Daily Tax Update - December 16, 2010: House Tax Debate Halted Over Procedural Issues - Vote Expected Later Today

HOUSE TAX DEBATE HALTED OVER PROCEDURAL ISSUES – VOTE EXPECTED LATER TODAY: House debate on the Senate-passed tax cut bill was halted this afternoon over concerns raised by members and unresolved procedural issues for considering the bill. The Democratic Caucus is weighing its options on how to proceed on the bill. However, a final vote is expected later today. House Rules member Jim McGovern (D-MA) said, "This is a little bump. I think it will be taken care of." McGovern said he expected a vote later today.

  • House Speaker Nancy Pelosi also said that she expected the bill to be voted on later tonight. Pelosi said, "That's the plan, definitely." Pelosi added, "We're in consultation with our members and the Rules Committee about what we can accommodate and how we can proceed."
  • The House had planned to vote on an estate tax amendment that would raise the estate tax rate to 45 percent with a $3.5 million exemption. Under the Senate bill, the estate tax would be reinstated for two years with a $5 million individual exemption and a 35 percent top rate.
  • If the House makes any changes to the Senate bill, it will have to be sent back to the Senate and will jeopardize the agreement reached between President Obama and Republicans. If the House accepts the Senate bill, it goes to President Obama for his signature.
  • One of the bill's main critics, Rep. Anthony Weiner (D-NY) said that it is "pretty clear the handwriting is on the wall (that) this is going to pass."
  • The text of the Senate bill can be accessed here.
  • A summary of the Senate bill can be accessed here.

MISCELLANEOUS GUIDANCE RELEASED TODAY:
Notice 2010-94 which delays the effective date of Revenue Ruling 2006-57. Revenue Ruling 2006-57 provides guidance to employers on the use of smartcards, debit or credit cards, or other electronic media to provide qualified transportation fringes under sections 132(a)(5) and (f) of the Code. This guidance is intended to provide relief to mass transit providers that have been unable to update their systems in order to comply with the Revenue Ruling guidelines prior to the current effective date of January 1, 2011. The effective date of Revenue Ruling 2006-57 is further delayed until January 1, 2012.

Revenue Ruling 2011-01 modifies the rules for group trusts described in Rev. Rul. 81-100, 1981-1 C.B. 326, as clarified and modified by Rev. Rul. 2004-67, 2004-2 C.B. 28. The modifications revise the generally applicable rules for these group trusts and, if certain requirements are met, permit the participation in group trusts of custodial accounts under § 403(b)(7), retirement income accounts under § 403(b)(9), and governmental retiree benefit plans under § 401(a)(24). This revenue ruling also extends the transition relief provided in Rev. Rul. 2008-40, 2008-2 C.B. 166, relating to plans qualifying under section 1165 of the Puerto Rico Internal Revenue Code (Puerto Rico Code). In addition, this revenue ruling provides related model language that may be used by group trusts to comply with these new provisions.

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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