Daily Tax Update - February 19, 2010

WHITE HOUSE WORKING ON FILIBUSTER-PROOF HEALTH CARE REFORM BILL:  The Administration is expected to post its version of a health care reform bill for public review before Monday. The Administration’s health care proposal could then be attached to the budget resolution. Under reconciliation procedures, the proposal would only need 51 Senate votes, thus averting a Republican filibuster in the Senate. A Democratic aide said, “It will be a reconciliation bill. If Republicans don’t come with any substantial offers, this is what we would do.”

  • Health and Human Services Secretary Kathleen Sebelius said yesterday that Obama plans to have a health care proposal that “will take some of the best ideas and put them into a framework” ahead of the February 25 summit. Congressional Republicans have not committed to attending the summit. A spokesman for Minority Leader John Boehner said, “How will they incorporate our ideas? Will they abandon their plans to jam through their latest backroom deal? Or is this just an infomercial for the same government takeover of health care that the American people have rejected again and again?”

REID WON’T ALLOW AMENDMENTS TO HIS SCALED BACK JOBS BILL:  Senate Majority Leader Harry Reid will not allow amendments to a jobs bill he substituted last week in place of a bipartisan measure that had won support from both Democrats and Republicans. Reid’s bill includes a (1) one-year extension of the highway act, (2) Build America Bonds provision, (3) small-business tax program, and (4) small-business tax credit proposal. A spokesman for the Majority Leader said that Reid will allow tax provisions in subsequent legislation passed after his $15 billion jobs bill. Senate Finance Chairman Max Baucus and Ranking member Charles Grassley had released a draft jobs bill prior to Reid’s scaled back version being introduced. It is doubtful that the Majority Leader has the 60 votes needed to break a filibuster on the HIRE bill. 

  • To pay for his jobs bill, Reid has proposed delaying implementation of a worldwide interest allocation provision already in law and levying a 30-percent withholding charge on US source payments to foreign financial institutions. The levy would apply to foreign banks, trusts, and corporations that do not agree to disclose their US account holders and owners to the IRS.
  • Today, Senators Blanche Lincoln (D-AR) and Susan Collins (R-ME) wrote Reid asking him to let the Senate consider the bipartisan jobs proposal. Their statement said, “As two centrist members of the Senate, we write to you in hopes that the Senate will move quickly to address the most important issue in our country today -- putting Americans back to work.  When the Senate returns to session on Monday, we urge you to reconsider your decision to bring to the floor a proposed jobs package put together without bipartisan input.”
  • Reid’s bill can be accessed here

MISCELLANEOUS GUIDANCE RELEASED TODAY:

Revenue Ruling 2010-08 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.

Notice 2010-22 provides for the allocation of the national limitation for qualified zone academy bonds among the States, the District of Columbia, and the possessions of the United States.

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.

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