Daily Tax Update - December 13, 2010: Senate Passes Key Tax Cut Procedural Vote/ UTP Regulatory Authority Finalized

SENATE PASSES KEY TAX CUT PROCEDURAL VOTE: As expected, the Senate passed a procedural vote to limit debate and advance "The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010" sponsored by Senate Majority Leader Harry Reid (D-NV) and Senate Minority Leader Mitch McConnell (R-KY). The vote is being held open to allow Senators sufficient travel time to get back to Washington. Sixty votes were needed to obtain cloture and cut off debate. A vote on final passage is expected tomorrow in the Senate.

  • Today, House Majority Leader Steny Hoyer said, "I think we will pass a bill, as opposed to simply not passing anything. I think we’re going to have a vote on the Senate bill, with possible changes. We’ll see what the process is." Hoyer said that he hopes for the House to complete work on the bill by the end of the week. Hoyer also said that the bill would go through the Ways and Means and House Rules Committees before it reaches the House floor and he expects efforts to be made to try to amend the estate tax provision to increase the estate rate to 45% from the current proposal of 35%. If the House amends the bill, the Senate would have to reconsider it.
  • A member of the House leadership, Rep. Chris Van Hollen (D-MD), discussed the House Democrats’ opposition to the estate tax provision in the bill yesterday. Van Hollen said an effort would be made in the House to change the estate tax portion. Van Hollen said, "We're not talking about blocking the whole thing." Van Hollen added that despite "some Democrats who will refuse to go along" with anything, the House "will have an opportunity to work its will." Van Hollen continued, "We're not going to hold this thing up at the end of the day, but we do think that simple question should be put to test. We're going to ask the Republicans and others, are they going to block this entire deal" over the level of taxes on estates?" Van Hollen continued, "Most of us understand we gotta make some tough compromises. Most of us agree with almost all of what the president negotiated. There is one thing that just was the choking point, and that deals with the estate tax break. It doesn't go to current law. There will be an opportunity for the House to work its will. What the form the bill takes as it comes to the floor is something that will be decided. People are looking at various alternatives."
  • During yesterday’s talk shows, a senior Administration adviser continued to promote the tax cut plan. White House Senior Adviser David Axelrod said, "Everybody understands what it would mean for the economy if we don't get this done. No one wants to see 2 million people lose their unemployment insurance." Axelrod added, "This is extraordinarily important for the economy and for people across this country that we not let this get to a Washington-style standoff."
  • A summary of the Senate bill can be accessed here.

TREASURY, IRS FINALIZE REGULATORY AUTHORITY FOR SCHEDULE UTP: Today, the Treasury Department and the IRS issued final regulations under section 6012 relating to new Schedule UTP. The preamble states: "This rule will authorize the IRS to require certain corporations, as set out in forms, publications, instructions, or other guidance, to provide information concerning uncertain tax positions concurrent with the filing of a return." The only significant change from the proposed regulations relates to the effective date of the regulations. The preamble explains: "While the proposed regulation applied to returns filed for tax years beginning after December 15, 2009 and ending after the date the regulations were published in the Federal Register, the final regulation applies to returns filed for tax years beginning on or after January 1, 2010."

MISCELLANEOUS GUIDANCE RELEASED TODAY:
Notice 2010-90 sets forth a list of changes referred to in Rev. Proc. 2007-44, 2007-2 C.B. 54, (2010 Cumulative List) pertaining to the statutory, regulatory, and guidance changes needed for certain requests to the Service for opinion, advisory, and determination letters for the 12-month period beginning February 1, 2011.

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.

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