Daily Tax Update - July 24, 2009

ADMINISTRATION EXPECTS HEALTH CARE REFORM BILL TO PASS BY YEAR’S END:  President Obama downplayed yesterday’s announcement by the Senate Majority Leader that the Senate would not vote on a health care reform bill until fall. The President said, “That's OK. I just want people to keep on working. Just keep working." White House Chief of Staff Rahm Emanuel said today, "I think we will have a bill by the end of the year for the President to sign on health care reform that controls costs, expands coverage and provides choice.” Emanuel added, “The key thing is...we are now debating how to control costs. We are down to the final details. Those details matter. But we...I think are making progress.”

  • Meanwhile, a bipartisan group of Senate Finance Committee members continue to try to reach a consensus on a health care package. Committee Chairman Baucus said that Majority Leader Harry Reid’s decision to hold a vote in the Senate until the fall makes it somewhat easier. Baucus said, “I think it’s helping a little because this is so complicated and Senators want to feel comfortable with what they’re doing.” Senate Budget Committee Chairman and Finance member Senator Kent Conrad said that the process continues to “take time.” Conrad added, “By far the most important thing is that we get this right. But I feel very good about the progress that’s being made.” However, Senator Tom Harkin, a Democratic member of the health committee expressed frustration with the pace. Harkin said yesterday, “The Finance Committee keeps dragging their feet and dragging their feet and dragging their feet. It's time for them to fish or cut bait...The people of America voted for Barack Obama last year to lead this country and make changes.”

COALITION URGES LAWMAKERS TO REJECT INTERNATIONAL TAX HIKES:  A coalition of over 280 companies and associations sent a letter yesterday to Congress opposing international tax revisions. The PACE Coalition’s (Promote America’s Competitive Edge) letter said, “A steep corporate tax hike on worldwide American companies, especially during a severe recession, will hinder our ability to protect and create American jobs and will slow our nation’s economic recovery.” The coalition’s letter continued, “The US business community supports closing tax loopholes and prosecuting those who cheat on their taxes. However, the current international tax rules including deferral, check the box and foreign tax credits are fundamental tax provisions, and are integral parts of the US tax system–not ‘tax loopholes.’ It is inaccurate and misleading to represent them as such. The proposals would force American companies to lose deductions for costs of doing business in the US, risk double taxation of dividends from worldwide business operations; and limit their ability to choose the entity or form in which they do business. Together, these proposals are in broad measure equivalent to repealing deferral. To keep good jobs and decent wages here in America, Congress must ensure that the US tax code keeps worldwide American companies competitive both here at home and abroad. Congress needs to examine tax changes that will enable American companies and US workers to compete in the global marketplace. We strongly urge Congress to reject any attempt to expand taxation of income beyond the borders of the US, as it would impair the competitiveness of American companies and American workers.” 

FINANCE COMMITTEE APPROVES IRS CHIEF COUNSEL’S NOMINATION:  Yesterday, the Senate Finance Committee agreed by voice vote to recommend William Wilkins to be the next IRS chief counsel. Daniel Tangherlini’s nomination as Treasury assistant secretary for management and chief financial officer was also approved.

MISCELLANEOUS GUIDANCE ISSUED TODAY:
Attached is TD 9454, final regulations describing the time and manner in which certain tax-exempt organizations not currently required to file an annual information return under section 6033(a)(1) are required to submit an annual electronic notice, often referred to as an electronic postcard, including certain information required by section 6033(i)(1)(A) through (F). These regulations affect tax-exempt organizations whose annual gross receipts are not normally in excess of $25,000.

TAX BILL INTRODUCED JULY 23RD:
S.1509: A bill to amend the Internal Revenue Code of 1986 to exempt from the harbor maintenance tax certain commercial cargo loaded or unloaded at United States ports in the Great Lakes Saint Lawrence Seaway System.
Sponsor: Sen Stabenow, Debbie [MI] (introduced 7/23/2009)      Cosponsors (2)

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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