Friday, April 29, 2011

Kathleen Haag v. Commissioner, TC Memo 2011-87 , Code Sec(s) 6015. ________________________________________ KATHLEEN HAAG, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent . Case Information: Code Sec(s): 6015 Docket: Docket No. 8915-10. Date Issued: 04/19/2011 Judge: Opinion by GUSTAFSON HEADNOTE XX. Reference(s): Code Sec. 6015 Syllabus Official Tax Court Syllabus P and H filed joint returns and failed to pay tax for 8 years (1985-91 and 1993). R served a notice of proposed levy in September 1999. In 2002 R authorized a collection suit to be brought against P and H in District Court; and P raised as an affirmative defense the claim that she was entitled to relief under I.R.C. sec. 6015(b) and (f). The parties cross-moved for summary judgment on the I.R.C. sec. 6015 issue, and the District Court held in favor of R on the grounds that P's assertion of the claim was untimely under I.R.C. sec. 6015(b)(1)(E) and 26 C.F.R. sec. 1.6015-5(b)(1), Income Tax Regs. The court entered judgment in favor of the Government and against P and H. P and H appealed, not raising the I.R.C. sec. 6015 issue, and the Court of Appeals for the First Circuit affirmed in April 2007. In October 2007 P filed suit in District Court claiming an entitlement to I.R.C. sec. 6015 relief for the same 8 years, but the District Court dismissed the suit on grounds of res judicata. In April 2009 this Court held in Lantz v. Commissioner, 132 T.C. 131 (2009), revd. 607 F.3d 479 [105 AFTR 2d 2010-2780] (7th Cir. 2010), that the 2-year deadline in sec. 1.6015-5(b)(1), Income Tax Regs., is invalid when applied to innocent spouse claims under I.R.C. sec. 6015(f). In July 2009 P filed new requests for relief under I.R.C. sec. 6015(f), citing Lantz. R denied P's requests, and P filed a petition in this Court. R moved for summary judgment on grounds of res judicata. Held : Res judicata precludes P's attempted relitigation of her I.R.C. sec. 6015(f) claim for the years that were the subject of the prior District Court collection suit. Counsel Timothy J. Burke, for petitioner. Patrick F. Gallagher, for respondent. Opinion by GUSTAFSON MEMORANDUM OPINION Petitioner Kathleen Haag seeks this Court's review, pursuant to section 6015(e), 1 of the denial by the Internal Revenue Service (IRS) of her requests for relief from her liability for income taxes for eight taxable years, for which she filed joint returns with her husband. The case is currently before the Court on respondent's motion for summary judgment filed under Rule 121. We will grant that motion and sustain the IRS's determination on grounds of res judicata. Background At the time she filed her petition, Mrs. Haag resided in Massachusetts. IRS collection of the Haags' unpaid taxes For the eight years 1985 through 1991 and 1993, Mrs. Haag filed joint tax returns with her husband, Robert F. Haag. The IRS examined their returns and assessed deficiencies, additions to tax, and interest. The Haags did not fully pay those liabilities. The IRS filed notices of Federal tax lien against the Haags: in July 1992 for tax years 1985, 1986, and 1987; in October 1994 for tax years 1988, 1989, 1990, and 1992; and in May 1995 for tax year 1993. On September 14, 1999, the IRS issued to each of the Haags a Final Notice, Notice of Intent to Levy and Notice of Your Right to a Hearing for their joint liabilities for each of those eight tax years. 2 Haag I In December 2002 the Government filed suit against Mr. and Mrs. Haag in the U.S. District Court for the District of Massachusetts (the District Court) in order to reduce their unpaid assessed taxes, interest, and additions to tax to United States v. Haag (Haag I), 94 AFTR 2d 2004-6665 [94 AFTR 2d 2004-6665], judgment. 2005-1 USTC par. 50,131 (D. Mass. 2004), affd. 485 F.3d 1 [99 AFTR 2d 2007-1986] (1st The years at issue in Haag I were the eight years Cir. 2007). that were the subject of the notice of levy (i.e., 1985-1991 and 1993) and the year 2001 (later dismissed as moot), 3 and the Haags' total unpaid balance for those nine years as of December 23, 2002, was over $1.6 million. The IRS refiled notices of Federal tax lien against the Haags in November 2003; and in November 2004, while the Haag I collection suit remained pending, the Haags filed suit against the Government in the District Court, Haag v. IRS, No. 04-12344 (D. Mass. filed Nov. 4, 2004), alleging that the IRS deprived them of their collection due process (CDP) rights by failing to notify them of