Daily Tax Update - June 8, 2011: Kyl: Republicans Want $2.4 Trillion in Spending Cuts

KYL:  REPUBLICANS WANT $2.4 TRILLION IN SPENDING CUTS: Senate Finance member Jon Kyl (R-AZ) and a member of the group of Congressional leaders negotiating with Vice President Biden on the budget and debt ceiling outlined the spending cuts needed to secure Republican support. Kyl said that in order for Republicans to support a debt ceiling increase through 2012, at least $2.4 trillion in spending cuts over a decade or more must be made. Kyl said, "You'd have to do about $2.4 trillion in debt ceiling...which means you’d have to be about $2 1/2 trillion - at a minimum - in savings."

In a letter to House Republicans earlier this week, House Majority Leader Eric Cantor (R-VA) stated that he was "cautiously optimistic we can find sufficient common ground with the Administration to enact spending cuts that meet the goal outlined by the Speaker. The President, Speaker, and Harry Reid have all expressed their support for the work of the Biden group and their optimism for the cuts and reforms we hope to produce." Cantor continued, "We are also discussing discretionary spending and long-term budget process reforms that will hopefully prevent a repeat of the explosion of federal spending we have witnessed over the past several years." Cantor added, "Achieving the level of spending reductions we all desire will mean that virtually every category of federal spending will see some level of cuts. I suspect that the special interests and the usual defenders of federal spending will vigorously oppose these cuts. After all, most of them agree that federal spending ought to be reduced, they just think it ought to be reduced somewhere else!"

The letter can be accessed here

MISCELLANEOUS GUIDANCE RELEASED TODAY:

Revenue Procedure 2011-33 provides the extent to which contributors may rely on Publication 78 or on the IRS Business Master File extract for purposes of deducting contributions and making grants. IRS may give notice of revocation in the IRB or on the IRS’s website at www.irs.gov. IRS no longer publishes a paper version of Publication 78.

Revenue Procedure-2011-36 modifies section 6.07 of Rev. Proc. 2011-8, 2011-1 I.R.B. 237, to provide for a reduced user fee for applications for reinstatement of tax-exempt status filed by certain small organizations following automatic revocation of their tax-exempt status under section 6033(j) of the Internal Revenue Code.

Notice 2011-43 provides transitional relief for certain small organizations (those that normally have annual gross receipts of not more than $50,000 in their most recently completed taxable year) that have been automatically revoked because they failed to file an annual electronic notice for taxable years beginning in 2007, 2008 and 2009. The notice provides the criteria that a small organization must satisfy to qualify for the transitional relief and describes how qualifying organizations apply for reinstatement of tax-exempt status and request retroactive reinstatement.

Notice 2011-44 tells organizations that have had their tax-exempt statuses automatically revoked for failing to file an annual return or notice for three consecutive years how to apply for reinstatement of tax-exempt status and request reinstatement retroactive to the date of automatic revocation.

A-2011-35 The IRS is required to publish and maintain a list of organizations that have had their federal tax-exempt statuses automatically revoked for failing to file an annual return or notice for three consecutive years. The IRS will publish this auto-revocation list on its website at www.irs.gov. The auto-revocation list will not appear in the Internal Revenue Bulletin.

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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