Daily Tax Update - June 10, 2011: "Five Guys" Plus 13 Discuss Deficit Reduction Plan Progress

“FIVE GUYS” PLUS 13 DISCUSS DEFICIT REDUCTION PLAN PROGRESS:  A group of 18 Senators met yesterday to hear a “progress report” of the deficit reduction work being done by the smaller group.  The original “Gang of Six” group was comprised of:  Democrats Mark Warner (VA), Dick Durbin (IL), and Kent Conrad (ND), and Republicans Saxby Chambliss (GA), Mike Crapo (ID), and Tom Coburn (OK).  Coburn announced he was taking a “sabbatical” from the discussions, and Durbin now refers to the group as “Five Guys.”  The group has been meeting for months to draft legislation based on the recommendations of President Obama’s fiscal commission.

  • Budget Committee Chairman Kent Conrad said the expansion of the gathering was an indication that the group is “close to reaching conclusion.”  Conrad added, “We’ve reached a natural point at which it seemed like the next step, the next natural step, would be to share what we’ve been doing with other members and get their reaction.”
  • However, a Senate aide cautioned against reading too much into Conrad’s statement saying it was “a massive overstatement of where we are."  The aide added, “This was the second or third meeting we’ve had with senators outside the core members, simply to give those people who have expressed an interest in the group an idea of what we’re doing.  It was essentially showing them the fiscal commission report and saying what we agree with and what we disagree with.”
  • When Warner was asked if the “Five Guys” Senate group meetings were relevant to discussions being led by Vice President Biden, he replied, “I believe it is.  I still think the best chances for a long-term debt and deficit deal come with a bipartisan basis that starts in the Senate."  Warner added, "I wish all the best to the Biden group, and if they get there first, go to it."
  • Meanwhile, the bipartisan House and Senate “Biden Group” debt-ceiling talks continued yesterday.  Group member Rep. Chris Van Hollen (D-MD) said, “Today we talked about revenues.  We’ve made clear, meaning the vice president and Democrats, that when you’re talking about cutting important investments, you also have to get rid of subsidies for the oil-and-gas industry and cut corporate pork.”  Van Hollen added, “You need to have that to have a balanced and credible approach to the deficit.”  Van Hollen also said that yesterday’s discussions were “simply an exchange of views.”
  • Reports indicate that during yesterday’s discussions, Treasury Secretary Timothy Geithner floated a plan to limit the value of itemized deductions for the wealthiest households.  Republicans have stated that they are opposed to the inclusion of any tax hikes as part of the debt-reduction plan.
  • Participants in the Biden talks include:  Vice President Joe Biden, Treasury Secretary Timothy Geithner, Sen. Max Baucus, Sen. Jon Kyl, Sen. Daniel Inouye, House Majority Leader Eric Cantor, Rep. Van Hollen, Rep. James Clyburn, and White House Budget Director Jack Lew.

MISCELLANEOUS GUIDANCE RELEASED TODAY:

Notice 2011-50 publishes the inflation adjustment factor for the credit for carbon dioxide (CO2) sequestration under § 45Q of the Internal Revenue Code for calendar year 2011. The amount of credit must be adjusted for inflation for taxable years beginning in a calendar year after 2009.

Notice 2011-51 extends the interim guidance provided in Notice 2010-79 for another year (to any taxable year beginning in 2010 and the first taxable year beginning after December 31, 2010).

TAX BILL INTRODUCED JUNE 9TH:

S.1171: A bill to amend the Internal Revenue Code of 1986 to extend the exclusion from gross income for employer-provided health coverage for employees' spouses and dependent children to coverage provided to other eligible dependent beneficiaries of employees.

Sponsor: Sen Schumer, Charles E. [NY] (introduced 6/9/2011) Cosponsors (14)

Latest Major Action: 6/9/2011 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.

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