President Obama signed a multi-billion dollar tax cut package, the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (2010 Tax Relief Act) (P.L. 111-312), on December 17. The new law follows through on the framework agreed to December 6 by President Obama and GOP leaders in Congress. The 2010 Tax Relief Act extends the Bush-era individual and capital gains/dividend tax cuts for all taxpayers for two years. Th e bill also provides for an AMT "patch," a one-year payroll tax cut, 100 percent bonus depreciation through 2011 and 50 percent bonus depreciation for 2012, a top federal estate tax rate of 35 percent with a $5 million exclusion, and more.

Read the full CCH Coverage Here

Congress approved a package of enhanced small business tax incentives, as part of a larger Small Business Jobs Act of 2010, H.R. 5297. The Senate passed the measure on September 16, 2010. The House subsequently passed the legislation on September 23, 2010. The new law extends bonus depreciation, extends and doubles Code Sec. 179 expensing, provides for 100 percent gain exclusion for qualified small business stock, relaxes the S corp built-in gain conversion rules, allows five-year carrybacks of the general business credit for qualified taxpayers, removes cell phones from the listed property rules, enhances the deduction for start-up expenses, provides retroactive Code Sec. 6707A penalty relief, and allows a self-employment income tax deduction for 2010 health care expenses. Revenue raising provisions to help pay for these tax breaks include increased failure-to-file penalties on information returns, a controversial new information reporting rule for rental property expense payments, tightened U.S. sourcing on guaranteed fees, streamlined tax levies on federal contractors, accelerated estimated tax payments by certain large corporations, and more.

Read the full CCH Coverage Here

Time is almost up for the historic tax cuts enacted by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). Without any Congressional action, many popular tax cuts automatically disappear ("sunset") after December 31, 2010. They will be replaced by rates, deductions, credits and other provisions based on the far less generous law in place before EGTRRA. Additionally, enhanced capital gains and dividends tax rates in the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) and subsequent legislation will also sunset after December 31, 2010. This CCH Tax Briefing alerts tax practitioners and their clients to what the Tax Code is scheduled to look like after EGTRRA's and JGTRRA's tax benefits sunset after December 31, 2010.

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Returning briefly from its summer recess, the House on August 10 approved, by a 247 to 161 vote, a critical education and Medicaid funding bill, H.R. 1586, which includes a $9 billion package of international tax reforms. Wasting no time, President Obama signed the bill into law that same afternoon, on August 10, 2010, as Pub. Law 111-226. The Senate had approved the legislation earlier on August 5 by a 61 to 39 margin.

Riding the coattails of a popular measure to fund the jobs of well over 100,000 teachers and first responders, as well as help states fund Medicaid shortfalls, the international tax provisions provide the bulk of the bill's revenue off sets needed under Congressional "pay-go" rules. The bill also adds another $1.1 billion in revenue by eliminating the advance payment option for the earned income credit (EIC).

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On July 2, 2010, President Obama signed the Homebuyer Assistance and Improvement Act of 2010, Pub. Law 111-198, into law. Frustrated over the progress of general extenders legislation, the House singled out homebuyer credit extension relief and approved it 409-5 in this stand-alone bill (H.R. 5623) on June 29, 2010. The Senate followed suit on June 30, approving H.R. 5623 by unanimous consent. The new law extends the closing date deadline, from June 30, 2010 to September 30, 2010, for homebuyers who signed sales contracts prior to May 1, 2010. To off set the estimated $140 million price tag of this relief, the new law includes three revenue provisions: a delay in the transfer of Travel Promotion Board fees, clarification of the bad check penalty for e-payments, and return disclosure authorization to prevent homebuyer credit fraud among prison inmates.

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On June 25, President Obama signed the Preservation of Access to Care for Medicare Beneficiaries and Pension relief Act of 2010 (H.R. 3962) a package of defined benefit pension funding relief measures and the so-called Medicare "doc-fix." The pension funding measures in the bill were originally part of the American Jobs and Closing Tax Loopholes Act of 2010 (H.R. 4213), a/k/a the tax extenders bill.

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The Senate's Democratic leadership unveiled a streamlined version of the "American Jobs and Closing Tax Loopholes Act" (H.R. 4213) on June 16 hoping to secure bipartisan support. The revised Senate bill modifies two controversial revenue raisers: a change in the taxation of carried interest and the imposition of self-employment tax on S corps. The revised Senate bill keeps a package of tax extenders, many temporary individual, business, energy, charitable and infrastructure tax incentives which expired at the end of 2009. The Senate bill retains a package of pension funding reforms and makes some minor changes to international tax reforms. The revised Senate bill includes Code Sec. 6707A penalty relief and a taxpayer-friendly modification to the first-time homebuyer credit.

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A package of small business tax incentives was passed by the House on June 15, 2010 by a vote of 247 to 170. The Small Business Jobs Tax Relief Act of 2010 (H.R. 5486) includes a 100 percent gain exclusion for qualified small business stock, retroactive Code Sec. 6707A penalty relief and an enhanced deduction for startup expenses. The House bill is completely off set by new limitations on grantor retained annuity trusts (GRATs) and the cellulosic biofuel producer credit along with a shift in corporate estimated taxes for large corporations in 2015.

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Passage of the Health Care and Education Reconciliation Act of 2010 (H.R. 4872) (Reconciliation Act) by Congress, followed by its signing by President Obama on March 30, 2010, completes a massive overhaul of the nation's health insurance and health delivery systems. The Reconciliation Act amends the Patient Protection and Affordable Care Act of 2010 (P.L. 111-148), which President Obama signed on March 23. Combined, the two new laws include more than $400 billion in revenue raisers and new taxes on employers and individuals.