their right to a CDP hearing when it refiled the notices of Federal tax lien in 2003. The Haags sought civil damages for unauthorized collection actions under section 7433, injunctive relief mandating a CDP hearing, declaratory relief, attorney's fees, and costs. The District Court consolidated the Haags' suit with the Haag I collection suit. In the answer she filed in Haag I, Mrs. Haag raised innocent spouse relief under section 6015(b)(1) and (2) and (f) as an affirmative defense. For purposes of the IRS's motion for summary judgment in this case, we will assume arguendo that Mrs. Haag's section 6015(f) defense was meritorious and should have been upheld. But when Mrs. Haag moved in Haag I for summary judgment on her claim for innocent spouse relief, the Government cross-moved for partial summary judgment on that claim, asserting that Mrs. Haag did not qualify for relief because she failed to request relief within two years after the IRS began its collection activities 4 —as required by statute for an election under section 6015(b) or (c), see sec. 6015(b)(1)(E), (c)(3)(B), and as required by regulation for a request for equitable relief under section 6015(f). 26 C.F.R. section 1.6015-5(b)(1), Income Tax Regs., provides: to request equitable relief under § 1.6015-4, a requesting spouse must file Form 8857 or other similar statement with the Internal Revenue Service no later than two years from the date of the first collection activity against the requesting spouse after July 22, 1998, with respect to the joint tax liability. However, in Mrs. Haag's instance the IRS's collection activity began no later than September 1999 (when it issued the notice of proposed levy), but she did not make any request or election for innocent spouse relief within two years. Rather, more than three years elapsed with no election and no request before the IRS commenced Haag I (and Mrs. Haag raised her affirmative defense). In September 2004 the District Court denied Mrs. Haag's motion for summary judgment because it held, as to the eight years still at issue (after the dismissal of 2001 as moot), that she failed to timely seek relief for the remaining years within the two-year period allowed by the statute and the regulation. The court granted the Government's motion for partial summary judgment on the innocent spouse claim, holding that Mrs. Haag could not meet the legal requirements for seeking innocent spouse relief for the remaining years because she had failed to timely raise the innocent spouse issue. 5 See Haag I. The Government proved that in November 2003 the IRS had sent the notice of lien required by section 6320(a) (by producing reprints of the 2003 lien notices and certified mail records showing that Mr. Haag signed for the 2003 lien notices), and in January 2006 the District Court granted the Government's motion for summary judgment on the Haags' notice claim and dismissed the Haags' action. The Haags appealed Haag I, specifically challenging (1) the dismissal of their claim for damages for the IRS's alleged failure to provide them with collection notices and notices of their right to a CDP hearing; (2) the denial of their motion to enforce a supposed settlement agreement; and (3) the denial of their motion to disqualify the Department of Justice from representing the Government in Haag I. The Haags did not assert any error in the District Court's innocent spouse ruling, which had denied Mrs. Haag summary judgment on that issue and had granted partial summary judgment to the Government. 6 In April 2007 the Court of Appeals for the First Circuit affirmed the judgment of the District Court. Haag v. United States, 485 F.3d 1 [99 AFTR 2d 2007-1986] (1st Cir. 2007). Haag III 7 Mrs. Haag submitted to the IRS a Form 8857, Request for Innocent Spouse Relief, in April 2005 (i.e., after the District Court's September 2004 order denying her innocent spouse claims, but before the Court of Appeals affirmed the District Court). In a Decision Letter Concerning Equivalent Hearing Under Section 6320 dated August 31, 2006, the IRS stated that Mrs. Haag was not entitled to relief under either section 6015(b) or (f) because “In View of Mr. Haag's Bankruptcy, This Case Is Ordered Administratively Closed.” Haag v. IRS (Haag II), No. 06-cv-11551 (D. Mass. Nov. 28, 2006) (order closing case), affd. sub nom. Haag v. United States, 589 F.3d 43 [104 AFTR 2d 2009-7722] (1st Cir. 2009). In Haag II the District Court denied several motions to reopen the case, on the