Daily Tax Update - August 19, 2011: Obama To Give September Jobs Speech

OBAMA TO GIVE SEPTEMBER JOBS SPEECH:  In a speech earlier this week, President Obama said that he would outline details of a new economic package after Labor Day.  The President’s plan is expected to contain tax cuts, increased infrastructure spending, and long-term ideas to tackle the nation's debt.  In his remarks earlier this week, the President said, "And over the course of the next few weeks, I’m going to be putting out more proposals to put people to work right now.  And some of them -- yes, some of them cost money.  And the way we pay for it is by doing more on deficit reduction than the plan that we had to come up with right at the last minute in order to avoid default.  We didn’t do as much as we could have.  When folks tell you that we’ve got a choice between jobs now or dealing with our debt crisis, they’re wrong.  They’re wrong.  We can’t afford to just do one or the other.  We’ve got to do both.  And the way to do it is to make some -- reform the tax code, close loopholes, make some modest modifications in programs like Medicare and Social Security so they’re there for the next generation, stabilize those systems.  And you could actually save so much money that you could actually pay for some of the things like additional infrastructure right now."

  • White House Press Secretary Jay Carney said Wednesday, "And he’s made clear that -- both yesterday and previously -- that he will put his concrete ideas for further deficit reduction on the table, provide them to the select -- joint select special committee -- super committee of Congress.  He will also -- has been talking a lot about some of his ideas that he believes could get bipartisan support for further economic growth and to spur economic growth and create jobs.  And I’m sure he will have some new ideas as well beyond those that he’s discussed, but I won’t get into any more specifics than that."

IRS SEEKS NEW ISSUES FOR INDUSTRY ISSUE RESOLUTION PROGRAM:  The IRS is seeking input from business taxpayers, associations, and other interested parties to submit to the Industry Issue Resolution (IIR) Program tax issues for resolution involving a controversy, a dispute, or a potentially unnecessary burden on business taxpayers.

  • The objective of the IIR program is to resolve business tax issues common to significant numbers of taxpayers through new and improved guidance.  In past years, issues have been submitted by associations and others representing both small and large business taxpayers, resulting in tax guidance that has affected thousands of taxpayers.
  • Additional information can be accessed here.

MISCELLANEOUS GUIDANCE RELEASED:

Notice 2011-64 updates the list of US income tax treaties that meet the requirements of section 1(h)(11), which was last updated in Notice 2006-101, 2006-2 C.B. 930, to reflect two new income tax treaties that have entered into force since the publication of Notice 2006-101.  Pursuant to section 1(h)(11) of the Internal Revenue Code, a dividend paid to an individual shareholder from a domestic corporation or a "qualified foreign corporation" is taxed at the reduced rates applicable to certain capital gains.  A qualified foreign corporation includes certain foreign corporations that are eligible for benefits of a comprehensive income tax treaty with the United States that the Secretary determines is satisfactory for purposes of section 1(h)(11).

Revenue Ruling 2011-18 provides the rates for interest on tax overpayments and underpayments for the calendar quarter beginning October 1, 2011.  The interest rates will be 3 percent for overpayments (2 percent in the case of a corporation), 3 percent for underpayments, 0 and one-half percent for the portion of a corporate overpayment exceeding 10,000, and 5 percent for large corporate underpayments.  This quarterly determination is required by section 6621 of the Internal Revenue Code.

Revenue Ruling 2011-20 (released August 17) provides various prescribed rates for federal income tax purposes including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by § 1274. The rates are published monthly for purposes of sections 42, 382, 412, 1288, 1274, 7520, 7872, and various other sections of the Internal Revenue Code.

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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