Daily Tax Update - June 18, 2010

TAX EXTENDERS PACKAGE GOES BACK TO THE DRAWING BOARD ONCE AGAIN IN SENATE: In an effort to secure the 60 votes needed for passage and after two-failed attempts to pass substitutes, Senate Democrats will now have to revamp the extenders bill once again. Although the exact timing and a strategy on how to proceed is uncertain at this point, additional amendments could be brought before the Senate next week in an effort to gain additional support for another modified bill. Today, a spokesperson for Senate Majority Leader Harry Reid said, “We will continue to work, but we will need Republican support to pass this legislation. It is our hope that they will join us in standing up for middle-class Americans rather than wealthy CEOs and corporations. Decisions are still being made on what legislation we will move to next.”

  • Democratic Senator Ben Nelson opposed the latest substitute and expressed concerns over its cost. Nelson said, “I want to see it all offset, except for those things that are through an emergency.” Nelson said that an extension of unemployment insurance benefits and federal Medicaid funding to states do not qualify as emergencies. Nelson added, “I think they're important, I don't think they're emergencies. It's not like a hurricane loss or a drought or something that's typically referred to as an act of God outside of the control of the government.”
  • Meanwhile, Finance Chairman Max Baucus expressed confidence that the votes would eventually come together for passage. Baucus said, “There are 100 senators. We need 60. There are lots of combinations. We're working hard … We'll get 60 votes. I can't say exactly when, but we'll get 60 votes.” Senate Majority Leader Reid added, “We’re not going to give up.”
  • Also today, the Senate passed a provision by unanimous consent that would provide a 2.2 percent payment increase to Medicare physicians for six months. The Medicare “doc fix” provision had been part of the broader extenders package.

TAX BILL INTRODUCED JUNE 17TH:
S.3496: A bill to amend the Internal Revenue Code of 1986 to allow individuals to designate that up to 10 percent of their income tax liability be used to reduce the national debt, and to require spending reductions equal to the amounts so designated.
Sponsor: Sen McCain, John [AZ] (introduced 6/16/2010) Cosponsors (None)

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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