ground that Haag I barred the action on the grounds of res judicata, and the Court of Appeals affirmed the dismissal and the conclusion that the question of whether the IRS provided proper notice of the collection action had been decided in Haag I. Haag v. United States, 589 F.3d at 45-46. Consequently, the Haag II suit has no effect on this case, and we do not discuss it further. her April 2005 request was not timely pursuant to 26 C.F.R. section 1.6015-5(b)(1), Income Tax Regs. 8 In October 2007 (after the Court of Appeals for the First Circuit denied her appeal of Haag I), Mrs. Haag filed suit against the IRS in the District Court, on the basis of her April 2005 request. Haag v. IRS (Haag III), No. 07-12007 (D. Mass. filed Oct. 22, 2007), affd. sub nom. Haag v. United States, 589 F.3d 43 [104 AFTR 2d 2009-7722] (1st Cir. 2009). She again alleged that she met the criteria for relief under section 6015; she claimed she had a right to innocent spouse relief; and she alleged that the IRS had violated its regulations in failing to hear and grant her claim. She sought damages under section 7433 and attorney's fees. The Government moved to dismiss the suit, arguing that the claim in Haag III was barred by res judicata. In a memorandum and order, the District Court held that Haag I was a final judgment on the merits of Mrs. Haag's innocent spouse claim; that the parties in Haag I and Haag III are identical; and that Haag I and Haag III arose from the same common nucleus of operative facts, i.e., that the innocent spouse claims in both suits were the same. In January 2008 the District Court held that Mrs. Haag's claim in Haag III was barred by claim preclusion, and it granted the Government's motion to dismiss. Haag v. IRS, No. 07-12007, slip op. at 3 (D. Mass. Jan. 15, 2008). Mrs. Haag appealed the judgment in Haag III, specifically challenging the holding that res judicata barred her from relitigating the innocent spouse claim. Mrs. Haag then filed with the District Court a motion for relief from the judgment in Haag III; the District Court denied her motion; and Mrs. Haag appealed that denial. In December 2009 the Court of Appeals for the First Circuit again affirmed the District Court, concluding that neither of her appeals had merit and stating that “both Kathleen Haag's innocent spouse defense and the contours of her right, if any, to a hearing were fully adjudicated in Haag I and resulted in a final judgment on the merits against her.” Haag v. United States, 589 F.3d at 46. The Court of Appeals concluded that because her complaint in Haag III concerned the same nucleus of operative facts as Haag I, her innocent spouse claim in Haag III is barred by res judicata. Id. The Court of Appeals also affirmed the dismissal of Haag II as barred by the res judicata effect of Haag I. Id. Post-Lantz requests for relief In April 2009—i.e., eight months before the Court of Appeals for the First Circuit affirmed Haag III—this Court decided, in Lantz v. Commissioner, 132 T.C. 131 (2009), revd. 607 F.3d 479 [105 AFTR 2d 2010-2780] (7th Cir. 2010), that 26 C.F.R. section 1.6015-5(b)(1), Income Tax Regs., was invalid in imposing the two-year deadline for claims for equitable relief under section 6015(f). Mrs. Haag therefore sought innocent spouse relief under section 6015(f) for a third time, submitting new Forms 8857 dated July 7, 2009, for tax years 1985 through 1991 and 1993. In an attachment to her 2009 requests for relief, Mrs. Haag argued that because Lantz v. Commissioner, supra, had held that regulation invalid, the IRS must consider her claim and grant her relief. The IRS issued final determinations dated March 23, 2010, denying Mrs. Haag's requests for relief under section 6015(f) for each of 1985-1991 and 1993. The workpapers of the IRS's examiner who considered Mrs. Haag's 2009 requests indicate that the IRS denied relief because of the res judicata effect of court proceedings that determined she was not eligible for innocent spouse relief for the years in issue. Mrs. Haag petitioned this Court on April 15, 2010, seeking review of the IRS's March 2010 denials of innocent spouse relief. The IRS moved for summary judgment on the basis of res judicata; and Mrs. Haag opposed the IRS's motion. Discussion I. Relief from joint liability Section 6013(d)(3) provides that when married taxpayers file a joint return, the tax is computed on their aggregate income, and their liability to pay the tax shown on the return or found to be owing is joint