Daily Tax Update - February 16, 2012: Payroll Tax Deal Reached

PAYROLL TAX DEAL REACHED:  Negotiators reached an agreement early this morning and the conference committee approved the bill late this afternoon to extend the payroll tax cut, emergency unemployment benefits, and the Medicare reimbursement rate for doctors.  The current reduction in the employee’s share of the Social Security payroll tax — from 6.2 percent to 4.2 percent of wages — would be continued to the end of the year.  The bill does not contain any of the tax extenders.  The bill is partially paid for by the sale of radio spectrum licenses and federal worker pension benefit changes. 

  • A House vote could occur tomorrow.  Earlier today, House Speaker John Boehner said, "First we’ve got to have a bill filed.  There’s a technical issue, a drafting issue, that is trying to be resolved.  But we’re working with Members on both sides of the aisle to talk about how best to move forward."  Boehner added, "The agreement that’s been reached to stop a tax hike on middle class Americans is a fair agreement and one that I support.  Let’s be honest, this is an economic relief package, not a bill that’s going to grow the economy and create jobs." 
  • House Minority Leader Nancy Pelosi said, "While we do not like the pay-for ... we do recognize that the bill does contain the three features that we said were necessary and does so – at least in terms of the payroll tax cut and in terms of the unemployment insurance – in a way that I think is acceptable to most of us.  I don’t see a scenario where our members will vote against it."
  • In reaction to the agreement, Senate Finance Chairman Max Baucus said earlier today, "It’s very good for the country.  We have an agreement.  We have agreements, and I’m totally convinced and assured that we’ve talked to conferees and there will be a majority of the conferees that will sign it."
  • In remarks earlier today, House Ways and Means Chairman Dave Camp said that there are some "technical issues" that "continue to be worked on," and conferees have not yet signed the report.  Camp added, "My job is to bring this over the finish line, and I’m confident that we can get there."
  • A summary of the bill can be accessed here.

TAX BILLS INTRODUCED FEBRUARY 15TH:

1. [112nd] H.R.4032 : To amend the Internal Revenue Code of 1986 to make permanent the 2010 increase in the deduction for start-up expenditures.
Sponsor: Rep Johnson, Henry C. "Hank," Jr. [GA-4] (introduced 2/15/2012)      Cosponsors (3)
Committees: House Ways and Means
Latest Major Action: 2/15/2012 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

2. [112nd] H.R.4035 : To amend the Internal Revenue Code of 1986 to exempt private foundations from the tax on excess business holdings in the case of certain philanthropic enterprises which are independently supervised, and for other purposes.
Sponsor: Rep Reichert, David G. [WA-8] (introduced 2/15/2012)      Cosponsors (1)
Committees: House Ways and Means
Latest Major Action: 2/15/2012 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

3. [112nd] H.R.4038 : To amend the Internal Revenue Code of 1986 to provide a 4-year extension of the deduction for tuition and related expenses.
Sponsor: Rep Ackerman, Gary L. [NY-5] (introduced 2/15/2012)      Cosponsors (6)
Committees: House Ways and Means
Latest Major Action: 2/15/2012 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

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.

STEPTOE & JOHNSON LLP - TAX PRACTICE
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