Daily Tax Update - August 4, 2010

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

SENATE GETS CLOTURE ON MEDICAID, EDUCATION FUNDING BILL WITH INTERNATIONAL OFFSETS: Today, the Senate voted 61 to 38 to advance a Medicaid and education funding bill (H.R. 1586) which contains numerous international offsets. A vote on final passage could occur tomorrow. The offsets would impose a new limitation on the amount of foreign taxes deemed paid with respect to tax code Section 956 inclusion, deny the use of foreign tax credits in cases in which foreign income is not subject to US taxation by reason of covered asset acquisitions, and repeal special rules for interest and dividends received from persons meeting the 80 percent foreign business requirements. The bill also eliminates the advance refundability of the earned income tax credit.

  • The bill can be accessed here.

IRS ANNOUNCES REALIGNMENT AND NEW NAME FOR LMSB: Today, the IRS announced the realignment of the Large and Mid-Size Business (LMSB) division to "create a more centralized organization dedicated to improving international tax compliance." The IRS said that the LMSB will change its name on October 1 to the Large Business and International division (LB&I). Heather Maloy will continue serving as Commissioner of LB&I. Michael Danilack, Deputy Commissioner, International, will head the realigned global unit. Paul DeNard will continue serving as Deputy Commissioner (Operations).

  • IRS Commissioner Doug Shulman said, "Executing our international strategy is a top priority, and our work continues to intensify in this area. Every day, we are moving forward in our international compliance efforts. Bringing together our top international personnel in this new group will help us advance our global tax administration efforts and ensure focus and fairness in a critical area for our nation." Shulman added, "The realigned organization will let us focus on high-risk international compliance issues and handle these cases with greater consistency and efficiency as we continue to increase our work in this area."
  • Additional information can be accessed here.

HOYER SUGGESTS HOUSE MAY TAKE UP MIDDLE CLASS TAX CUTS BEFORE ELECTION: Yesterday, House Majority Leader Steny Hoyer suggested that the House may take up the extension of the Bush 2001 and 2003 tax cuts for middle-income earners before the November election. Hoyer said, "We may well consider that over the next four weeks from September 14 to October 8." The House is scheduled to adjourn October 8. However, Hoyer added that "it is possible we won't reach agreement on how to proceed" and that the issue could be deferred until a lame duck session.

  • Hoyer said, "I think there is a general consensus among House Democrats" that the breaks that benefit the middle-class should be extended. Hoyer added, "With respect to wealthiest Americans, we believe that those tax cuts need not be extended. First of all they are very expensive. Secondly, almost every economist indicates those will not serve to grow the economy or encourage investment or consumer purchasing."
  • Today, a spokesman for Senate Majority Leader Harry Reid suggested that the Senate could take up the tax cuts when it returns in September.

TAX BILLS INTRODUCED AUGUST 3RD:
S.3691: A bill to establish rules to assist consumers to compare airfares and other costs applicable to tickets for air transportation, to amend the Internal Revenue Code of 1986 to provide that fees charged for carry-on and checked baggage on passenger aircraft are subject to the excise tax imposed on transportation of persons by air, and for other purposes.
Sponsor: Sen Webb, Jim [VA] (introduced 8/3/2010) Cosponsors (None)

S.3692: A bill to amend the Internal Revenue Code of 1986 to permanently extend the deductibility of mortgage insurance premiums.
Sponsor: Sen Lincoln, Blanche L. [AR] (introduced 8/3/2010) Cosponsors (1)

TAX BILLS INTRODUCED JULY 30TH:
H.R.5982: To amend the Internal Revenue Code of 1986 to repeal the expansion of certain information reporting requirements to corporations and to payments for property, to eliminate loopholes which encourage companies to move operations offshore, and for other purposes.
Sponsor: Rep Levin, Sander M. [MI-12] (introduced 7/30/2010)     Cosponsors (21)

H.R.5990: To amend the Internal Revenue Code of 1986 to allow a business credit for investments in rural microbusinesses.
Sponsor: Rep Kind, Ron [WI-3] (introduced 7/30/2010)      Cosponsors (1)

H.R.5994: To amend the Internal Revenue Code of 1986 to disallow deductions for the payment of punitive damages, and for other purposes.
Sponsor: Rep Welch, Peter [VT] (introduced 7/30/2010)      Cosponsors (2)

H.R.5995: To amend the Internal Revenue Code of 1986 to deny the trade or business expense deduction for damages paid pursuant to the Oil Pollution Act of 1990.
Sponsor: Rep Grijalva, Raul M. [AZ-7] (introduced 7/30/2010)      Cosponsors (None)

H.R.6001: To amend the Internal Revenue Code of 1986 to provide for the establishment of tax-free COBRA premium payment accounts, and for other purposes.
Sponsor: Rep Pitts, Joseph R. [PA-16] (introduced 7/30/2010)      Cosponsors (None)

H.R.6025: To amend the Internal Revenue Code of 1986 to allow manufacturing businesses to establish tax-free manufacturing reinvestment accounts to assist them in providing for new equipment and facilities and workforce training.
Sponsor: Rep DeLauro, Rosa L. [CT-3] (introduced 7/30/2010)      Cosponsors (5)

H.R.6031: To amend the Internal Revenue Code of 1986 to deny certain tax benefits to persons responsible for an oil spill if such person commits certain additional violations.
Sponsor: Rep Engel, Eliot L. [NY-17] (introduced 7/30/2010)      Cosponsors (None)

H.R.6033: To amend the Internal Revenue Code of 1986 to consolidate education tax benefits into one credit against income tax for higher education expenses.
Sponsor: Rep Hall, John J. [NY-19] (introduced 7/30/2010)      Cosponsors (None)

H.R.6035: To amend the Internal Revenue Code of 1986 to provide an investment credit to promote the conversion of United States coal and domestic carbonaceous feedstocks into synthetic fuels and synthetic gas.
Sponsor: Rep Holden, Tim [PA-17] (introduced 7/30/2010)      Cosponsors (None)

H.R.6041: To amend the Internal Revenue Code of 1986 to exclude income attributable to certain empowerment zone real property from gross income.
Sponsor: Rep Kirk, Mark Steven [IL-10] (introduced 7/30/2010)      Cosponsors (None)

H.R.6056: To amend the Internal Revenue Code of 1986 to treat certain employee-funded pensions created before June 25, 1959, in the same manner as qualified trusts for purposes of unrelated debt-financed income derived from real property, and to increase the limitation on elective deferrals to such employee-funded pensions.
Sponsor: Rep Neal, Richard E. [MA-2] (introduced 7/30/2010)     Cosponsors (None)

H.R.6061: To amend the Internal Revenue Code of 1986 to reform the system of public financing for Presidential elections, and for other purposes.
Sponsor: Rep Price, David E. [NC-4] (introduced 7/30/2010)      Cosponsors (3)

H.R.6067: To increase by $25 million the funding available for individual development accounts for each of fiscal years 2011 and 2012, and to amend the Internal Revenue Code of 1986 to eliminate the domestic production deduction for coal and other hard mineral fossil fuels.
Sponsor: Rep Sanchez, Linda T. [CA-39] (introduced 7/30/2010)      Cosponsors (None)

S.3681: A bill to amend the Internal Revenue Code of 1986 to reform the system of public financing for Presidential elections, and for other purposes.
Sponsor: Sen Feingold, Russell D. [WI] (introduced 7/30/2010)      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
Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country. The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court. The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving. Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them. Read more information on Steptoe's tax practice.