Daily Tax Update - April 21, 2010

SENATE FINANCE HOLDS FIRST HEARING ON ADMINISTRATION BANK TAX PROPOSAL: Yesterday, the Senate Finance Committee held its first hearing on the White House’s Financial Crisis Responsibility Fee (or “bank tax” proposal). The hearing focused primarily on the operation of the Troubled Assets Relief Program (“TARP”) and the nature of TARP losses and did not examine the Administration’s bank tax proposal in detail. The sole witness, Neil Barofsky (Special Inspector General for TARP), did not take a position on how the tax should be structured, including whether it should be a tax on assets or profits or whether non-TARP recipients should be subject to the tax. Mr. Barofsky stated that the structure of the tax involved difficult policy questions to be resolved by Congress.

  • Chairman Baucus stated that the hearing was the first in a series to consider the Administration’s bank tax proposal and other options for recovering TARP losses. According to Chairman Baucus, “We need to think about how we are going to get the TARP money used to stabilize our economy back on behalf of American taxpayers. As we consider a bank tax and other options for recovering TARP funds, we need to understand the best approach to designing a bank tax, to whom it should apply and how it might affect the economy and the markets. We also need to understand how to prevent a bank tax from being passed on to consumers, and how the bank tax might affect lending to small businesses.”
  • Ranking Member Grassley stressed that if any bank tax should be used only to pay down the deficit: “I cannot emphasize this next point enough, if Congress decides to pass a TARP tax, that money should only go toward paying down the deficit. Otherwise, the TARP tax wouldn’t even pay for losses from TARP, it would just enable more taxing and spending by those who want to spend more.”
  • Testimony from the hearing can be accessed here
  • For additional information, contact Philip R. West - pwest@steptoe.com or Amanda Varma - avarma@steptoe.com

TAX BILLS INTRODUCED APRIL 20TH:
H.R.5066: To prohibit the hiring of additional employees by the Internal Revenue Service to implement, administer, or enforce health insurance reform.
Sponsor: Rep Fleming, John [LA-4] (introduced 4/20/2010)      Cosponsors (None)

H.R.5075: To amend the Internal Revenue Code of 1986 to modify the dependent care tax credit and to extend and increase the additional standard deduction for state and local real property taxes.
Sponsor: Rep Adler, John H. [NJ-3] (introduced 4/20/2010)      Cosponsors (None)

H.R.5076: To amend the Internal Revenue Code of 1986 to require the disclosure of the names of individuals who are granted amnesty from criminal prosecution by the Internal Revenue Service.
Sponsor: Rep Bishop, Timothy H. [NY-1] (introduced 4/20/2010)      Cosponsors (None)

H.R.5077: To amend the Internal Revenue Code of 1986 to increase the alternative minimum tax exemption amount and index such amount for inflation.
Sponsor: Rep Hall, John J. [NY-19] (introduced 4/20/2010)      Cosponsors (3)

H.R.5078: To amend the Internal Revenue Code of 1986 to expand incentives for education.
Sponsor: Rep Higgins, Brian [NY-27] (introduced 4/20/2010)      Cosponsors (3)

H.R.5080: To amend the Internal Revenue Code of 1986 to provide unemployment benefits during summer vacation for nonprofessional school employees.
Sponsor: Rep Kennedy, Patrick J. [RI-1] (introduced 4/20/2010)      Cosponsors (1)

H.R.5085: To amend the Internal Revenue Code of 1986 to eliminate for 5 years the limitation on expensing certain depreciable business assets.
Sponsor: Rep Owens, William L. [NY-23] (introduced 4/20/2010)      Cosponsors (None)

S.3231: A bill to amend the Internal Revenue Code of 1986 to extend certain tax incentives for alcohol used as fuel and to amend the Harmonized Tariff Schedule of the United States to extend additional duties on ethanol.
Sponsor: Sen Grassley, Chuck [IA] (introduced 4/20/2010)      Cosponsors (6)

S.3232: A bill to amend the Internal Revenue Code of 1986 to make employers of spouses of military personnel eligible for the work opportunity credit.
Sponsor: Sen Burr, Richard [NC] (introduced 4/20/2010)      Cosponsors (1)

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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