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President Obama on March 23 signed the massive health care reform package approved by the House on March 21, 2010. The Patient Protection and Affordable Care Act (the Patient Protection Act), approved by the Senate on December 24, 2009, is now law. It contains over $400 billion in revenue raisers and new taxes on employers and individuals. The House also passed on March 21 H.R. 4872, the Health Care and Education Tax Credits Reconciliation Act of 2010 (the House Reconciliation Act). The House Reconciliation Act serves as a "sidecar" bill, that will allow amendments to the Patient Protection Act to be passed by the Senate with only 51 votes using the budget reconciliation rules.

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The $18 billion job creation package, the Hiring Incentives to Restore Employment (HIRE) Act (H.R. 2847), is now law. President Obama signed this first major tax bill of 2010 on March 18. The Senate approved the HIRE Act on March 17, 2010, by a bi-partisan 68-29 vote, following House passage on March 4, 2010, by 217 to 201. The new law provides incentives for hiring and retaining workers, along with a one-year extension of enhanced Code Sec. 179 expensing and changes to Build America Bonds. The HIRE Act is partially offset by a package of new foreign account tax compliance rules and a further delay in the worldwide interest allocation rules. Certain corporate estimated tax payments are also accelerated to help offset the cost of the tax incentives.

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The Senate approved a nearly $140 billion "tax extenders" package on March 10 by a vote of 62 to 36. The American Workers, State and Business Relief Act of 2010 (H.R. 4213) extends a host of popular but temporary individual, business, charitable, and energy tax incentives through December 31, 2010. The Senate bill also extends eligibility for COBRA premium assistance through December 31, 2010, provides for pension funding relief, allows workers over age 59-1/2 to convert 401(k) distributions to Roth 401(k) plans, and adds a technical modification to the popular first-time homebuyer tax credit, among its list of changes. The Senate extenders bill is partially paid for by codification of the economic substance doctrine and reform of the cellulosic biofuel producer credit.

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Confronted with stubbornly high unemployment numbers and a slow economic recovery, the Senate on February 24 voted 70 to 28 to approve a $15 billion jobs bill, the Hiring Incentives to Restore Employment (HIRE) Act, H.R.2847. The HIRE Act provides new incentives for hiring and retaining workers, along with a one-year extension of enhanced Code Sec. 179 expensing and changes to Build America Bonds. The HIRE Act is partially offset by a package of new foreign account tax compliance rules. The HIRE Act does not include extenders, COBRA premium assistance or an estate tax extension.

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President Obama presented Congress with his fiscal year (FY) 2011 federal budget proposals on February 1, and the $3.83 trillion budget emphasizes job creation and deficit reduction. Tax incentives for individuals and businesses total approximately $300 billion with an additional $100 billion allocated to job creation. On the other hand, proposed tax increases would raise $1.4 trillion. Although rate increases for higher-income taxpayers would bring in the lion's share of that revenue, the budget calls for over $450 billion in other revenue raisers. Those increases impact many categories of taxpayers but, perhaps most directly, those with international operations.

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Taxpayers making charitable cash contributions in early 2010 to help Haiti after the devastating January 12 earthquake can claim a deduction on their 2009 federal tax returns. The House of Representatives unanimously passed H.R. 4462 on January 20 to allow taxpayers to claim a charitable deduction on their 2009 returns for qualified Haiti disaster relief contributions made after January 11, 2010 and before March 1, 2010. The Senate approved the measure on January 21, and President Obama promptly signed it into law on January 22.

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After six months of internal study, review of hundreds of comments and a series of public meetings, the IRS has announced a sweeping reform of return preparer oversight. All paid signing preparers, regardless of credentials or licenses, will be required to register with the IRS. Unenrolled preparers will be required to complete competency testing and mandatory continuing education. On January 4, the IRS released a blueprint of its new preparer initiative and indicated that regulations necessary to implement the changes would be released in 2010.

Read the full CCH Coverage Here

The House of Representatives approved a package of tax extenders on December 9, 2009, by a largely party-line vote of 241 to 181. The $31 billion Tax Extenders Act of 2009 (H.R. 4213) extends more than 50 popular, but temporary, tax incentives through December 31, 2010. Two revenue raisers - a change in the taxation of carried interest and heightened information reporting and disclosure requirements for foreign bank and financial accounts - would pay for the one-year extensions.

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By a vote of 60-39, the Senate approved a massive health care reform bill on December 24, 2009 with over $390 billion in revenue raisers and new taxes on employers and individuals. The Patient Protection and Affordable Care Act (H.R. 3590) is a version of bills passed earlier by the Senate Finance Committee (SFC) and the Senate Health, Education, Labor, and Pensions (HELP) Committee. Although the Senate bill is similar in scope to the House-passed Affordable Health Care for America Act (H.R. 3962) many differences remain, especially over revenue raisers.

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On December 3, the House approved the Permanent Estate Tax Relief for Families, Farmers and Small Businesses Bill of 2009 (H.R. 4154), which would permanently extend the top federal estate tax rate of 45 percent with a $3.5 million exclusion ($7 million for married couples who fully utilize their exclusions). The House Bill also provides for continuation of the gift and generation-skipping transfer (GST) tax provisions as they exist in 2009. However, after several year-end parliamentary maneuvers, the bill failed to win support in the Senate, as did a temporary stop-gap measure to extend the 2009 estate tax regime through March 2010.

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The House of Representatives approved a package of tax extenders on December 9, 2009, largely along party lines by a vote of 241 to 181. The $31 billion Tax Extenders Act of 2009 (H.R. 4213) extends more than 50 popular but temporary tax incentives through December 31, 2010. Most of the incentives would have expired after December 31, 2009. Two revenue raisers - a change in the taxation of carried interest and heightened information reporting and disclosure requirements for foreign bank and financial accounts - would pay for the one-year extensions. President Obama has indicated he will sign the extenders bill as passed by the House, but the bill's fate is uncertain in a Senate focused almost exclusively on heath care reform.