and several. See also 26 C.F.R. sec. 1.6013-4(b), Income Tax Regs. That is, each spouse is liable for the entire joint tax liability. However, section 6015 provides several means for a taxpayer to seek relief from joint liability; and if the IRS determines not to grant such relief to a taxpayer, section 6015(e) gives this Court jurisdiction to review that determination. II. Res judicata arising from Haag I Mrs. Haag's non-entitlement to relief under section 6015 for the eight years at issue has already been decided, and the doctrine of res judicata (Latin for “a thing adjudicated”) requires us to follow that prior decision. Res judicata has the “purpose of protecting litigants from the burden of relitigating an identical issue and of promoting judicial economy by preventing unnecessary or redundant litigation.” Meier v. Commissioner, 91 T.C. 273, 282 (1988). Res judicata (also called “claim preclusion”) was developed by the courts to bar repetitious suits on the same cause of action and is applicable to tax litigation. 9 As the Supreme Court explained: [W]hen a court of competent jurisdiction has entered a final judgment on the merits of a cause of action, the parties to the suit and their privies are thereafter bound “not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose.” *** Commissioner v. Sunnen, 333 U.S. 591, 597-598 [36 AFTR 611] (1948) (quoting Cromwell v. County of Sac, 94 U.S. 351, 352 (1877)). Simply stated, Under res judicata, a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action. Allen v. McCurry, 449 U.S. 90, 94 (1980). Under the Supreme Court's explication of res judicata in Commissioner v. Sunnen, supra, four conditions must be met to preclude relitigation of a claim: (1) The parties in each action must be identical (or at least be in privity); (2) a court of competent jurisdiction must have rendered the first judgment; (3) the prior action must result in a final judgment on the merits; and (4) the same cause of action or claim must be See United States v. Shanbaum, 10 F.3d involved in both suits. 305, 310 (5th Cir. 1994). Once these conditions are met, each party is prohibited from raising any claim or defense that was or could have been raised as part of the litigation over the cause Those four conditions are met of action in the prior case. Id. here: 1. In Haag I, Mrs. Haag was the defendant, and the United States Government was the plaintiff. In this case, Mrs. Haag is the petitioner, and the respondent is the Commissioner of the IRS—an agency of the United States Government. A “judgment in a suit between a party and a representative of the United States is res judicata in relitigation of the same issue between that party and another officer of the government” because officers of the same government are in privity. Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 402-403 [24 AFTR 956] (1940). Privity exists when the United States is a party in the District Court and the Commissioner of Internal Revenue is the respondent here. Gammill v. Commissioner, 62 T.C. 607, 614 (1974). Thus, the parties are sufficiently identical. 2. The Government sued Mrs. Haag in Haag I to reduce unpaid assessments to judgment, and the District Court had jurisdiction over that action under sections 7401 and 7402(a) and 28 U.S.C. sections 1340 and 1345. Mrs. Haag pleaded her innocent spouse claim in her answer, and the District Court entertained that claim as an affirmative defense to the Government's collection claim. The Court of Appeals for the First Circuit affirmed that judgment in Haag I; and when Mrs. Haag tried to resist the application of res judicata in Haag III, the same Court of Appeals (and the court to which an appeal from the instant case would lie) held against her again. Any challenge to the competency of the District Court to enter judgment on that claim has been resolved against Mrs. Haag. 10 3. The District Court's judgment considered Mrs. Haag's innocent spouse claim: Mrs. Haag sought summary judgment and the Government sought partial summary judgment on the innocent spouse defense, and the District Court granted the Government's motion because it held that Mrs. Haag failed to satisfy the statutory and regulatory requirement that she timely request relief. The District Court's judgment was a final judgment on the merits of this claim. 4. Finally, in this case Mrs. Haag seeks innocent spouse relief for tax years 1985-1991 and 1993. Identity between claims raised in an earlier and a later suit depends on whether the claims derive from a common nucleus of operative facts—the Gonzales v. Banco Cent. Corp., 27 F.3d transactional approach. 751, 755 (1st Cir. 1994). The District Court entered a judgment of approximately $1.85 million against Mrs. Haag and her husband for tax years 1985-1991 and 1993, and the District Court decided Mrs. Haag was not eligible to seek innocent spouse relief for those same years. Thus, the innocent spouse claim that she attempts to raise in this case (for tax years 1985-1991 and 1993) derives from the same nucleus of operative facts as the innocent spouse claim that she already litigated (for the same tax years) in Haag I. Where the four conditions for claim preclusion are thus present, relitigation of a claim is barred by res judicata. III. The non-effect of Lantz v. Commissioner A legal development important to Mrs. Haag occurred after Haag I held that her assertion of section 6015 was untimely: This Court struck down section 1.6015-5(b)(1), Income Tax Regs., as an invalid interpretation of section 6015(f) in Lantz v. Commissioner, 132 T.C. 131 (2009), revd. 607 F.3d. 479 [105 AFTR 2d 2010-2780] (7th Cir. 2010). 11 Thus, if Mrs. Haag were seeking innocent spouse relief in this Court in the first instance, then—apart from any effect of Haag I—her delay in requesting that relief would not necessarily disqualify her. She implicitly argues that this Court's intervening decision in Lantz should forestall the application of res judicata arising from Haag I. This argument cannot avail. The doctrine of res judicata (unlike the doctrine of collateral estoppel) 12 admits no exception for changes in the law. Res judicata prohibits the relitigating of a claim or cause of action, absent fraud or some other factor that invalidates the original judgment. Commissioner v. Sunnen, 333 U.S. at 597. Thus, even where the law has changed after a first judgment on the merits, a given claim may be relitigated only if the first judgment is voided in the original court or reversed on appeal. 13 Therefore, a change in the law after a matter has been litigated does not change the claim-preclusive effect of the earlier Id. at 598-599. decision. In Haag I Mrs. Haag litigated her innocent spouse claim for the very years that are at issue here, and under res judicata the judgment in Haag I precludes her raising in this Court a repetitive claim for those same years. She is therefore precluded from “relitigating issues that were or could have been raised in that action”, Allen v. McCurry, 449 U.S. at 94 (emphasis added), including the issue of the validity of 26 C.F.R. section 1.6015-5(b)(1), Income Tax Regs. Our invalidating the regulation does not render invalid the District Court's judgment (affirmed on appeal) in Haag I and cannot deprive that judgment of res judicata effect. IV. The inapplicability of section 6015(g)(2) Mrs. Haag insists that she has never had the opportunity to establish that she is entitled to innocent spouse relief, and in a sense that is correct; i.e., the two-year time bar of the regulation has prevented her attempts to prove that she is entitled to relief. She invokes section 6015(g)(2), which provides: (2) Res judicata.—In the case of any election under subsection (b) or (c) or of any request for equitable relief under subsection (f), if a decision of a court in any prior proceeding for the same taxable year has become final, such decision shall be conclusive except with respect to the qualification of the individual for relief which was not an issue in such proceeding. The exception contained in the preceding sentence shall not apply if the court determines that the individual participated meaningfully in such prior proceeding. [Emphasis added.] That is, to escape the effect of res judicata from prior litigation, the requesting spouse must show (1) that her innocent spouse claim “was not an issue” in the prior proceeding and (2) that she did not “participate[] meaningfully” in the prior proceeding. Mrs. Haag meets neither of those conditions. First, her innocent spouse claim was explicitly at issue in Haag I and was presented to the court by the parties' cross- motions for summary judgment on that very issue, and the District Court explicitly denied her claim for innocent spouse relief. Second, her allegation that she did not meaningfully participate in Haag I falls far short. Mrs. Haag was a party in Haag I; she had a lawyer; and he pressed her innocent spouse claim. It cannot be said that she did