Daily Tax Update - February 28, 2013: Bill to Tax Financial Transactions Introduced

THE DAILY TAX UPDATE WILL BE PUBLISHED WHEN CONGRESS RETURNS ON MARCH 4TH

BILL TO TAX FINANCIAL TRANSACTIONS INTRODUCED:  Sen. Tom Harkin (D-IA) and Rep. Peter DeFazio (D-OR) introduced the “Wall Street Trading and Speculators Tax Act,” which would tax financial transactions at 3 basis points. They introduced a similar bill last Congress.  According to a summary, “The measure will place a small tax of three basis points (three pennies on $100 in value) on most non-consumer financial trading including stocks, bonds and other debts, except for their initial issuance.  For example, if a company receives a loan from a financial company, that transaction would not be taxed.  But, if the financial institution traded the debt, the trade would be subject to the tax.  The tax would also cover all derivative contracts, options, puts, forward contracts, swaps and other complex instruments at their actual cost.  The measure excludes debt that has an original term of less than 100 days. The proposed tax would take effect after December 31, 2013.”  Harkin and DeFazio said it could generate $352 billion in revenues over 10 years.  Harkin’s press release added, “Earlier this year, a group of 11 European governments agreed to implement a financial transaction tax.  The action allows for a tax of 10 basis points on stocks and one basis point on derivatives on financial transactions by the following countries: Germany, France, Italy, Spain, Belgium, Austria, Greece, Portugal, Slovakia, Slovenia, and Estonia.”

  • Harkin said, “The American people overwhelmingly agree that deficit reduction in this country must come from a balance of spending cuts and necessary revenue increases. We need the new revenue that would be generated by this tax in order to reduce deficits and maintain critical investments in education, infrastructure, and job creation.  And there is no question that Wall Street can easily bear this modest tax.  This Wall Street tax is a simple matter of fairness and fiscal sanity.” 
  • DeFazio said, “This Wall Street Speculator Tax should be a no-brainer. It will raise significant revenue that we desperately need and reins in the excessive speculative activity that has destabilized our financial system. The only way we can meaningfully address our deficit, is by taking a balanced approach that includes revenue raisers and smart, targeted cuts. This bill should be part of that balanced solution.”

IRS WILL NOT FURLOUGH EMPLOYEES UNTIL AFTER TAX FILING SEASON: Acting IRS Commissioner Steven Miller said in a memo to IRS employees today that the agency would not begin furloughs until after the tax filing season concludes. The memo stated, “This Friday, March 1, marks the effective date of across-the-board spending cuts for nearly all federal agencies, also known as sequestration. Should sequestration occur, we will still be able to operate, but our overall funding for the remainder of the fiscal year will be reduced. Therefore, it is essential that we prepare for whatever events may unfold and continue to look for opportunities to reduce expenses so we can minimize the impact on IRS’ mission to serve the American public and the impact on your lives as well.”  The memo continued, “Despite our current and planned efforts to cut expenses, the reality is that our greatest expense, by far, is employee pay. As a result, if sequestration occurs and our budget is reduced for the remainder of the fiscal year, it appears that a number of furlough days will be necessary given the size of the anticipated budget cut to the IRS. Let me be clear: We know that asking you to take even one furlough day is difficult. That’s why we’ve spent so much time and energy trying to minimize the impact on our employees as much as possible while carrying out our mission. We will continue to look for cost savings in the coming weeks and months.”

  • In other news, Republican and Democratic bills to avoid the budget cuts failed in the Senate today.  Congress is not in session tomorrow.

MISCELLANEOUS GUIDANCE RELEASED:

Notice 2013-21 postpones until October 15, 2013, the deadline to make an election under § 165(i) to deduct in the preceding taxable year losses attributable to Hurricane Sandy sustained in federally declared disaster areas in Connecticut, Delaware, District of Columbia, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Virginia, and West Virginia resulting from Hurricane Sandy.

TAX BILLS INTRODUCED FEBRUARY 27:

1. [113rd] H.R.851 : To amend the Internal Revenue Code of 1986 to encourage domestic insourcing and discourage foreign outsourcing.
Sponsor: Rep Pascrell, Bill, Jr. [NJ-9] (introduced 2/27/2013)      Cosponsors (10) 
Committees: House Ways and Means 
Latest Major Action: 2/27/2013 Referred to House committee. Status: Referred to the House Committee on Ways and Means.


2. [113rd] H.R.856 : To amend the Internal Revenue Code of 1986 to require the social security number of the student and the employer identification number of the educational institution for purposes of education tax credits.
Sponsor: Rep Black, Diane [TN-6] (introduced 2/27/2013)      Cosponsors (3) 
Committees: House Ways and Means 
Latest Major Action: 2/27/2013 Referred to House committee. Status: Referred to the House Committee on Ways and Means.


3. [113rd] H.R.860: To amend the Internal Revenue Code of 1986 to make qualified biogas property eligible for the energy credit and to permit new clean renewable energy bonds to finance qualified biogas property.
Sponsor: Rep Kind, Ron [WI-3] (introduced 2/27/2013)      Cosponsors (1) 
Committees: House Ways and Means; House Science, Space, and Technology 
Latest Major Action: 2/27/2013 Referred to House committee. Status: Referred to the Committee on Ways and Means, and in addition to the Committee on Science, Space, and Technology, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.


4. [113rd] H.R.877 : To amend the Internal Revenue Code of 1986 to expand the incentives for the rehabilitation of older buildings, including owner-occupied residences.
Sponsor: Rep Turner, Michael R. [OH-10] (introduced 2/27/2013)      Cosponsors (7) 
Committees: House Ways and Means 
Latest Major Action: 2/27/2013 Referred to House committee. Status: Referred to the House Committee on Ways and Means.


5. [113rd] S.391 : A bill to amend the Internal Revenue Code of 1986 to include vaccines against seasonal influenza within the definition of taxable vaccines.
Sponsor: Sen Baucus, Max [MT] (introduced 2/27/2013)      Cosponsors (1) 
Committees: Senate Finance 
Latest Major Action: 2/27/2013 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.