Daily Tax Update - June 7, 2011: Republican Leaders Considering Two-Year Budget in Exchange for Raising Debt Ceiling

REPUBLICAN LEADERS CONSIDERING TWO-YEAR BUDGET IN EXCHANGE FOR RAISING DEBT CEILING: Republicans are considering asking the Obama Administration to support a two-year budget process in exchange for their support to raise the debt ceiling. 

  • House Speaker John Boehner (R-OH) has previously voted for a biennial budget bill. Boehner also said he supports matching any increase in the debt limit with a dollar for dollar real spending cut. Last week, Boehner said, "I think there needs to be real review of the entire budget process, and I’ll probably have more to say on that later."

TREASURY, IRS ANNOUNCE PROPOSED CHANGES TO NEW MARKETS TAX CREDIT PROGRAM: Today, the Treasury Department and the IRS announced proposed changes to the new markets tax credit program to encourage more investment in non-real estate businesses located in low-income communities. 

  • According to the IRS, "The new markets tax credit, created as part of the Community Renewal Tax Relief Act of 2000, provides incentives to invest in businesses in designated low-income communities. The proposed modifications to the credit are intended to promote greater investment in non-real estate businesses under the new markets tax credit program while still maintaining the structure of the credit that has been successful for other types of investments. Potential changes to the tax credit include revising reinvestment requirements for entities investing in operating businesses, streamlining compliance requirements, and modifying ownership rules to reduce noncompliance risk over the course of an investment, among others."
  • Additional information can be accessed via:
    http://www.steptoe.com/publications/2011-13978[1].pdf
    http://www.steptoe.com/publications/2011-13981[1].pdf

COUNCIL OF ECONOMIC ADVISERS CHAIRMAN TO RESIGN: Austan Goolsbee, the chair of President Obama's Council of Economic Advisers (CEA), will leave his post by the fall and return to teaching.

MISCELLANEOUS GUIDANCE RELEASED TODAY:

Notice 2011-49 provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under § 412(b)(5)(B)(ii)(II) of the Internal Revenue Code as in effect for plan years beginning before 2008. It also provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), and the 24-month average segment rates under § 430(h)(2). In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, the 30-year Treasury weighted average rate under § 431(c)(6)(E)(ii)(I), and the minimum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007. 

Revenue Procedure 2011-37 provides guidance with respect to the United States and area median gross income figures that are to be used by issuers of qualified mortgage bonds, as defined in § 143(a) of the Internal Revenue Code, and issuers of mortgage credit certificates, as defined in § 25(c), in computing the housing cost/income ratio described in § 143(f)(5).

Notice 2011-48 invites public comments on the content and administration of the registered tax return preparer competency examination (competency examination). The Treasury Department and the Internal Revenue Service have published final regulations (TD 9527, 76 FR 32286) under 31 CFR Part 10 that require certain individuals to pass a competency examination to become a registered tax return preparer. The IRS has selected a vendor to support the IRS in developing and administering the competency examination for the Form 1040 series tax returns and accompanying schedules. 

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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