Daily Tax Update - December 9, 2010: Part II - Legislative Text of New Tax Cut Bill Released

LEGISLATIVE TEXT, BRIEF SUMMARY AND PRELIMINARY JOINT TAX REVENUE ESTIMATES FOR NEW TAX CUT BILL RELEASED:  The legislative language, a summary, and the preliminary revenue estimates for the new tax cut bill were released tonight.  Senate Majority Leader Harry Reid filed cloture on a motion to cut off debate and scheduled a vote on that motion for 3 p.m. Monday.

The bill:

  • Extends all of the 2001 and 2003 tax rates for two years, through the end of 2012.
  • Provides a two-year fix for the Alternative Minimum Tax.  
  • Increases the estate tax exemption to $5 million (indexed for inflation) and reduces the top rate to 35 percent for 2011 and 2012. 
  • Establishes a payroll tax reduction in place of the Making Work Pay Credit. 
  • Extends through 2011 traditional tax "extenders" on both the business side (like the Research & Experimentation tax credit) and the individual side (like the deduction for state and local sales taxes).
  • Allows businesses (1) to deduct immediately 100 percent of property placed in service between September 9, 2010 and December 31, 2011; and (2) to take advantage of 50 percent bonus depreciation in 2012.  
  • Extends a limited number of refundable tax credits expanded or initiated in 2009 but "terminates many of the stimulus law’s most flawed and expensive programs, such as the Build America Bonds program. "
  • Renews the current Federal UI benefit programs for another 13 months, through December 2011, and maintains the current cap of 99 weeks of total benefits.

NEW REPUBLICAN MEMBERS ON WAYS AND MEANS COMMITTEE NAMED: The new Republican Members on the Ways and Means Committee, in alphabetical order, are:

Rick Berg (ND)
Diane Black (TN)
Vern Buchanan (FL)
Jim Gerlach (PA)
Lynn Jenkins (KS)
Chris Lee (NY)
Erik Paulsen (MN)
Tom Price (GA)
Aaron Schock (IL)
Adrian Smith (NE)

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.