Daily Tax Update - August 7, 2009

THE DAILY TAX UPDATE WILL BE PUBLISHED ON A PERIODIC BASIS UNTIL CONGRESS RETURNS FROM ITS AUGUST RECESS ON SEPTEMBER 8TH.

IRS ISSUES FOREIGN BANK, FINANCIAL ACCOUNTS GUIDANCE:  Today, the IRS issued Notice 2009-62. The Notice provides additional administrative relief for (i) persons with no financial interest in a foreign financial account but with signature or other authority over the foreign financial account and (ii) persons with a financial interest in, or signature authority over, a foreign financial account in which the assets are held in a commingled fund. The Department of the Treasury intends to issue regulations clarifying the FBAR filing requirements pertaining to those persons with respect to these foreign financial accounts, and solicits comments related to these FBAR filing requirements in this Notice. 

  • The Notice provides that those persons have until June 30, 2010, to file an FBAR for the 2008 and earlier calendar years with respect to these foreign financial accounts. Thus, eligible persons that avail themselves of the administrative relief provided in this Notice may need to file FBARs for the 2008, 2009 and earlier calendar years on or before June 30, 2010, to the extent provided in future guidance.
  • Interested persons should submit comments and suggestions with respect to the guidance on FBAR reporting in this Notice by October 6, 2009.
  • For additional information, contact Catherine W. Wilkinson - cwilkinson@steptoe.com, Stanley Smilack - ssmilack@steptoe.com, Philip R. West - pwest@steptoe.com, or Anne E. Moran - amoran@steptoe.com.

SENATE RECESSES AS BIPARTISAN GROUP CONTINUES WORK ON HEALTH CARE:  The Senate recessed for its month-long August break last night. The group of six bipartisan Finance Committee members working on the revenue options to fund health care reform plans to hold teleconferences throughout the recess. Finance Chairman Max Baucus said that yesterday's meeting was very productive. Baucus said, “This was a very good meeting. We are all working very hard, our group of six, on lots of issues -- I mean very hard, and really want to do this right.” No agreement has been reached on the financing portion. One of the revenue raisers that appears to be gaining support is a tax on insurers offering high-end “Cadillac” insurance plans. A 35 percent tax on those high-end plans would only apply to premiums above certain thresholds, about $21,000 for most regions and $24,000 for more expensive areas.

  • Senate Majority Leader Harry Reid said that the Senate would not consider a health care reform bill immediately after the August recess.  Reid said, “Even though our druthers would be to come back and jump right into health care, we're not going to be able to do that because the Finance Committee is still working on their important legislation.” Reid added, “I believe that for us to succeed more easily we need a bipartisan bill. We realize that the best way to proceed is on a bipartisan basis.”

MISCELLANEOUS GUIDANCE RELEASED TODAY:
Notice 2009-63 provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under § 412(b)(5)(B)(ii)(II) of the Internal Revenue Code. It also provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), the 24-month average segment rates, and the funding transitional segment rates under § 430(h)(2). In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, and the minimum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007.  

Revenue Procedure 2009-34 provides domestic asset/liability percentages and domestic investment yields needed by foreign life insurance companies and foreign property and liability insurance companies to compute their minimum effectively connected net investment income under section 842(b) for taxable years beginning after Dec. 31, 2007. This revenue procedure will appear in Internal Revenue Bulletin 2009-34, dated Aug. 24, 2009.

TAX BILLS INTRODUCED AUGUST 6TH:
S.1588 : A bill to amend the Internal Revenue Code of 1986 to provide the same tax treatment for both commercial and noncommercial investors in oil and natural gas and related commodities, and for other purposes.
Sponsor: Sen Wyden, Ron [OR] (introduced 8/6/2009)      Cosponsors (None)

S.1589 : A bill to amend the Internal Revenue Code of 1986 to modify the incentives for the production of biodiesel.
Sponsor: Sen Cantwell, Maria [WA] (introduced 8/6/2009)      Cosponsors (1)

S.1604 : A bill to amend the Internal Revenue Code of 1986 to provide an income tax credit for eldercare expenses.
Sponsor: Sen Klobuchar, Amy [MN] (introduced 8/6/2009)      Cosponsors (1)

S.1605 : A bill to amend the Internal Revenue Code of 1986 to reform the rules relating to fractional charitable donations of tangible personal property.
Sponsor: Sen Schumer, Charles E. [NY] (introduced 8/6/2009)      Cosponsors (3)

S.1610 : A bill to amend the Internal Revenue Code of 1986 to repeal the shipping investment withdrawal rules in section 955 and to provide an incentive to reinvest foreign shipping earnings in the United States.
Sponsor: Sen Cantwell, Maria [WA] (introduced 8/6/2009)      Cosponsors (4)

S.1612 : A bill to amend the Internal Revenue Code of 1986 to improve the operation of employee stock ownership plans, and for other purposes.
Sponsor: Sen Lincoln, Blanche L. [AR] (introduced 8/6/2009)      Cosponsors (1)

S.1620 : A bill to amend the Internal Revenue Code of 1986 to provide tax incentives and fees for increasing motor vehicle fuel economy, and for other purposes.
Sponsor: Sen Bingaman, Jeff [NM] (introduced 8/6/2009)      Cosponsors(3)

S.1630 : A bill to amend title XVIII of the Social Security Act of improve prescription drug coverage under Medicare part D and to amend the Public Health Service Act, the Employee Retirement Income Security Act of 1974, and the Internal Revenue Code of 1986 to improve prescription drug coverage under private health insurance, and for other purposes.
Sponsor: Sen Rockefeller, John D., IV [WV] (introduced 8/6/2009)      Cosponsors (1)

S.1637 : A bill to amend the Internal Revenue Code of 1986 to improve and extend certain energy-related tax provisions, and for other purposes.
Sponsor: Sen Snowe, Olympia J. [ME] (introduced 8/6/2009)      Cosponsors (2)

S.1639 : A bill to amend the Internal Revenue Code of 1986 to improve and extend certain energy-related tax provisions, and for other purposes.
Sponsor: Sen Bingaman, Jeff [NM] (introduced 8/6/2009)      Cosponsors (2)

S.1643 : A bill to amend the Internal Revenue Code of 1986 to allow a credit for the conversion of heating using oil fuel to using natural gas or biomass feedstocks, and for other purposes.
Sponsor: Sen Snowe, Olympia J. [ME] (introduced 8/6/2009)      Cosponsors (1)

TAX BILLS INTRODUCED AUGUST 5TH:
S.1582 : A bill to amend the Internal Revenue Code of 1986 to provide a credit against income tax to facilitate the accelerated development and deployment of advanced safety systems for commercial motor vehicles.
Sponsor: Sen Stabenow, Debbie [MI] (introduced 8/5/2009)      Cosponsors (2)

S.1583 : A bill to amend the Internal Revenue Code of 1986 to extend the new markets tax credit through 2014, and for other purposes.
Sponsor: Sen Rockefeller, John D., IV [WV] (introduced 8/5/2009)      Cosponsors (1)

TAX BILL INTRODUCED AUGUST 4TH:
S.1570:  bill to amend the Internal Revenue Code of 1986 to repeal the percentage depletion allowance for certain hardrock mines, and for other purposes.
Sponsor: Sen Feingold, Russell D. [WI] (introduced 8/4/2009)      Cosponsors (3)

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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