Daily Tax Update - March 18, 2011: 64 Senators Urge President to Take Up Entitlement and Tax Reform

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

SIXTY-FOUR SENATORS URGE PRESIDENT TO TAKE UP ENTITLEMENT AND TAX REFORM:  Today, sixty-four senators (32 Democrats and 32 Republicans) urged President Obama to expand the discussion about government spending to include tax and entitlement reform.  The bipartisan letter was circulated by Sens. Mike Johanns (R-NE) and Michael Bennet (D-CO).

  • The letter to Obama states, "[W]e write to inform you that we believe comprehensive deficit reduction measures are imperative and to ask you to support a broad approach to solving the problem.  As you know, a bipartisan group of Senators has been working to craft a comprehensive deficit reduction package based upon the recommendations of the Fiscal Commission.  While we may not agree with every aspect of the Commission’s recommendations, we believe that its work represents an important foundation to achieve meaningful progress on our debt.  The Commission’s work also underscored the scope and breadth of our nation’s long-term fiscal challenges.  Beyond FY2011 funding decisions, we urge you to engage in a broader discussion about a comprehensive deficit reduction package.  Specifically, we hope that the discussion will include discretionary spending cuts, entitlement changes and tax reform.  By approaching these negotiations comprehensively, with a strong signal of support from you, we believe that we can achieve consensus on these important fiscal issues.  This would send a powerful message to Americans that Washington can work together to tackle this critical issue."
  • Johanns said, "We need the White House to be engaged.  There is no question that tackling tax reform and entitlements is tough...We won’t have any chance unless the President joins with us in the good-faith effort.  The ball is very clearly in the President’s court."
  • Bennet said, "We want to work toward a comprehensive plan.  This is about keeping the conversations going, keeping it alive."
  • A White House spokesperson said, "We believe it’s a positive development anytime Democrats and Republicans come together to work on one of our nation’s toughest challenges, and we will continue to work with members of Congress from both sides of the aisle to rein in our deficit, grow our economy, and win the future.  The President agrees that any serious discussion of how to tackle our long-term fiscal situation needs to include entitlements and tax reform, which is why he committed to take on both in his State of the Union Address."
  • The letter can be accessed here

MISCELLANEOUS GUIDANCE RELEASED TODAY:
Revenue Ruling 2011-10 provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, the adjusted federal long-term tax-exempt rate.  These rates are determined as prescribed by § 1274.

TAX BILLS INTRODUCED MARCH 17TH:
1.  [12nd] H.R.1147: To amend the Internal Revenue Code of 1986 to allow a deduction for certain payments made to reduce debt on commercial real property.
Sponsor: Rep Nunes, Devin [CA-21] (introduced 3/17/2011)      Cosponsors (1)
Committees: House Ways and Means
Latest Major Action: 3/17/2011 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

2.  [112nd] H.R.1149: To amend the Clean Air Act to include algae-based biofuel in the renewable fuel program and amend the Internal Revenue Code of 1986 to include algae-based biofuel in the cellulosic biofuel producer credit.
Sponsor: Rep Bilbray, Brian P. [CA-50] (introduced 3/17/2011)      Cosponsors (7)
Committees: House Ways and Means; House Energy and Commerce
Latest Major Action: 3/17/2011 Referred to House committee. Status: Referred to the Committee on Ways and Means, and in addition to the Committee on Energy and Commerce, 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.

3.  [112nd] H.R.1177: To amend the Internal Revenue Code of 1986 to provide for tax preferred savings accounts for individuals under age 26, and for other purposes.
Sponsor: Rep Critz, Mark S. [PA-12] (introduced 3/17/2011)      Cosponsors (None)
Committees: House Ways and Means
Latest Major Action: 3/17/2011 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

4.  [112nd] H.R.1180: To amend the Internal Revenue Code of 1986 to establish small business start-up savings accounts.
Sponsor: Rep Gardner, Cory [CO-4] (introduced 3/17/2011)      Cosponsors (4)
Committees: House Ways and Means
Latest Major Action: 3/17/2011 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

5.  [112nd] H.R.1188: To amend the Internal Revenue Code of 1986 to terminate incentives for alcohol fuels.
Sponsor: Rep Lance, Leonard [NJ-7] (introduced 3/17/2011)      Cosponsors (6)
Committees: House Ways and Means
Latest Major Action: 3/17/2011 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

6.  [112nd] H.R.1190: To amend the Internal Revenue Code of 1986 to provide that a deduction equal to fair market value shall be allowed for charitable contributions of literary, musical, artistic, or scholarly compositions created by the donor.
Sponsor: Rep Lewis, John [GA-5] (introduced 3/17/2011)      Cosponsors (1)
Committees: House Ways and Means
Latest Major Action: 3/17/2011 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

7.  [112nd] S.626: A bill to amend the Internal Revenue Code of 1986 to repeal the shipping investment withdrawal rules in section 955 and to provide an incentive to reinvest foreign shipping earnings in the United States.
Sponsor: Sen Cantwell, Maria [WA] (introduced 3/17/2011)      Cosponsors (6)
Committees: Senate Finance
Latest Major Action: 3/17/2011 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.

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.