Daily Tax Update - August 5, 2010

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

SENATE PASSES MEDICAID, EDUCATION FUNDING BILL WITH INTERNATIONAL OFFSETS – HOUSE TO VOTE NEXT WEEK: Today, by a vote of 61 to 39, the Senate passed a Medicaid and education funding bill (H.R. 1586) which contains numerous international offsets. Two amendments by Sen. Jim DeMint (R-SC) seeking to permanently extend the 2001 and 2003 tax cuts were defeated.

  • 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 House will return early next week to vote on the bill with a vote expected Tuesday. Yesterday, House Majority Leader Steny Hoyer said that the House will return "to vote on the bill and send it to the president for his signature."
  • The bill can be accessed here.
  • The Joint Committee on Taxation's revenue estimates of the bill can be accessed here.

MISCELLANEOUS GUIDANCE RELEASED TODAY:
Notice 2010-57 provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under § 412(b)(5)(B)(ii)(II) of the Internal Revenue Code. It also provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), the 24-month average segment rates, and the funding transitional segment rates under § 430(h)(2). In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, and the minimum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007.

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.