Daily Tax Update - June 25, 2012: Supreme Court Expected To Issue Health Care Decision Thursday

SUPREME COURT EXPECTED TO ISSUE HEALTH CARE DECISION ON THURSDAY:  The US Supreme Court is expected to release its health care ruling on Thursday.  One of the funding mechanisms for the health care law is section 7701(o), the codification of the economic substance doctrine and the related strict liability penalty.  Even if the individual mandate portion of the health care law is struck down, other portions of the law, including the tax revenue provisions, could remain in effect.  The tax revenue provisions include the following:

  • Beginning in 2013, a new 3.8-percent Medicare contribution tax on interest, dividends, capital gains, and other investment income for individuals making more than $200,000 a year and couples making more than $250,000.  The health care law also increases the Medicare payroll tax by 0.9 percentage points to 2.35 percent on wages above $200,000 for individuals and $250,000 for married couples filing jointly.
  • Tax on High-Cost Health Insurance Plans:  A 40-percent excise tax on so-called Cadillac health insurance plans would begin in 2018, be indexed to the consumer price index (CPI) plus one for 2019, and then rise annually by the CPI beginning in 2020.
  • Elimination of Unintended Application of Cellulosic Biofuel Producer Credit:  Modification to the cellulosic biofuel producer credit to exclude fuels with significant water, sediment, or ash content, such as black liquor, effective January 1, 2010.
  • Time for Payment of Corporate Estimated Taxes:  Increase the required payment of estimated tax otherwise due in July, August, or September, 2014, by 15.75 percentage points.
  • Tax on Medical Devices:  An excise tax on medical device sales equal to 2.9 percent of the price of the device.

MISCELLANEOUS GUIDANCE RELEASED:

RR-2012-19 - Section 162(m)(4)(C)—Dividends and Dividend Equivalents on Restricted Stock and Restricted Stock Units

n-12-44.pdf provides guidance concerning qualified energy conservation bonds under § 54D of the Internal Revenue Code (Qualified Energy Conservation Bonds).  This Notice addresses questions regarding qualified conservation purposes eligible for financing with these bonds, particularly (1) how to measure reductions of energy consumption in publicly-owned buildings by at least 20 percent under § 54D(f)(1)(A)(i) and (2) what constitutes a “green community program” under § 54D(f)(1)(A)(ii).

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:  Steptoe & Johnson LLP has one of the largest and most diverse law firm tax practices in the country.  The practice covers the entire spectrum of federal taxation, including representation of businesses before the Congress, Treasury and the national office of the IRS; transactional planning for domestic and multinational corporations; complex audit and controversy work for corporations and other business interests contesting IRS adjustments; litigation before the Tax Court, Court of Federal Claims, district courts, courts of appeals and the Supreme Court.  The firm's tax practice also encompasses all aspects of employee benefits (ERISA), executive compensation, tax-exempt organizations and charitable giving.  Steptoe has an extensive state and local tax practice, representing an array of business clients on complex sales and use tax, corporate income tax and property tax matters, both advising those clients and handling audits, administrative appeals, and litigation for them. Read more information on Steptoe's tax practice.