Tax News

CCH (cch.taxgroup.com) reports:

  The Senate is expected to wait until September to take up health care reform legislation. President Obama, who had called for its passage before the August recess, said that he had no problem with this delay as long as work continued during the recess. PAYGO legislation passed the House, but the Senate may not take up the measure. The IRS reminded taxpayers of the temporary tax incentives in the American Recovery and Reinvestment Act of 2009 (2009 Recovery Act) (P.L. 111-5) and finalized filing rules for small exempt organizations. On the international front, the IRS announced that it intends to issue guidance for individuals receiving gifts and bequests from expatriates and a Treasury Department official said that negotiating tax treaties is a priority.

Legislation

  Senate Majority Leader Harry Reid, D-Nev., said on July 23 that the Senate will wait until September to take up health care reform legislation, but he expects that the Senate Finance Committee will mark up its bill before August 7 (TAXDAY, 2009/07/24, C.2). Reid said the delay was in response to numerous complaints from Republican lawmakers that leadership is moving too quickly to pass complex legislation that would have far-reaching impact. Baucus hopes to mark up his health care overhaul during the week beginning August 3, just day days before the Senate leaves for a month-long recess. Baucus continues to hold meetings with a group of six bipartisan members of the Committee who are negotiating the bill. House lawmakers on July 22 voted 265-to-166 to approve the Statutory Pay-As-You-Go Bill of 2009 (2920) (TAXDAY, 2009/07/23, C.1). Under PAYGO, lawmakers would be required to fully offset any new mandatory spending or tax cuts so that the budget deficit will not increase. The Senate may not take up the measure as Senate Budget Committee Chairman Kent Conrad, D-N.D., has said he opposes the bill over concerns about exemptions and the possibility of relinquishing control of budget baselines to the White House.

  President Obama dropped his call for both House and Senate passage of health care reform legislation by the August recess after Senate Majority Leader Harry Reid, D-Nev., announced that the Senate would not be able to meet the president's deadline. Obama said he had no problem with the delay as long as work continued diligently during the month-long recess (TAXDAY, 2009/07/24, C.2). The president said his target date for a final package to reach his desk is the fall.

  Obama began to weigh in on some of the financing options passed by the House Ways and Means Committee and under consideration by the Senate Finance Committee, suggesting that a House proposal to impose a surtax on wealthy households meets his general principle to not raise taxes on the middle class. He also expressed interest in proposals under consideration by the Senate tax-writing panel to cap the tax exclusion for high-end health insurance plans and penalize insurance companies that provide the so-called Cadillac, gold-plated coverage. He stressed he does not support eliminating the tax break altogether and opposes taxing health care benefits on anyone already receiving them (TAXDAY, 2009/07/24, W.1).

IRS/Treasury

  Exempt Organizations. Final regulations detail which small exempt organizations must file Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required To File Form 990 or 990-EZ (T.D. 9454,
TAXDAY, 2009/07/23, I.1). The IRS declined to exclude small exempt organizations that have little or no income.

  Recovery Act. Many of the tax incentives in the 2009 Recovery Act (P.L. 111-5) are temporary; therefore, the IRS encouraged taxpayers to take advantage of them before they sunset (IR-2009-67; TAXDAY, 2009/07/21, I.1). The IRS highlighted the deduction for state and local sales taxes of qualified new vehicle purchases, energy tax incentives, the American Opportunity Tax Credit, the first-time homebuyer credit, and the Making Work Pay Credit.

  Gifts and Bequests. The Heroes Earnings Assistance and Relief Tax Act of 2008 (P.L. 110-245) added new filing and reporting requirements on individuals who received gifts and bequests from expatriates. The IRS announced that it intends to issue guidance in this area (Announcement 2009-57, TAXDAY, 2009/07/20, I.1).

  Tax Treaties. A Treasury Department official said on July 23 that the U.S. is anticipating updating some existing tax treaties and negotiating more tax information exchange agreements (TAXDAY, 2009/07/24, T.1). Treasury International Tax Counsel John Harrington relayed that recent agreements with Luxemburg and Switzerland have focused on information exchanges, rather than resolving all issues.

  Return Preparers. The IRS invited tax professionals and consumers to comment on its review of return preparers (IR-2009-68, Notice 2009-60; TAXDAY, 2009/07/27, I.7). The IRS is holding the first in a series of nationwide public meetings in Washington, D.C. on July 30 (IR-2009-66; TAXDAY, 2009/07/15, I.1).

  Tax Tips. The IRS launched its "Summertime Tax Tips" with tips for job seekers, new business owners, recently married couples, students with summer jobs, and members of the U.S. Armed Forces (TAXDAY, 2009/07/22, I.2.; TAXDAY, 2009/07/23, I.4). The IRS also reminded taxpayers that its website offers many explanations and materials in Spanish.

  By Jeff Carlson, Paula Cruickshank and George L. Yaksick, Jr., CCH News Staff