Daily Tax Update - December 7, 2011: Impasse Remains On Payroll Tax Extension

IMPASSE REMAINS ON PAYROLL TAX CUT EXTENSION – HOUSE REPUBLICANS PLAN NEW VERSION:  Lawmakers remain at an impasse over how to advance the payroll tax cut extension.  Senate Minority Leader Mitch McConnell said yesterday that the Democrats’ new scaled-back Senate bill was "nothing more than another bill that’s been designed to fail, so Democrats can have another week of fun and games on the Senate floor."  The Senate is expected to vote on the revised Democratic bill, which includes a proposed surtax on millionaires, on December 9.

  • Today, House Republicans discussed a new version of a payroll tax cut extension bill.  The House measure is expected to extend for one year the current payroll tax cut plus benefits for the long-term unemployed, and prevent a cut in Medicare payments to doctors for two years.
  • Although a deal is expected to be reached before the December 16 target date for adjournment, a House vote is not expected until next week.  Sen. Roy Blunt (R-MO) said, "There’s a final package out here.  There are clearly well over 60 votes for extending this in some way, so you’d be wise to assume it probably gets extended.  But it would probably have to have an incredibly attractive set of other issues with it before I’d vote for it."
  • After a meeting with President Obama today, Senate Majority Leader Harry Reid said that he would be open to paying for a payroll tax holiday extension with spending cuts. Reid added, "We're ruling nothing out."

MISCELLANEOUS GUIDANCE RELEASED:

Notice 2011-100 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.

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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