Daily Tax Update - July 30, 2010

The Daily Tax Update will be published on a periodic basis until Congress returns from its August recess on September 13th.

ETHICS SUBCOMMITTEE RECOMMENDS REPRIMAND FOR RANGEL: Today, a House Ethics Subcommittee investigating former House Ways and Means Chairman Charles Rangel has recommended that he be reprimanded rather than censured or expelled from Congress. Subcommittee Chairman Rep. Gene Green said, "The recommendation that we have is a reprimand.”  The full Committee on Standards of Official Conduct would have to approve the recommendation followed by a House vote. Rangel was charged yesterday with 13 counts of violating House rules.

INTERNATIONAL OFFSETS USED FOR SENATE EDUCATION FUNDING BILL: Several of the international offsets in the stalled Senate extenders bill are being proposed to pay for an education funding bill the Senate may take up next week.  The international revenue raisers were part of the Senate extenders bill (H.R. 4213) and a House bill (H.R. 5893 - Investing in American Jobs and Closing Tax Loopholes Act) that would expand the Build America Bonds program.

  • The bill can be accessed here.
  • Today, a new version of the Small Business Tax Relief Act of 2010 (H.R. 5982) was introduced in the House. In addition to numerous international offsets, the bill includes several additional revenue raisers including: limiting the cellulosic biofuel producer credit so that crude tall oil is no longer eligible, requiring a minimum 10-year term for grantor retained annuity trusts (“GRATs”), treating distributions of debt securities in a tax-free spin-off in the same manner as distributions of cash or other property, and increasing penalties for failure to file information returns. The House is scheduled to recess later today.
  • A summary of the bill can be accessed here.

MISCELLANEOUS GUIDANCE RELEASED TODAY:
Notice 2010-55 provides guidance on filing Form 5500 and Schedule SB for single-employer defined benefit plans for plan sponsors who are considering use of the special funding rules under § 430(c)(2)(D) of the Internal Revenue Code (Code), as added by section 201(b)(1) of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (PRA 2010), Pub. L. No.111-192. New § 430(c)(2)(D) permits a plan sponsor to reduce a plan’s minimum required contribution for certain years by electing to use an alternative shortfall amortization schedule. This notice also describes anticipated future guidance that will apply for sponsors of single-employer defined benefit pension plans with respect to an election to use these special funding rules. It will be published in Internal Revenue Bulletin 2010-33 on August 16, 2010.

Notice 2010-56 provides guidance on filing Form 5500 and Schedule MB for multiemployer defined benefit plans for plan sponsors who are considering use of the special funding rules under § 431(b)(8) of the Internal Revenue Code (Code), as added by section 211(a)(2) of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (PRA 2010), Pub. L. No. 111-192, for a plan year for which the Form 5500 (and Schedule MB) is filed. This notice also describes anticipated future guidance that will apply for sponsors of multiemployer defined benefit pension plans with respect to the special funding rules under § 431(b)(8). It will be published in Internal Revenue Bulletin 2010-33 on August 16, 2010.

TAX BILLS INTRODUCED JULY 29TH:
H.R.5918: To amend the Internal Revenue Code of 1986 to provide an investment tax credit for biomass heating property and repeal the passive activity limitation exception for working interests in oil and gas property.
Sponsor: Rep Hodes, Paul W. [NH-2] (introduced 7/29/2010)      Cosponsors (None)

H.R.5931: To amend the American Recovery and Reinvestment Act of 2009 and the Internal Revenue Code of 1986 to provide incentives for the development of solar energy.
Sponsor: Rep Matsui, Doris O. [CA-5] (introduced 7/29/2010)      Cosponsors (2)

H.R.5936: To repeal limitations imposed by the Patient Protection and Affordable Care Act on health-related tax benefits under the Internal Revenue Code of 1986 and to treat high deductible health plans as qualified health plans under such Act.
Sponsor: Rep Reichert, David G. [WA-8] (introduced 7/29/2010)      Cosponsors (1) 

H.R.5943: To amend the Internal Revenue Code of 1986 to allow a deduction for the portion of any equity investment used to buy down debt on commercial real property.
Sponsor: Rep Berkley, Shelley [NV-1] (introduced 7/29/2010)      Cosponsors (2)

H.R.5952: To amend the Internal Revenue Code of 1986 to allow a credit for installation of composite, recyclable power line poles.
Sponsor: Rep Davis, Danny K. [IL-7] (introduced 7/29/2010)      Cosponsors (None)

H.R.5956: To amend the Internal Revenue Code of 1986 to increase the additional standard deduction for individuals age 65 and older.
Sponsor: Rep Hinchey, Maurice D. [NY-22] (introduced 7/29/2010)      Cosponsors (7)

H.R.5959: To amend the Internal Revenue Code of 1986 to repeal the withholding of income taxes.
Sponsor: Rep Latta, Robert E. [OH-5] (introduced 7/29/2010)      Cosponsors (3)

H.R.5962: To amend the Internal Revenue Code of 1986 to reduce the maximum corporate income tax rate and to offset the revenue cost by repealing certain corporate tax benefits.
Sponsor: Rep Maffei, Daniel B. [NY-25] (introduced 7/29/2010)      Cosponsors (None)

H.R.5972: To amend the Internal Revenue Code of 1986 to permit the Secretary of the Treasury to disclose certain return information related to identity theft, and for other purposes.
Sponsor: Rep Petri, Thomas E. [WI-6] (introduced 7/29/2010)      Cosponsors (2)

H.R.5977: To amend the Internal Revenue Code of 1986 to provide tax incentives for producing electricity from wasted heat.
Sponsor: Rep Tonko, Paul [NY-21] (introduced 7/29/2010)      Cosponsors (3)

H.R.5978: To amend the Internal Revenue Code of 1986 to allow loans from certain retirement plans for the payment of certain small business expenses.
Sponsor: Rep Tsongas, Niki [MA-5] (introduced 7/29/2010)      Cosponsors (9)  

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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