Daily Tax Update - April 22, 2010

MALOY: “UNCERTAIN TAX POSITIONS ARE UNCERTAIN FOR A REASON”: Today, in a speech at the New York chapter of Tax Executives Institute Inc., IRS Large and Mid-Size Business Commissioner Heather Maloy commented on the draft form for disclosing uncertain tax positions. Maloy said that the IRS does not plan to use the information submitted by taxpayers when reporting their uncertain tax positions as an automatic starting point for examinations. Maloy said, “That's not our intention. We certainly understand that uncertain tax positions are uncertain for a reason.” Maloy said that the draft schedule and instructions released earlier this week and the information reported is “not intended to be where you start and work down to get an answer." Maloy added that the instructions were, “very specific with regard to what we're looking for.”

  • For previous coverage of the instructions and form click here.

OBAMA SUGGESTS OPENNESS TO VAT: In an interview yesterday, President Obama suggested that he might be open to the imposition of a value-added tax (VAT). The President said, “I know that there's been a lot of talk around town lately about the value-added tax-- that is something that has worked for some countries. It's something that would be novel-- for the United States. And before, you know, I started saying, 'This makes sense or that makes sense.' I want to get a better picture of what our options are. And my first priority is to figure out how can we reduce wasteful spending so that-- you know, we have a baseline of the core services that we need and the government should provide. And then we decide how do we pay for that. As opposed to figuring out how much money can we raise and then-- not have to make some tough choices on the spending side.” 

  • Prior to the President’s remarks yesterday, several White House officials have said that the President was not considering a VAT. Earlier yesterday, White House Press Secretary Robert Gibbs said, “I think I directly answered this the other day by saying that it wasn't something that the president had under consideration.” After the President's interview yesterday, White House deputy communications director Jen Psaki said nothing has changed and the White House is "not considering" a VAT.
  • Last week, the Senate voted 85-13 for a nonbinding "sense of the Senate" resolution that stated, “It is the sense of the Senate that the Value Added Tax is a massive tax increase that will cripple families on fixed income and only further push back America's economic recovery and the Senate opposes a Value Added Tax.” Earlier this week, House Ways and Means Chairman Sander Levin was also dismissive of the idea of a VAT. Levin said, “My guess is that next week [the VAT talk] will be gone and that's with good reason.” Levin added, “I don't think it's on the agenda."

TAX BILLS INTRODUCED APRIL 21ST:

H.R.5095: To amend the Internal Revenue Code of 1986 to repeal the excise tax on medical devices.
Sponsor: Rep Paulsen, Erik [MN-3] (introduced 4/21/2010) Cosponsors (26)

H.R.5104: To amend the Internal Revenue Code of 1986 to allow for the deduction for domestic oil related production activities of companies which are not major integrated oil companies.
Sponsor: Rep Pomeroy, Earl [ND] (introduced 4/21/2010) 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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