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The House on December 3, 2009, passed long-awaited legislation, the Permanent Estate Tax Relief for Families, Farmers and Small Businesses Bill of 2009 (H.R. 4154), permanently extending the top federal estate tax rate of 45 percent with a $3.5 million exclusion ($7 million for married couples who fully utilize their exclusions). The 225 to 200 vote reflected the urgency felt by some House lawmakers to provide certainty to estate planning and disagreement over whether to abolish the tax entirely or provide for a lower exclusion. The House Bill also provides for continuation of the gift and generation-skipping transfer (GST) tax provisions as they exist in 2009. The $233 billion cost over 10 years of the House Bill is not offset.

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Health care reform took another major step forward on November 18 when Senate Democratic leaders unveiled the Patient Protection and Affordable Care Act. The bill is a blended version of bills passed earlier by the Senate Finance Committee (SFC) and the Senate Health, Education, Labor, and Pensions (HELP) Committee. The $849 billion package, with $370 billion in revenue raisers, was drafted not only with an eye toward garnering the 60 votes necessary for full Senate approval but also in preparation for conference committee negotiations. Although the Senate bill is similar in scope to the House-passed Affordable Health Care for America Act (H.R. 3962) many differences remain, especially over revenue raisers.

Read the full CCH Coverage Here

Health care reform took a major step forward late on November 7 when the House passed, 220-215,a mammoth 2,000+ page bill overhauling health insurance coverage for Americans.The Affordable Health Care for America Act (H.R. 3962) imposes a new surtax on higher-income individuals expected to raise more than $400 billion over 10 years to help pay for nearly universal coverage.

Read the full CCH Coverage Here

Two popular but temporary tax incentives have been given a new lease on life as part of legislation extending unemployment compensation benefits. The Worker, Homeownership, and Business Assistance Act of 2009 (H.R. 3548), signed into law by President Obama on November 6, 2009, extends those incentives and more. Following several weeks of negotiations, the new law was approved in rapid-fire succession, first by the Senate, 98-0,on November 4 and then by the House,403-12, on November 5.

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The Obama administration released much-anticipated details about its proposed tax cuts and revenue raisers on May 11. The Treasury Department's General Explanations of the Administration's Fiscal Year 2010 Revenue Proposals (also known as the "Green Book") describes the administration's tax agenda, including permanent Making Work Pay, American Opportunity and research credits; a package of international tax reforms; reinstatement of the 36 and 39.6 percent individual marginal income tax rates; expanded information reporting; and automatic enrollment in IRAs. According to the Treasury, the proposals would generate $736.5 billion in savings for individuals (largely aimed at middle income taxpayers) and $71 billion in long-term savings for businesses. Revenue raisers would bring in roughly $900 billion.

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President Obama has signed the American Recovery and Reinvestment Act into law. Moving through Congress in less than four weeks, the $787 billion new law, which contains nearly $300 billion in tax relief, sets in motion a wave of direct spending and tax incentives to jump start the U.S. economy out of recession.

Read the full CCH Coverage Here

CCH's Quick Tax Facts on the American Recovery and Reinvestment Act of 2009

CCH industry-leading books and CPE courses that cover the 2009 Stimulus Act:

• Law, Explanation and Analysis
• Conference Report
• Highlights
• Kess CPE Course
• Kess CPE Course and Book Bundle
• Income Tax Regulations, (Winter 2010 Ed.)
• Internal Revenue Code: Income, Estate, Gift, Employment and Excise Taxes, (Winter 2010 Edition)

In response to the continuing drumbeat of bad economic news, Congress passed the Worker, Retiree, and Employer Recovery Act of 2008 (H.R. 7327), suspending required minimum distributions (RMDs) from 401(k) plans, IRAs and similar retirement accounts for 2009, providing pension plan funding relief, and including technical corrections to the Pension Protection Act of 2006 . A $14 billion automaker rescue package, passed by the House on December 10, appears to be stalled in the Senate at this time. The White House has indicated that President Bush will sign the Worker, Retiree, and Employer Recovery Act as soon as it reaches his desk.

Read the full CCH Coverage Here

On January 20, 2009, Barack Obama will take the oath of office as the 44th president of the United States. Federal tax policy is guaranteed to be at the forefront of President Obama's agenda. Democrats in Congress are preparing an economic stimulus package, which they hope to have ready for the new president's signature on January 20. It is likely to include significant individual and business tax incentives. The stimulus package may also include tax incentives for individuals and businesses to "go green" along with a huge infusion of federal funds for state and local infrastructure spending.

The president-elect is counting on a stimulus package large enough to jolt the economy out of what some are calling the worse slowdown since the 1930s. One way to jump start the economy in the view of the incoming administration is to get more money into taxpayers' hands, thereby increasing the consumer spending needed to drive the economy.

Read the full CCH Coverage Here

CCH Books You Can Order Now:

• Law, Explanation and Analysis of the Emergency Economic Stabilization Act of 2008
• Tax Legislation 2008: Complete 2008 Highlights Bundle
• Intern al Revenue Code: Income, Estate, Gift, Employment and Excise Taxes - Winter 2011 Edition
• U.S. Master Tax Guide® 2011
• Income Tax Regulations  (Winter 2011 Edition)
• Tax Planning for Troubled Corporations, 2010

President Bush signed the historic Emergency Economic Stabilization Act of 2008, on October 3, 2008; the same day that the House passed the legislation by a vote of 263 to 171. The House vote came just two days after the Senate passed the measure by a vote of 74 to 25, and four days after the House failed to pass a similarly title bill.

The landmark legislation gives the Treasury $250 billion immediately, and requires the president to certify if an additional $100 billion is necessary. An additional $350 billion may be disbursed subject to Congressional approval. The Treasury Department is required to report on the use of the funds and progress made in addressing the crisis. An oversight board and a special inspector general will also be created to watch over the Treasury department

Read the full CCH Coverage Here

Special Resources from CCH for Tax Legislation
For additional CCH tax legislation resources, including white papers on the sub-prime lending crisis and SEC rules on short selling, please visit: http://www.cch.com/rescue/

CCH Books You Can Order Now:

• Law Explanation and Analysis of the Emergency Economic Stabilization Act of 2008
• Highlights of the 2008 Tax Legislation Emergency Economic Stabilization Act of 2008
• Emergency Economic Stabilization Act of 2008, Text of H.R. 1424 and JCT Explanation

As the U.S. prepares to elect its 44th president, tax and accounting professionals and their clients are looking for details about the tax policies of the candidates of the two major parties. This special CCH Briefing describes the tax policies of John McCain, the Republican Party candidate for president, and Barack Obama, the Democratic Party candidate, with analysis of the potential impact of their tax policies.

