Daily Tax Update - June 24, 2011: Boehner: Tax Hikes Cannot Pass the House

BOEHNER:  TAX HIKES "CANNOT PASS THE HOUSE":  With the collapse of yesterday’s deficit reduction talks, Senate Majority Leader Harry Reid suggested yesterday that negotiations now have to move up to a higher level than those in the Biden group.  Reid said, "My honest feeling is that we are beyond gangs of five and gangs of sixes."  Reid added, "With what Kyl and Cantor’s done, I think it’s in the hands of the speaker and the president and, sadly, probably me."

House Majority Leader Eric Cantor also said that "it is up to the president to come in and talk to the Speaker."

In a statement released last night, Vice President Biden said the goal of the talks was always to report findings to "our respective leaders," and suggested his group’s work had run its course.  Biden's statement said, "The next phase is in the hands of those leaders, who need to determine the scope of an agreement that can tackle the problem and attract bipartisan support.  For now, the talks are in abeyance as we await that guidance."

After leaving yesterdays' meeting, Cantor called on the President to "resolve the tax issue."  Cantor added, "Regardless of the progress that has been made, the tax issue must be resolved before discussions can continue.  Given this impasse, I will not be participating in today’s meeting and I believe it is time for the president to speak clearly and resolve the tax issue."

In a statement today, House Speaker Boehner said, "The president and his party may want a debt limit increase that includes tax hikes, but such a proposal cannot pass the House.  The president and his party may want a debt limit increase without spending cuts that exceed the amount of the debt limit hike, but such a proposal cannot pass the House.  The president and his party may want a debt limit increase without budget reforms that will restrict Washington’s ability to spend in the future, but such a proposal cannot pass the House."  The statement added, "These are the realities of the situation.  If the president and his allies want the debt limit increased, it is only going to happen via a measure that meets these tests.  If the president puts forth such a proposal, he has my word that the House will act on it.  But a measure that fails to meet these tests cannot pass the House.  If the president wants this done, he must lead.  We have an extraordinary opportunity to do something big for our economy and our country.  With presidential leadership, we can seize this moment and deliver something important for the people we serve."

Shortly after Boehner’s statement, the White House announced that Obama and Biden would meet Monday with the Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell to discuss a deficit-reduction package.  The White House said the meeting is intended to "to find common ground on a balanced approach to deficit reduction."

IRS: REPORT CERTAIN FOREIGN BANK AND FINANCIAL ACCOUNTS BY JUNE 30TH:  Today, the IRS reminded "everyone who has a bank or other financial account in a foreign country, or who has signature authority over such an account, that they may be required to report the account to the U.S. Department of the Treasury by June 30 each year."

According to the IRS, "U.S. persons are required to file a Report of Foreign Bank and Financial Accounts (FBAR), Treasury Department Form TD F 90-22.1, each year if they have a financial interest in or signature authority over financial accounts, including bank, securities or other types of financial accounts, in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year. For 2010, the due date for filing the FBAR is Thursday, June 30, 2011, though some financial professionals will have until June 30, 2012 to file. Unlike with federal income tax returns, requests for an extension of time to file an FBAR cannot be granted."

For additional information, contact Philip R. West - pwest@steptoe.comCatherine W. Wilkinson - cwilkinson@steptoe.com or Stanley Smilack  - ssmilack@steptoe.com

TAX BILLS INTRODUCED JUNE 23RD:

1. [112nd] H.R.2311:  To amend the Internal Revenue Code of 1986 to modify the tax rate for excise tax on investment income of private foundations.
Sponsor: Rep Paulsen, Erik [MN-3] (introduced 6/23/2011)   Cosponsors (1)
Committees: House Ways and Means
Latest Major Action: 6/23/2011 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

2. [112nd] H.R.2320:  To amend the Internal Revenue Code of 1986 to permanently extend existing elective tax treatment for Alaska Native Settlement Trusts.
Sponsor: Rep Young, Don [AK] (introduced 6/23/2011)   Cosponsors (None)
Committees: House Ways and Means
Latest Major Action: 6/23/2011 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

3. [112nd] H.R.2327:  To amend the Internal Revenue Code of 1986 to exclude from gross income gain from the conversion of property by reason of eminent domain.
Sponsor: Rep Gingrey, Phil [GA-11] (introduced 6/23/2011)   Cosponsors (10)
Committees: House Ways and Means
Latest Major Action: 6/23/2011 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

4. [112nd] S.1271:  A bill to amend the Internal Revenue Code of 1968 to provide a temporary credit for hiring previously unemployed workers.
Sponsor: Sen Whitehouse, Sheldon [RI] (introduced 6/23/2011)   Cosponsors (None)
Committees: Senate Finance
Latest Major Action: 6/23/2011 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.

5. [112nd] S.1277:  A bill to amend the Internal Revenue Code of 1986 to modify the incentives for the production of biodiesel.
Sponsor: Sen Cantwell, Maria [WA] (introduced 6/23/2011)   Cosponsors (6)
Committees: Senate Finance
Latest Major Action: 6/23/2011 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.

6. [112nd] S.1278:  A bill to amend the Internal Revenue Code of 1986 to repeal the excise tax on indoor tanning services.
Sponsor: Sen Snowe, Olympia J. [ME] (introduced 6/23/2011)    Cosponsors (5)
Committees: Senate Finance
Latest Major Action: 6/23/2011 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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