Daily Tax Update - April 1, 2011: IRS Expands CAP Program

IRS EXPANDS CAP PROGRAM:  The IRS announced that the six-year-old Compliance Assurance Process (CAP) pilot program for large corporate taxpayers is being expanded and made permanent.  According to the IRS, "Under CAP, participating taxpayers work collaboratively with an IRS team to identify and resolve potential tax issues before the tax return is filed each year.  With the major potential tax issues largely settled before filing, taxpayers are generally subject to shorter and narrower post-filing examinations."  The IRS added, "[I]t is being expanded to include two additional components.  A new pre-CAP program will provide interested taxpayers with a clear roadmap of the steps required for gaining entry into CAP.  A new CAP maintenance program is intended for taxpayers who have been in CAP, have fewer complex issues, and have established a track record of working cooperatively and transparently with the IRS."

  • IRS Commissioner Doug Shulman said, "This marks another important step in our evolving relationship with corporate taxpayers.  Through greater cooperation and transparency, CAP taxpayers and the IRS both benefit.”  Shulman added, “CAP is a program where the tax system is at its best – when the taxpayer and the IRS are transparent and issues are resolved before a return is filed."
  • Additional information can be accessed here

 MISCELLANEOUS GUIDANCE RELEASED:
Notice 2011-30 publishes the nonconventional fuel source credit, inflation adjustment factor, and reference price under § 45K of the Internal Revenue Code for calendar year 2010. For 2010, the section 45K credit is only available for fuel produced from coke or coke gas (other than from petroleum based products) and is not subject to phase-out.

Notice 2011-20 addresses the application of section 501(c)(3) of the Internal Revenue Code to tax-exempt organizations participating in the Medicare Shared Savings Program (MSSP) through an accountable care organization (ACO) as described in section 3022 of the Patient Protection and Affordable Care Act. In addition, the Notice includes a request for public comments.

TAX BILLS INTRODUCED MARCH 31ST:
[112nd] S.697: A bill to amend the Internal Revenue Code of 1986 to allow a credit against income tax for amounts paid by a spouse of a member of the Armed Services for a new State license or certification required by reason of a permanent change in the duty station of such member to another State.
Sponsor: Sen Casey, Robert P., Jr. [PA] (introduced 3/31/2011)   Cosponsors (2)
Committees: Senate Finance
Latest Major Action: 3/31/2011 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.

2. [112nd] S.700: A bill to amend the Internal Revenue Code of 1986 to permanently extend the treatment of certain farming business machinery and equipment as 5-year property for purposes of depreciation.
Sponsor: Sen Klobuchar, Amy [MN] (introduced 3/31/2011)    Cosponsors (3)
Committees: Senate Finance
Latest Major Action: 3/31/2011 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.

3. [112nd] S.705: A bill to amend the Internal Revenue Code of 1986 to provide for collegiate housing and infrastructure grants.
Sponsor: Sen Carper, Thomas R. [DE] (introduced 3/31/2011)    Cosponsors (6)
Committees: Senate Finance
Latest Major Action: 3/31/2011 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.