Whoever is elected on November 4 will likely unveil his tax policies soon after taking office so Congress can begin holding hearings and drafting legislation. Once Congress begins its work, practitioners and taxpayers can expect to see more details about changes in federal tax policy. The track record for newly-elected presidents to get a large tax bill passed during their first year in office is good. That makes 2008 year-end tax planning especially challenging and urgent since the door may close after this year on many current tax breaks.

Read the full CCH Coverage Here

CCH Resources Now Available:

• Internal Revenue Code: Income Tax Regulations (Winter 2011 Edition)
• Income Tax Regulations (Summer 2010 Edition)
• U.S. Master Tax Guide® (2011)

Reacting to the continuing slump in housing sales, along with rising unemployment numbers and weakness in the credit markets, Congress passed the Housing and Economic Recovery Act of 2008 (H.R. 3221). Although the tax provisions are only one part of the larger American Housing Rescue and Foreclosure Prevention Act , they make significant changes.

The tax title includes $15.1 billion in tax incentives that are fully offset by far-reaching revenue raisers. While the tax incentives are targeted principally to home ownership and affordable housing, the offsets are collected from a variety of sources. New provisions that require credit card purchase information reporting by merchants and close a home sale exclusion loophole for vacation and rental property are among the more prominent offsets that will require a shift in tax strategies.

President Bush signed the bill into law on Wednesday, July 30, 2008.

Read the full CCH Coverage Here

CCH Legislation Books You Can Order Now:

• Law, Explanation and Analysis of the Housing Assistance Tax Act of 2008
• Highlights of 2008 Tax Legislation - Housing Assistance Act of 2008
• U.S. Master Tax Guide® (2011)

Other CCH Books You Can Order Now:

• Multistate Corporate Tax Guide (2011)
• Internal Revenue Code: Income Tax Regulations (Winter 2011 Edition)
• Income Tax Regulations (Winter 2011 Edition)

The Food, Conservation, and Energy Act of 2008 (H.R. 2419), also known as the Farm Bill, has finally been enacted into law.

The Senate on May 22 successfully overrode President Bush's May 21 veto of the bill by a convincing 82-13 vote. The House overrode the veto the day earlier immediately after the president's veto by a lopsided margin of 316-108.

Due to an enrollment error, however, the legislation contained only 14 of the 15 titles when the House and Senate adopted the conference report on the bill on May 14 and 15, respectively.

Nevertheless, the tax title was included in the legislation sent to the President and in the override votes by Congress. It is not clear at press time if the procedural mix-up will result in litigation challenging the legislation.

Read the full CCH Coverage Here

CCH Legislation Books You Can Order Now:

• Law, Explanation and Analysis of the Heartland, Habitat, Harvest, and Horticulture Act of 2008; Heroes Earnings Assistance and Relief Tax Act of 2008
• Highlights of 2008 Tax Legislation - Heroes Earnings Assistance and Relief Act of 2008; Heartland, Habitat, Harvest, and Horticulture Act of 2008
• U.S. Master Tax Guide® (2011)

Other CCH Books You Can Order Now:

• Internal Revenue Code: Income Tax Regulations (Winter 2011 Edition)
• Income Tax Regulations (Winter 2011 Edition)

President Bush signed into law the Economic Stimulus Act of 2008 (HR5140) . The legislation, estimated to cost $125 billion over a ten-year period, includes a recover rebate credit for 2008.

In addition to rebates, the new law includes $44.8 billion in business incentives that include generous expensing and bonus depreciation allowances, as well as additional help for homeowners facing foreclosure because of the mortgage meltdown.

Read the full CCH Coverage Here

2011 had been predicted to be a quiet year in federal tax news – as it landed between major tax legislation in 2010 and expected tax reform in 2012 – but the year brought many significant tax developments from the Obama Administration, Congress, the Treasury Department, the IRS, and the courts. President Obama signed bills enacting hiring incentives, repealing three percent government withholding, and more. Congress initiated a national conversation on the pros and cons of tax increases, tax reform, and deficit reduction, which will frame tax proposals for 2012 and beyond. The IRS issued a steady stream of much-needed guidance for businesses and individuals, ratcheted up its attention on tax compliance, particularly in the international area, and continued its multi-prong initiative on return preparer oversight. Meanwhile, the Tax Court and other federal courts handed down decisions of their own, impacting rules for many other taxpayers.

This Tax Briefing provides a review of the key tax law developments of 2011 and more.

CCH Tax Briefing: 2011 Tax Year-In-Review

President Obama signed the Three Percent Withholding Repeal and Job Creation Act on November 21. The new law repeals three percent withholding on government contractors and expands tax incentives to encourage employers to hire military veterans. The new law also expands the IRS’s continuous levy authority, extends authority for the U.S. Department of Veterans Affairs (VA) to obtain information from the IRS and directs the Treasury Department to prepare a report on how to reduce the tax gap owed by federal contractors. HR 674 passed overwhelmingly in the Senate on November 10 by a vote of 95 to 0 and in the House on November 16 by a vote of 422 to 0.

The $12.8 billion cost of repeal of government withholding and the veterans’ tax incentives is off set by modifying the calculation of modified adjusted gross income (AGI) for determining certain federal health care program eligibility, as well as delaying scheduled reductions in fees for VA mortgage applications.

