Tax News

CCH (cch.taxgroup.com) reports:

A taxpayer that extracted and processed gas from its own gas wells was liable for Mississippi use tax on the portion of gas that was used and consumed by the taxpayer for plant fuel and as fuel to run its lease equipment at the well sites.
Such gas was subject to use tax as property that was withdrawn or used from an established business or from stock-in-trade for consumption or any other use in the business or by the owner. Previously, the taxpayer had purchased fuel used in operations from third parties and paid sales tax on those purchases.
Although the taxpayer was a wholesaler of gas to other companies, the gas at issue was never sold at wholesale for resale by another company. Thus, taxpayer could not avail itself of the wholesaler exemption. Use tax was due regardless of whether the gas came from within Mississippi's borders or was brought into the state.
Subscribers to CCH Tax Research NetWork can view this opinion.
Pursue Energy Corporation v. Mississippi State Tax Commission,
Mississippi Supreme Court, No. 2006-CA-01390-SCT, September 20, 2007.

CCH (cch.taxgroup.com) reports:

Nine hotel operators in Santa Cruz, California, were required to comply with subpoenas issued by the city requiring the production of records necessary for a transient occupancy tax audit. The ordinance that imposes the tax is not unconstitutionally vague, it did not violate equal protection principles by improperly classifying for taxation persons who cannot afford month-to-month housing and can afford residing at a motel only on a day-to-day basis, and the subpoenas were proper and lawful.

CCH (cch.taxgroup.com) reports:

Linda Stiff has started serving as acting IRS commissioner as of September 10, an IRS spokesperson has confirmed to CCH. A brief description of Stiff's prior service with the IRS, starting with her position in 1980 as a revenue agent in Jacksonville, Fla., now appears on the IRS's website (www.irs.gov) under "About the IRS," where she is listed as acting IRS commissioner.
In addition to her role as acting IRS commissioner, Stiff will serve as deputy commissioner for Services and Enforcement, providing direction and oversight for all major decisions affecting the four taxpayer-focused IRS Divisions: Wage and Investment; Large and Mid-Size Business; Small Business/Self-Employed; and Tax Exempt and Government Entities. Stiff held the position of deputy commissioner for Operations Support immediately prior to her appointment. Her new role as acting commissioner was determined under a standing Internal Delegation Order based on holding that former position. She replaces Kevin Brown, who has served as acting commissioner since May 4, when Mark W. Everson left the IRS to become head of the Red Cross.
No news has been forthcoming from the administration regarding how the selection of a new commissioner is progressing. The role of acting commissioner generally has been considered that of a caretaker. During an acting commissioner's term, policies and programs set into motion by the last commissioner are carried forward.
By George Jones, CCH News Staff
 

CCH (cch.taxgroup.com) reports:

The House on passed the FAA Reauthorization Bill of 2007 (HR 2881) by a vote of 267-151 on September 20. The measure, which funds the FAA for four years, includes the Airport and Airway Trust Fund Financing Bill of 2007 (HR 3539), which was approved by the House Ways and Means Committee to raise airline fuel taxes in order to pay for air traffic control system improvements and modernization efforts (TAXDAY, 2007/09/18, C.2).
The measure would increase the general aviation jet fuel tax rate from 21.8 cents per gallon to 30.7 cents per gallon. It would also increase the aviation fuel tax rate from 19.3 cents per gallon to 24.1 cents per gallon. Lawmakers said the funds would be used to provide funding for a next generation satellite air traffic control system, and to stabilize and strengthen the Airport and Airway Trust Fund.
The tax increases were approved by the Ways and Means Committee on September 18 when members voted unanimously to supportHR 3539. That bill, which would extend the taxes from September 30, 2007, through September 30, 2011, was included in HR 2881.
According to estimates from the Joint Committee on Taxation released on September 17, the tax provisions would raise $1.8 billion over the next 10 years. House Transportation and Infrastructure Committee Chairman Jim Oberstar, D-Minn., said the fuel tax increases only apply to noncommercial aviation, and the revenues will only pay for air traffic control modernization efforts.
The Bush administration on September 19 threatened to veto the FAA legislation, criticizing its reforms as inadequate and charging that the bill would worsen the status quo by undoing the actions of past Congresses. The Statement of Administration Policy suggests that lawmakers focus on ways to better target highway resources without resorting to tax increases or budget gimmicks.
By Stephen K. Cooper, CCH News Staff
Airport and Airway Trust Fund Financing Act of 2007, as Reported by the House Ways and Means Committee, HR 3539

CCH (cch.taxgroup.com) reports:

President Bush on September 20 stood firmly against any congressional move to increase tobacco taxes to pay for expansion of the federally and state-funded Children's Health Insurance Program (S-CHIP). Health and Human Services (HHS) Secretary Mike Leavitt, at a White House news conference, said that the president will seek a temporary extension of the existing S-CHIP program if the administration does not reach agreement on a funding compromise with Congress by the end of the fiscal year (FY) on September 30.
The president indicated that tax-cut policies have sustained economic growth and will help to avert an economic recession amid the current financial market turmoil. Referring to himself as a "supply-sider," Bush said that he believes supply-side economics, "when properly instituted," result in additional tax revenue growth. Higher-than-estimated tax receipts have kept the federal deficit "lower than the 30-year average," he noted. Keeping taxes low, combined with federal spending restraint, will keep the budget on track toward balance by 2012, the president maintained.
On mandatory spending programs, Bush said that he will not give up on entitlement reform. "The biggest issues we've got with the deficit are those deficits inherent in these entitlement programs."
On discretionary spending, the Congress faces a veto showdown on 10 out of 12 regular appropriations bills. Only the appropriations bills for military construction and the Department of Veterans Affairs have been spared a promised veto, noted White House Deputy Press Secretary Tony Fratto.
IRS Appropriations Bill
Meanwhile, the House approved an IRS budget of $11.1 billion for FY 2008 as part of a $12.3 billion Treasury budget (HR 2829, TAXDAY, 2007/06/29, C.1). The appropriation includes $3.6 billion for taxpayer service, $7.2 billion for enforcement, $282 million for business systems modernization, and $116 million for tax compliance research.
The Senate Appropriations Committee approved an $11.1 billion IRS budget on July 12, as part of the Financial Services and General Government Appropriations Act for FY 2008 (TAXDAY, 2007/07/13, C.3) The bill has not yet been taken up by the Senate.
By Paula Cruickshank and Brant Goldwyn, CCH News Staff
 

Tax Analysts report: