistic” about the prospects for health care reform but added that “there's going to be some legitimate debates to be had over how this private plan takes shape.” Regarding the timetable for Congressional action, the President said, “I hope that Congress will continue to make significant progress on this issue in the weeks ahead.”

MISCELLANEOUS GUIDANCE ISSUED TODAY:
Revenue Ruling 2009-19 holds that Pay-for-Performance Success Payments that benefit a homeowner under the United States Government’s Home Affordable Modification Program are excludable from the homeowner’s income under the general welfare exclusion. This program helps homeowners who have defaulted, or are at risk of default, on their mortgages. A homeowner that makes timely payments on a modified loan is eligible to have incentive payments made to lenders/investors that reduce the principal balance on the loan.

Revenue Ruling 2009-20 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274.

The rates are published monthly for purposes of sections 42, 382, 412, 1288, 1274, 7520, 7872, and various other sections of the Internal Revenue Code.

Revenue Ruling 2009-18 notes that a number of guidance documents had become outdated due to numerous intervening statutory revisions enacted in section 403(b). Final regulations under sections 1.403(b)-1 thru 11 have been issued.  Since these regulations include and modify much of the IRS guidance relating to section 403(b) issued between 1964 and 2004, the guidance documents listed in the revenue ruling are obsoleted or superseded in their entirety, with one partial exception (Notice 89-23).

Notice 2009-51 solicits applications for allocations of the national bond volume limitation authority (“volume cap”) of $2 billion to issue tribal economic development bonds (TEDBs) under § 7871(f) of the Code. This Notice also provides related guidance on the (1) eligibility requirements that a project must meet to be considered for a volume cap allocation; (2) application requirements and the application form for requests for volume cap allocations; and (3) the method that the IRS will use to allocate the volume cap.
 
TAX BILL INTRODUCED JUNE 22nd:
S. 1313: A bill to amend the Internal Revenue Code of 1986 to permanently extend and expand the charitable deduction for contributions of food inventory.
Sponsor: Sen Lugar, Richard G. [IN] (introduced 6/22/2009)      Cosponsors (5)

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.