CCH Tax Briefing: President Signs 3% Withholding Repeal and Job Creation Act

President Obama has challenged Congress to immediately pass the American Jobs Act of 2011 – a $447 billion jobs package, including payroll tax cuts and tax credits to encourage hiring, along with extended 100 percent bonus depreciation, which would be paid for by limiting deductions for higher income taxpayers and changing the taxation of carried interest. The President described his jobs package during a speech to a Joint Session of Congress on September 8 and unveiled the legislative text on September 12.

CCH Tax Briefing: President Proposes $447 Billion Jobs Package

President Obama signed on April 14 a bill (H.R. 4) to repeal controversial expanded information reporting on Form 1099 for certain business payments and rental property expense payments. The Senate passed H.R. 4 on April 5, the House had approved the bill on March 3, 2011. To offset cost of repeal, H.R. 4 increases the amount of the overpayment of the health insurance premium assistance credit that is subject to recapture.

CCH Tax Briefing: Obama Signs 1099 Repeal Bill

President Obama released the third proposed federal budget of his term, for fiscal year (FY) 2012, on February 14. The FY 2012 budget renews many of the president’s earlier tax policies, such as:

• ending the Bush-era tax cuts for higher income individuals,
• making permanent the American Opportunity Tax Credit,
• eliminating some energy tax incentives, and
• reforming some international tax provisions.

Overall, President Obama proposed $3.73 trillion in federal spending and $1.1 trillion in deficit reductions. The president’s FY 2012 budget now faces many Congressional hearings, at which lawmakers are expected to challenge many of the proposals, especially in the GOP-controlled House.

In what proved to be a banner year, 2010 saw a record number of tax law changes and developments impacting all taxpayers: individuals, businesses, exempt organizations and more. Starting the year with fundamental health care reform, the Patient Protection and Affordable Care Act, made a number of significant changes to the Internal Revenue Code. A series of tax stimulus measures, first in the Hiring Incentives to Restore Employment Act of 2010, then in the Small Business Jobs Act of 2010, and finally the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (the 2010 Tax Relief Act) provide substantial, but temporary, opportunities that in many cases must be acted upon quickly to maximize savings. To offset the cost of many of the tax breaks, Congress enacted "revenue raisers" with a special focus on tightening international tax rules, extending information reporting, adding anti-abuse provisions, and more. On the other hand, the $800 billion-plus of incentives in the 2010 Tax Relief Act was off-budget, with none of the so-called “pay-go” rules requiring offsetting tax increases. CCH's Tax Briefing provides an overview of the key tax law developments of 2010 and their impact on taxpayers.

With just weeks before the scheduled sunset of numerous taxpayer-friendly tax rates and incentives, Congress passed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Tax Relief Act of 2010), which extends these popular provisions for two years. The Tax Relief Act of 2010 extends lower marginal individual income tax rates, marriage penalty relief, lower capital gains tax rates, and more that 50 other tax benefits popularly referred to as the "Bush Tax Cuts."

In addition to the extension of the "Bush Tax Cuts," the measure:

• Provides a two-year AMT patch
• Includes temporary estate tax relief
• Extends the deduction for elementary and secondary school teacher expenses
• Extends the deduction for state and local general sales taxes<
• Extends the deduction for qualified tuition and related expenses
• Reinstates the research and development credit
• Extends the credit for energy-efficient appliances
• And more!

In all, the Tax Relief Act of 2010 carries a price tag in excess of $850 billion and impacts hundreds of Internal Revenue Code provisions. President Obama signed the legislation into law immediately.

On September 27, 2010, President Obama signed into law a package of enhanced business tax incentives, as part of a larger Small Business Jobs Act of 2010, H.R. 5297. Passage was marked by months of negotiations, culminating in House approval on September 23, 2010 by a vote of 237 to 187, after clearing the Senate on September 16, 2010 by a 61 to 38 margin. The new law:

• extends bonus depreciation,
• extends and doubles Code Sec. 179 expensing,
• provides for 100 percent gain exclusion for qualified small business stock,
• relaxes the S corp built-in gain conversion rules,
• allows five-year carrybacks of the general business credit for qualified taxpayers,
• removes cell phones from the listed property rules,
• enhances the deduction for start-up expenses,
• provides retroactive Code Sec. 6707A penalty relief, and
• allows a self-employment income tax deduction for 2010 health care expenses.

The new law contains a number of evenue raising provisions to help pay for these tax incentives, including increased failure-to-file penalties on information returns, a new information reporting rule for rental property expense payments, tightened U.S. sourcing on guaranteed fees, streamlined tax levies on federal contractors, accelerated estimated tax payments by certain large corporations, and more!

CCH’s Tax Briefing:  Congress Approves Small Business Tax Bill

2010 Small Business Jobs Acts of 2010: Law, Explanation and Analysis
Small Business Jobs Act of 2010: Legislative Text

JCT Technical Explanation of the Tax Provisions in Senate Amendment 4594 to HR 5297, the Small Business Jobs Act of 2010, JCX-47-10

JCT Estimated Budget Effects of the Revenue Provisions Contained in Senate Amendment 4594 to HR 5297, the Small Business Jobs Act of 2010, JCX-48-10

Over $1 trillion in tax cuts enacted in 2001 and 2003 as part of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) (P.L. 107-16) and the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA) (P.L. 108-27) are scheduled to sunset after December 31, 2010. Unless Congress acts to extend or otherwise modify the impacted provisions, more than 50 major tax code provisions will be replaced by rates, deductions and credits based on pre-2001 law.

When EGTRRA and JGTRRA were enacted, few members of Congress expected the sunsets to ever take place. Yet, just months away from the sunset, there is no clear consensus in Congress on whether to extend the impacted provisions or, if extended, for how long. As illustrated by the estate tax repeal at the end of 2009, it seems wise to prepare for the possibility that the sunset of EGTRRA and JGTRRA will occur and to start to plan accordingly.

