Daily Tax Update - February 9, 2011: Geithner Says Repatriation Must Be Part Of Broad Tax Reform

GEITHNER SAYS REPATRIATION MUST BE PART OF BROAD TAX REFORM:  Today, Treasury Secretary Timothy Geithner said that the Obama administration will not consider any proposals allowing US firms to repatriate foreign earnings at a lesser tax rate unless it is part of a broader tax overhaul effort.  Geithner said, "We are not going to look at a repatriation holiday outside the context of comprehensive reform."  Geithner and Office of Management and Budget Director Jacob Lew both said that the President’s FY 2012 budget, which will be released Monday, would not contain detailed plans for overhauling the tax code.  Geithner said, "But we are not in the process of trying to shape consensus among the key people in Congress – both Democrats and Republicans – and among the broad cross section of the business community that's going to be so affected by this."  Geithner added, "But we have to do it in a way that is fiscally responsible."  

  • Lew said, "The notion that (tax reform) starts with a fixed plan is probably not the best way to get to a positive outcome.  The best way to get to a positive outcome is get broad agreement on the goals and work toward them."
  • Geithner was optimistic that any final proposal would lower rates, broaden the tax base, and improve incentives to invest, adding, "I think we can do that."
  • Senate Finance Chairman Max Baucus said yesterday that tax reform will be the Committee’s top priority this session and that he intends to hold numerous hearings on the issue.  Baucus was noncommittal on whether he would draft a tax reform bill or whether tax reform would be enacted before the 2012 elections.  Baucus said, "I just want to have strong, vigorous, constructive hearings and see what develops.  I do believe strongly that with those hearings a lot of good ideas are going to pop up, and in addition, a pathway, or two or three, will also begin to develop."
  • White House Press Secretary Robert Gibbs also commented on tax reform yesterday and reiterated that the Administration does not plan to send a tax reform proposal to Congress.  Gibbs said, "Well, I think it’s important to understand that this is not going to be we put out a plan, we say, hey, this is our plan, take this or leave this.  I think the President started a series of discussions about this with business leaders at the Blair House.  Those conversations – and with Secretary Geithner – have continued to happen.  This is a process that is not going to – not going to take a matter of days or weeks; it’s going to take months if not years.  So I think this is a long process that will involve stakeholders at all levels with both political parties weighing in on their ideas about how we meet the goal of reforming the way corporate taxes are done, lowering that rate, but keeping it deficit neutral."

TAX BILLS INTRODUCED FEBRUARY 8TH:
1.  [112nd] H.R.524: To amend the Internal Revenue Code of 1986 to repeal the provisions of the Patient Protection and Affordable Care Act that limit distributions from medical-related tax-preferred accounts for medicines only if the medicines are prescribed drugs or insulin and to repeal the increase in additional tax on distributions from health savings accounts and Archer MSAs not used for qualified medical expenses.
Sponsor: Rep Quayle, Benjamin [AZ-3] (introduced 2/8/2011)      Cosponsors (None)
Committees: House Ways and Means
Latest Major Action: 2/8/2011 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

2.  [112nd] H.R.529: To amend the Internal Revenue Code of 1986 to treat computer technology and equipment as eligible higher education expenses for 529 plans, to allow certain individuals a credit against income tax for contributions to 529 plans, and for other purposes.
Sponsor: Rep Jenkins, Lynn [KS-2] (introduced 2/8/2011)      Cosponsors (8)
Committees: House Ways and Means
Latest Major Action: 2/8/2011 Referred to House committee.  Status: Referred to the House Committee on Ways and Means.

3.  [112nd] H.R.539: To amend title II of the Social Security Act and the Internal Revenue Code of 1986 to make improvements in the old-age, survivors, and disability insurance program, to provide for cash relief for years for which annual COLAs do not take effect under certain cash benefit programs, and to provide for Social Security benefit protection.
Sponsor: Rep Deutch, Theodore E. [FL-19] (introduced 2/8/2011)      Cosponsors (5)
Committees: House Ways and Means; House Education and the Workforce; House Rules; House Transportation and Infrastructure; House Veterans' Affairs
Latest Major Action: 2/8/2011 Referred to House committee. Status: Referred to the Committee on Ways and Means, and in addition to the Committees on Education and the Workforce, Rules, Transportation and Infrastructure, and Veterans' Affairs, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

4.  [112nd] H.R.547: To amend the Internal Revenue Code of 1986 to repeal the alternative minimum tax on individuals.
Sponsor: Rep Garrett, Scott [NJ-5] (introduced 2/8/2011)      Cosponsors (24)
Committees: House Ways and Means
Latest Major Action: 2/8/2011 Referred to House committee.  Status: Referred to the House Committee on Ways and Means.

5.  [112nd] H.R.559: To amend the Internal Revenue Code of 1986 to provide an additional year for the extension of the placed in service date for the low-income housing credit rules applicable to the GO Zone.
Sponsor: Rep Richmond, Cedric L. [LA-2] (introduced 2/8/2011)      Cosponsors (1)
Committees: House Ways and Means
Latest Major Action: 2/8/2011 Referred to House committee.  Status: Referred to the House Committee on Ways and Means.

6.  [112nd] H.R.561: To amend the Internal Revenue Code of 1986 to extend the work opportunity tax credit with respect to veterans.
Sponsor: Rep Welch, Peter [VT] (introduced 2/8/2011)      Cosponsors (None)
Committees: House Ways and Means
Latest Major Action: 2/8/2011 Referred to House committee.  Status: Referred to the House Committee on Ways and Means.

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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