Daily Tax Update - February 22, 2011: Baucus, Hatch Announce Tax Hearings On Why The Code Needs Reform

THE DAILY TAX UPDATE WILL BE PUBLISHED ON A PERIODIC BASIS UNTIL CONGRESS RETURNS ON FEBRUARY 28TH.

BAUCUS, HATCH ANNOUNCE TAX HEARINGS ON WHY THE CODE NEEDS REFORM:  Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) said that the Committee will undertake a series of hearings examining why the tax code needs reform.  The Finance leaders said they plan to look at ways to make the code more competitive and fair, while making it less complex.  Baucus and Hatch announced they would hold a hearing titled "How Did We Get Here?  Changes in the Law and Tax Environment Since the Tax Reform Act of 1986" on Tuesday, March 1.  The hearing will examine how changes since the Tax Reform Act of 1986 have affected the tax code, including the globalization of the economy, innovations in technology, advancements in the financial services industry and growth of tax planning practices, and how the tax code has and has not responded.

  • Five former Assistant Secretaries for Tax Policy will testify.  The former top Treasury Department tax officers will be Fred Goldberg, Jonathan Talisman, Mark Weinberger, Pamela Olson and Eric Solomon. 
  • Baucus said, "Today there are just too many special benefits in the tax code for one industry or another.  All those credits and deductions make our code so complicated that those with an army of lawyers and accountants can slim down their tax bill while others are left paying one of the highest corporate tax rates in the world.  We will hold a number of hearings to look at how this unbalanced tax code is a drag on the economy and what changes need to be made.  All tax incentives, both personal and business, should produce the outcomes we intended, such as job creation and widespread economic growth.  We need to figure out how to get rid of loopholes and simplify the system, so we can lower tax rates and keep our economy growing."
  • Hatch said, "Our tax system is burdensome, overly complex and stifles American competitiveness.  It needs to be reformed.  I'm pleased to announce with Chairman Baucus that the Finance Committee will spend the next year fully examining our tax code.  With these hearings, we hope to lay the ground work towards a comprehensive overhaul to ensure we are putting real pro-growth policies in place that will spur investment, economic expansion, and much needed jobs."

MISCELLANEOUS GUIDANCE RELEASED TODAY:
Notice 2011-18 provides transitional relief from information reporting requirements in section 6045B of the Internal Revenue Code (“Code”) that apply to issuers of stock with respect to organizational actions that affect the basis of the stock.

Revenue Ruling 2011-7 provides guidance clarifying how the section 403(b) plan termination provisions apply. Final regulations under § 403(b) were published in 2007.  Under the regulations a § 403(b) plan is permitted to contain provisions that provide for plan termination and that allow accumulated benefits to be distributed on termination. This revenue ruling provides guidance clarifying how the section 403(b) plan termination provisions apply. 

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.