CCH is providing tax practitioners with everything they need to know about the sunset of the 2001 and 2003 tax cuts and other expiring provisions. For CCH's complete analysis on IntelliConnect, click the links below

Following an unusual sequence of events, Congress passed critical legislation to fund education and Medicaid (H.R. 1586). International tax provisions provide the bulk of the revenue offsets needed for the popular measure to fund the jobs of over 100,000 teachers and first responders, as well as help states fund Medicaid shortfalls. The $9 billion package of tax reforms:

• Imposes restrictions on foreign tax credits with respect to covered asset acquisitions,
• Provides for the separate application of foreign tax credit limitations to items resourced under international treaties,
• Limits foreign taxes deemed paid with respect to Code Sec. 956 inclusions, and
• Provides a new rule involving redemptions by foreign subsidiaries.

The Senate passed the measure on August 5, 2010, prior to recessing for the month of August. The House returned to Washington, D.C. more than a week into their recess to vote on the legislation. The measure was passed by the House on August 10, 2010. President Obama signed the measure into law on August 10, 2010.

A package of enhanced small business tax incentives, as part of a larger Small Business Jobs Act of 2010, H.R. 5297, is expected to be considered by the Senate in September. After several close procedural maneuvers failed to bring the bill onto the Senate floor before the August recess, Democratic leaders have pledged to move the bill forward and to President Obama’s desk this fall. Officially designated as the Senate Substitute 5297, the Senate bill makes significant additions to the tax title that the House passed on June 15, 2010. Both the House and Senate versions of H.R. 5297 include a 100 percent gain exclusion for qualified small business stock, retroactive Code Sec. 6707A penalty relief and an enhanced deduction for start-up expenses. The Senate bill, however, goes much further in providing tax relief, adding a bonus depreciation extension, extending and doubling Section 179 expensing, shortening the C corporation to S corporation holding period for appreciated assets, eliminating cell phones as listed property, and more.

Leading into the July 4th holiday, Congress passed a series of small bills covering issues ranging from adjustments to the first-time homebuyer credit, an extension of funding for federal aviation programs, and pension funding relief. Following the House’s action of June 29, the Senate on June 30, 2010, passed the Homebuyers Assistance and Improvement Act of 2010 (P.L. 111-198) by unanimous consent. The legislation extends the deadline for closing on a home to qualify for the homebuyer credit from June 30, 2010, to September 30, 2010. The measure is paid for with a delay in the timing of the Travel Promotion Act and a clarification that the bad checks penalty applies to electronic payments. The legislation was signed into law by President Obama on July 2, 2010.

On June 25, President Obama signed the Preservation of Access to Care for Medicare Beneficiaries and Pension relief Act of 2010 (H.R. 3962) a package of defined benefit pension funding relief measures and the so-called Medicare "doc-fix." The pension funding measures in the bill were originally part of the American Jobs and Closing Tax Loopholes Act of 2010 (H.R. 4213), a/k/a the tax extenders bill.

The Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (HR 3962) reverses a 21 percent cut in Medicare reimbursements to physicians that took effect on June 1, 2010. In addition, it provides for a 2.2 percent increase in physician payment rates through November 30. The measure is fully funded by pension funding provisions that were originally part of the American Jobs and Closing Tax Loopholes Act of 2010 (H.R. 4213) a/k/a the tax extenders bill. The pension funding relief measures give sponsors of defined benefit plans additional time to amortize pension funding shortfalls, but does not waive or alter an employer’s obligation to fully fund its pension plan.

H.R. 3962 also authorizes the IRS to disclose to the Center for Medicare and Medicaid Services (CMS) certain return information concerning providers’ outstanding tax debts and provides for a data exchange between CMS and the IRS to identify fraudulent providers.

A package of small business tax incentives was passed by the House on June 15, 2010 by a vote of 247 to 170. The Small Business Jobs Tax Relief Act of 2010 (H.R. 5486) includes a 100 percent gain exclusion for qualified small business stock, retroactive Code Sec. 6707A penalty relief and an enhanced deduction for start-up expenses. The House bill is completely off set by new limitations on grantor retained annuity trusts (GRATs) and the cellulosic biofuel producer credit along with a shift in corporate estimated taxes for large corporations in 2015.

It is unclear if the Senate will take up the House bill before its Independence Day recess. House Ways and Means Committee Chair Sander Levin, D-Mich., predicted that the Senate would likely seek to amend the bill but he did not specify how. Senate Democrats also are preoccupied with passing the American Jobs and Closing Tax Loopholes Act (H.R. 4213), which extends a host of temporary tax incentives, and a war spending bill. Many of the provisions in the House bill have been endorsed by the Obama administration.

Unable to win support for the leadership-endorsed "American Jobs and Closing Tax Loopholes Act" (H.R. 4213), House Democrats passed an abbreviated, yet still substantial, extenders bill on May 28 by a vote of 215 to 204. The bill extends many temporary individual, business, energy, and charitable tax incentives through the end of 2010. The bill retains a controversial revenue raiser, a change in the taxation of carried interest. The bill also retains a package of international taxation reforms. To keep the cost of the bill down, House lawmakers jettisoned, among other things, an extension of eligibility for COBRA premium assistances.

On April 30, 2010, President Obama signed into law the Airport and Airway Extension Act of 2010. The legislation extends through July 3, 2010, authorities to collect taxes that fund the Airport and Airway Trust Fund, make expenditures from the Airport and Airway Trust Fund, and make grants to airports under the Airport Improvement Program.

On March 30, 2010, President Obama signed into law the Health Care and Education Reconciliation Act of 2010 (2010 Reconciliation Act), which was passed by both the House and Senate on March 25, 2010. The legislation makes some significant changes to the Patient Protection and Affordable Care Act (Patient Protection Act), as signed into law by President Obama on March 23, 2010. Some of the highlights of the 2010 Reconciliation Act include:

• Broadening of the definition of dependents to include children under age 27 for purposes of the general exclusion for reimbursements for medical care expenses under an employer-provided accident or health plan, and for certain other purposes;
• Imposition of a 3.8% unearned income Medicare contribution tax on net investment income beginning in 2013;
• Codification of the economic substance doctrine;
• Increase in the estimated tax payments for certain large corporations; and
• Exclusion of "black liquor" from the cellulosic biofuel producer credit.