not participate meaningfully in Haag I. Section 6015(g)(2) therefore does not alter the operation of res judicata in this instance. Because res judicata bars Mrs. Haag's relitigating the innocent spouse claims she already litigated in Haag I, we will grant respondent's motion for summary judgment and affirm the IRS's denial of innocent spouse relief to Mrs. Haag. To reflect the foregoing, An appropriate order and decision will be entered. ________________________________________ 1 Unless otherwise indicated, all section references are to the Internal Revenue Code of 1986 (26 U.S.C.), as amended, and all Rule references are to the Tax Court Rules of Practice and Procedure. ________________________________________ 2 In her statement of facts in dispute, submitted in United States v. Haag (Haag I), 94 AFTR 2d 2004-6665, 2005-1 [94 AFTR 2d 2004-6665] USTC par. 50,131 (D. Mass. 2004), affd. 485 F.3d 1 [99 AFTR 2d 2007-1986] (1st Cir. 2007), discussed below, Mrs. Haag admits that the IRS issued the levy notices in September 1999. Pursuant to Fed. R. Evid. 201, we take judicial notice of the record of Haag I and the other District Court cases discussed herein. Mrs. Haag now appears to deny the fact, but under Rule 121 she cannot rely on her mere denial when opposing the IRS's motion for summary judgment, but rather she must submit evidence to raise a genuine issue of material fact. She has not submitted an affidavit or other evidence to do so, and we take the fact as admitted in Haag I. ________________________________________ 3 The District Court found that the issue of the Haags' tax liability for 2001 was moot because the liability had been paid. We will therefore not further discuss the 2001 year, since it has no bearing on the outcome of this case. ________________________________________ 4 With its summary judgment motions, first in the District Court and later in this Court, the Government submitted transcripts of account for the Haags for the tax years in question. Although those account transcripts show notices of Federal tax lien filed against the Haags in 1992, 1994, and 1995, the Government's motions measure the timeliness of Mrs. Haag's innocent spouse requests relative to the 1999 levy notice. Obviously, if Mrs. Haag's requests were untimely as to the later levy action, they were even more untimely as to the earlier lien filings. ________________________________________ 26 ________________________________________ 5 The statutory bars of section 6015(b)(1)(E) and (c)(3)(B) were unassailable in the District Court action, and the record contains no indication of any direct challenge to the validity of 26 C.F.R. section 1.6015-5(b)(1), Income Tax Regs., in any of Mrs. Haag's District Court cases. It is not clear whether Mrs. Haag sought relief under section 6015(c), and there is nothing in the record to suggest that she was divorced, separated, or living apart from Mr. Haag, as section 6015(c)(3)(A)(i) would have required. ________________________________________ 6 The Haags also did not appeal the District Court's reducing to judgment, in favor of the Government, the $1.85 million of Federal tax assessments against the Haags. Haag v. United States, 485 F.3d 1, 4 [99 AFTR 2d 2007-1986] (1st Cir. 2007). ________________________________________ 7 Between Haag I and Haag III the Haags had filed an additional suit, which we refer to as Haag II. In August 2006 they sued the Government in the District Court for damages under section 7433 for the IRS's alleged failure to send proper collection notices to the Haags' attorney in connection with refiling the liens in 2003. Among other claims, the Haags alleged that Mrs. Haag satisfied the requirements of section 6015 and therefore qualified for innocent spouse relief. After Mr. Haag filed a bankruptcy petition in November 2006, the District Court closed Haag II with the following docket entry: ________________________________________ 8 The IRS considered Mrs. Haag's April 15, 2005, innocent spouse claim as part of an equivalent hearing triggered by a request for a CDP hearing that the Haags also submitted on April 15, 2005. ________________________________________ 9 The related doctrine of collateral estoppel (or “issue preclusion”) prevents the relitigation of an identical issue, even in connection with a different claim or cause of action. The rule of collateral estoppel provides, “When an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.” 