The House, on March 24, 2010, passed the Small Business and Infrastructure Jobs Tax Act (HR 4849) by a vote of 246-to-178. The legislation is intended to increase investments that help small businesses create jobs.

The $19.3-billion measure would expand the Build America Bonds program and provide a one-year extension of the TANF Emergency Fund that subsidizes employers who hire unemployed workers; provide capital gains tax relief to small businesses and crack down on multinational firms that engage in so-called tax treaty shopping; and provide a 100-percent exclusion for small business capital gains.

President Obama, on March 23, 2010, signed into law the Patient Protection and Affordable Care Act (H.R. 3590). The House passed the legislation March 21, 2010, in a rare Sunday by a vote of 219 to 212. The Senate previously passed the legislation on December, 24, 2009.

The Patient Protection and Affordable Care Act (the Patient Protection Act), is generally designed to effectuate fundamental reforms to the United States health care system. Almost all individuals not covered by Medicaid or Medicare would be required to obtain health care coverage or pay penalties. Employer-provided coverage would generally satisfy the universal coverage requirement. Lower-income individuals, as well as some middle-class families, would receive a credit or voucher to help pay for health insurance, which can be used at one of the American Health Benefits Exchanges that are required to be established by every state. Employers electing not to offer qualifying coverage would be subject to an additional tax to help finance the health care coverage for their employees. Exceptions would be made for small businesses.

The new law also:

• Requires individuals to make a "shared responsibility payment" if they do not have health insurance for themselves and their dependents, beginning in 2014
• Provides qualifying taxpayers with household income between 100 percent and 400 percent of the federal poverty line a refundable health insurance premium assistance credit, beginning in 2014
• Increases the threshold for the itemized deduction for unreimbursed medical expenses from 7.5 percent of adjusted gross income (AGI) to 10 percent of AGI for regular income tax purposes, for tax years beginning after December 31, 2012
• Requires employers to disclose the total cost of employer-sponsored health insurance coverage provided to their employee annually on the employee's Form W-2 starting with the 2011 plan year
• Requires any person who provides minimum essential health care coverage to an individual during a calendar year to file a return reporting such coverage in the form and manner described by the Secretary of the Treasury and provide a statement to the covered individual
• And more!

Pending Changes

On March 21, 2010, the House also approved the Health Care and Education Reconciliation Bill of 2010 (H.R. 4872), or "sidecar" bill, which would make changes to the new health care law. The proposal now goes to the Senate where it expected to meet with significant opposition. Because the Senate is considering this legislation under the reconciliation process, only 51 votes are needed to pass. The Senate is expected to vote on the bill as early as the week of March 21.

The Senate on March 22, 2010, unanimously approved the FAA Reauthorization bill (H.R. 1586, as amended). The measure would raise fuel taxes for noncommercial aircraft from 21.9 cents to 36 cents per gallon. The excise tax increase is part of a broader $34.5 billion measure reauthorizing the Federal Aviation Administration through fiscal year 2011.

The Senate has failed to pass comprehensive FAA reauthorization dating back to 2008. As a result, Congress has subsequently approved 11 three-month extensions. The House passed a similar measure, the FAA Reauthorization Act of 2009 (H.R. 915), on  May 21, 2009, by a vote of 277 to 136. The House-passed bill extends a similar tax increase on aviation-grade kerosene for three years.

Because the FAA's current funding authority is set to expire on March 31, 2010, House lawmakers on March 17, 2010, approved another three-month temporary extension (H.R. 4853) of the financing and spending authority of the Airport and Airway Trust Fund for three months, to July 3, 2010. The Senate's two-year reauthorization bill now moves to the House, which is likely to request a conference on the measure.

The Senate, on March 17, 2010, passed the Hiring Incentives to Restore Employment (HIRE) Act, which previously passed the House on March 4, 2010. President Obama signed the legislation into law on March 18, 2010.

The HIRE Act provides tax breaks for business to encourage hiring. In addition to continuing a couple of other employment related tax breaks, such as Code Sec. 179 expensing and COBRA premium assistance, the new payroll tax holiday and retention credit and their interaction with the work opportunity credit will give employers additional factors to consider in their hiring decisions.

The legislation also imposes a number of additional burdens with respect to reporting and disclosure of foreign assets. Direct reporting responsibilities are imposed on foreign financial institutions with the threat of withholding used as the tool to achieve compliance. Disclosure and reporting responsibilities imposed on individuals with respect to foreign assets and trusts are also extended to U.S. persons formed or availed of to avoid the disclosure and reporting requirements.

CCH Tax Briefing: Hiring Incentives to Restore Employment Act
Hiring Incentives to Restore Employment (HIRE): Law, Explanation & Analysis
Senate Amendment 3310 to H.R. 2847
Tax Bulletin: HIRE Act: Incentives to Hire and Retain the Unemployed
Tax Bulletin: HIRE Act: Extension of Increased Code Sec. 179 Expensing
Tax Bulletin: HIRE Act: Foreign Account Tax Compliance Requirements

A special CCH briefing discussing the foreign tax compliance provisions in the HIRE Act can be found at http://business.cch.com/briefings/jobsbill.pdf.

Legislation that would provide capital gains tax relief to small businesses and crack down on multinational firms that engage in so-called tax treaty shopping was approved by the House Ways and Means Committee on March 17. The Small Business and Infrastructure Jobs Tax Bill (HR 4849), which was introduced by Committee Chairman Sander Levin, D-Mich., passed the committee by a vote of 25-to-15.

The Senate, on March 10, 2010, passed the American Workers, State and Business Relief Bill of 2010 (H.R. 4213), by a vote of 62 to 36. The measure would extend through 2010 approximately $30-billion worth of expired tax provisions, including the research and development tax credit, accelerated depreciation for certain small businesses and tax credits for biodiesel and other renewable fuels, plus various provisions of the American Recovery and Reinvestment Act (2009 Recovery Act) (P.L. 111-5), and a Medicare physician payment update through the end of September 2010. The measure also extends through the end of the year increased unemployment and COBRA benefits.

On March 10, 2010, the House unanimously passed a bill (H.R. 4783) that allows individuals who make charitable contributions to the victims of the Chile earthquake to take an itemized charitable deduction on their 2009 tax return, as opposed to claiming the deduction on their 2010 tax return. Contributions must be made after February 26, 2010 and on or before April 15, 2010.

The bill also extends the time period for which a charitable donation to the victims of the earthquake in Haiti can be claimed on an individual's 2009 tax return. Pursuant to P.L. 111-126, taxpayers who make monetary contributions to the victims of the earthquake in Haiti after January 11, 2010, and before March 1, 2010, can claim an itemized charitable contribution deduction on their 2009 federal tax return. H.R. 4783 extends that time frame to include donations made on or before April 15, 2010.

On March 4, 2010, the House amended and passed the Hiring Incentives to Restore Employment (HIRE) Bill (H.R. 2847) by a vote of 217-201. The House amended the bill as passed by the Senate on February 24, 2010, to fully offset the measure. The HIRE bill includes a payroll tax holiday for certain new hires, an extension of the Build America Bonds program to existing tax credit bonds, an extension of highway authorizations, and an extension of higher §179 expensing thresholds. The amended bill now goes to the Senate for consideration.

President Obama on March 2 signed the Temporary Extension Act of 2010 (P.L. 111-144). The new law provides a 30-day funding extension for unemployment compensation, COBRA premiums, Medicare physician payments and therapy caps. It also temporarily funds surface transportation and flood insurance programs, small business loan guarantees, federal poverty guidelines and retransmission of television broadcasts.

On February 24, 2010, the Senate passed the Hiring Incentives to Restore Employment (HIRE) Bill by a vote of 70-28. The $15 billion measure includes a payroll tax holiday for certain new hires, an extension of the Build America Bonds program to existing tax credit bonds, an extension of highway authorizations, and a one-year extension of higher §179 expensing thresholds.

The House passed the Jobs for Main Street Bill of 2010 (H.R. 2847) on December 16, 2009, by a vote of 217 to 212. The significantly more expensive House bill extends unemployment insurance benefits and COBRA health benefits for unemployed workers, and contains a number of non tax provisions. It is not clear if the House will take up the Senate bill.

The White House on February 22 unveiled its health care reform plan depicting its ideas as the best chance for bridging the differences between Democrats and Republicans on final legislation. The proposal is built on the Senate's Patient Protection and Affordable Care Bill (HR 3590), with some modifications, including raising the excise tax threshold on family health plans to $27,500, effective in 2018, excluding high-risk and elderly populations.

On February 22, 2010, the Senate voted 62-30 to advance a $15 billion jobs bill offered by Senate Majority Leader, Harry Reid, D-Nev. The Hiring Incentives to Restore Employment (HIRE) Bill (Senate Amendment 3310 to H.R. 2847) includes a payroll tax holiday for certain new hires, an extension of the Build America Bonds program to existing tax credit bonds, an extension of highway authorizations, and a one-year extension of higher §179 expensing thresholds.

The cost of the legislation is offset by revenues raised from the Foreign Account Tax Compliance Bill (S. 1934) and a one-year delay in application of worldwide interest allocation rules.

A final vote in the Senate is expected later in the week.

The House previously passed the Jobs for Main Street Bill of 2010 (H.R. 2847) by a vote of 217 to 212, which is significant different from the Senate proposal. In addition to extending unemployment insurance benefits for six months and COBRA health benefits for unemployed workers, the House measure contains several minor tax provisions. It is not clear if the House will consider the Senate proposal or if differences between the two bills will be worked out in a conference.

President Obama presented Congress with his $3.83 trillion fiscal year (FY) 2011 federal budget proposal on February 1, 2010. Tax incentives for individuals and businesses total approximately $300 billion with an additional $100 billion allocated to job creation. Tax provisions proposed in the budget include:

• A one year extension of the Making Work Pay Credit
• A $5000 credit for every new employee hired by a qualified small business in 2010 (capped at $500,000)
• An extension of the enhanced §179 expensing at 2009 levels through December 31, 2010
• An extension of the first-year bonus depreciation deduction

Proposed tax increases would raise $1.4 trillion, with the majority of that revenue coming from rate increases for higher-income taxpayers. However, the proposal also calls for over $450 billion in other revenue raisers. Those increases impact many categories of taxpayers but, perhaps most directly, those with international operations.

On January 22, 2010, President Obama signed into law H.R. 4462, which allows taxpayers who make monetary contributions to the victims of the earthquake in Haiti after January 11, 2010, and before March 1, 2010, to claim an itemized charitable contribution deduction on their 2009 federal tax return. The House of Representatives unanimously passed H.R. 4462 on January 20, 2010. The Senate approved the measure by unanimous consent one day later on January 21, 2010.

The IRS also designated the January 2010 earthquake in Haiti as a qualified disaster. Employer-sponsored private foundations may assist certain victims in areas affected by the earthquake, and recipients of the aid may exclude relief payments from gross income. The IRS will presume that qualified disaster relief payments made by a private foundation to employees and their family members in areas affected by the Haiti earthquake are consistent with the foundation's charitable purposes.

After six months of internal study, review of hundreds of comments and a series of public meetings, the IRS has announced a sweeping reform of return preparer oversight. All paid signing preparers, regardless of credentials or licenses, will be required to register with the IRS. Unenrolled preparers will be required to complete competency testing and mandatory continuing education. On January 4, the IRS released a blueprint of its new preparer initiative and indicated that regulations necessary to implement the changes would be released in 2010.