1 Restatement, Judgments 2d, sec. 27 (1982); see also Allen v. McCurry, 449 U.S. 90, 94 (1980) (”Under collateral estoppel, once a court has decided an issue of fact or law necessary to its judgment, that decision may preclude relitigation of the issue in a suit on a different cause of action”); Montana v. United States, 440 U.S. 147, 153-154 (1979). ________________________________________ 10 Whether a District Court has jurisdiction to decide an innocent spouse claim in a collection suit (such as Haag I) can be disputed. See Pollock v. Commissioner, 132 T.C. 21, 25 n.11 (2009). However, Mrs. Haag's challenge to the res judicata effect of Haag I was resolved against her in Haag III, so that she is collaterally estopped (see note 9 above) from challenging the res judicata effect of Haag I. ________________________________________ 11 After the Court of Appeals for the Seventh Circuit reversed Lantz, we reconsidered the matter but did not change our position. See Hall v. Commissioner, 135 T.C. 374 (2010), on appeal (6th Cir., Dec. 7, 2010). The Court of Appeals for the Third Circuit has recently held the two-year deadline to be valid. See Mannella v. Commissioner, 631 F.3d 115 [107 AFTR 2d 2011-519] (3d Cir. 2011), revg. 132 T.C. 196 (2009). ________________________________________ 12 Collateral estoppel may not lie where the controlling facts or applicable legal rules have changed. See Commissioner v. Sunnen, 333 U.S. 591, 599-600 [36 AFTR 611] (1948). Where the legal or factual situation in the second case is different, the prior determination on that issue may no longer be conclusive. For example, “a judicial declaration intervening between the two proceedings may so change the legal atmosphere as to render the rule of collateral estoppel inapplicable.” Id. at 600. However, even assuming that our decision in Lantz is such a “judicial declaration”, we note that it was issued in April 2009, eight months before the Court of Appeals for the First Circuit affirmed Haag III in December 2009. It is therefore not strictly correct that Lantz “interven[ed] between” Haag III and this case. ________________________________________ 13 Accordingly, any relief for Mrs. Haag would lie not in this Court, where res judicata bars her relitigating the innocent spouse claim, but in the Federal courts in Massachusetts, where the original decisions might be voided or reversed. Of course, having already lost this issue in those courts at trial and several times on appeal, Mrs. Haag may have no practical remedy for her failure to timely request relief, but that does not confer on this Court any power to undo their decisions. © 2011 Thomson Reuters/RIA. All rights reserved. www.irstaxattorney.com 888-712-7690
TUCKER v. U.S., Cite as 107 AFTR 2d 2011-XXXX, 04/12/2011 ________________________________________ FRANCIS C. TUCKER, Plaintiff, v. UNITED STATES OF AMERICA, Defendant. Case Information: Code Sec(s): Court Name: IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF WEST VIRGINIA, Docket No.: Civil Action No. 5:08CV105 (STAMP), Date Decided: 04/12/2011. Disposition: HEADNOTE . Reference(s): OPINION IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF WEST VIRGINIA, MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART THE DEFENDANT'S PARTIAL MOTION FOR SUMMARY JUDGMENT Judge: FREDERICK P. STAMP, JR. UNITED STATES DISTRICT JUDGE I. Facts and Procedural History The plaintiff in the above-styled civil action, Francis C. Tucker (“Tucker”), filed a complaint in this Court against the United States of America, alleging wrongful disclosure of his tax return information by an employee of the Internal Revenue Service (“IRS”) during the course of a criminal investigation of the plaintiff. During that investigation, IRS Special Agent Brad Nickerson (“Nickerson”) contacted numerous third parties. The plaintiff believes that during six of these interviews, Nickerson wrongfully disclosed tax return information about the plaintiff. On October 22, 2008, this Court granted a motion by the United States to stay proceedings pending the outcome of the criminal matters arising out of the IRS investigation that formed the basis for this civil action. The United States then indicated to this Court that the IRS discontinued the investigation of the plaintiff. On August 16, 2010, this Court lifted the stay. The United States filed a motion for partial summary judgment to which the plaintiff responded 1 and the defendant replied. For the reasons stated below, this Court grants in part and denies in part the United States' motion for partial summary judgment. II. Applicable Law Under Rule 56(c) of the Federal Rules of Civil Procedure, A party asserting that a fact cannot be or is genuinely disputed must support the assertion by: ((A)) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations ... admissions, interrogatory answers, or other materials; or ((B)) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact. Fed. R. Civ. P. 56(c). The party seeking summary judgment bears the initial burden of showing the absence of any genuine issues of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986). “The burden then shifts to the nonmoving party to come forward with facts sufficient to create a triable issue of fact.” Temkin v. Frederick County Comm'rs, 945 F.2d 716, 718 (4th Cir. 1991), cert. denied, 502 U.S. 1095 (1992) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986)). However, as the United States Supreme Court noted in Anderson, “Rule 56(e) itself provides that a party opposing a properly supported motion for summary judgment may not rest upon the mere allegations or denials of his pleading, but ... must set forth specific facts showing that there is a genuine issue for trial.” Id. at 256. “The inquiry performed is the threshold inquiry of determining whether there is the need for a trial -- whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.” Id. at 250; see also Charbonnages de France v. Smith, 597 F.2d 406, 414 (4th Cir. 1979) (Summary judgment “should be granted only in those cases where it is perfectly clear that no issue of fact is involved and inquiry into the facts is not desirable to clarify the application of the law.” (citing Stevens v. Howard D. Johnson Co., 181 F.2d 390, 394 (4th Cir. 1950))). In Celotex, the Court stated that “the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322. Summary judgment is not appropriate until after the non-moving party has had sufficient opportunity for discovery. See Oksanen v. Page Mem'l Hosp., 912 F.2d 73, 78 (4th Cir. 1990), cert. denied, 502 U.S. 1074 (1992). In reviewing the supported underlying facts, all inferences must be viewed in the light most favorable to the party opposing the motion. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). III. Discussion The plaintiff alleges that the United States of America violated 26 U.S.C. § 7431 when Special Agent Nickerson allegedly disclosed the tax return information of the plaintiff. This statute provides: If any officer or employee of the United States knowingly, or by reason of negligence, inspects or discloses any return or return information with respect to a taxpayer in violation of any provision of section 6103, such taxpayer may bring a civil action for damages against the United States in a district court of the United States. 26 U.S.C. § 7431(a). In its motion for partial summary judgment, the United States contends that, after taking the deposition of third-party witnesses, there is no genuine dispute that Special Agent Nickerson did not disclose the plaintiff's return information to Cathy Mae West, Thomas West, Donetta LaRue, and Gary Tucker. The United States argues that it is entitled to judgment on those claims. It also believes that it is entitled to a partial summary judgment that the plaintiff is not entitled to actual damages. A. Cathy Mae West, Thomas West, and Donetta LaRue In a deposition, Nickerson states that he did not disclose to Cathy Mae West or Thomas West that he was conducting a criminal investigation of Francis Tucker, that Francis Tucker was going to jail, or that Francis Tucker was evading his income tax. Nickerson also states that he did not disclose to Donetta LaRue that Francis Tucker was being investigated for tax evasion or that Francis Tucker was going to jail. Cathy Mae West and Thomas West both told the government in depositions that they do not remember Nickerson stating that the IRS was investigating Tucker for tax evasion or that Tucker was going to jail. Cathy Mae West stated in her deposition that she learned about the investigation from her brother, that she assumed Nickerson was looking into tax evasion, and that she assumed that Tucker was going to jail based on the questions Nickerson asked her. LaRue stated in a deposition by the government that Nickerson did not tell LaRue that Tucker was going to jail. She says that she made the assumption that Tucker was going to jail. LaRue stated that she was present during a conversation between Tucker and his mother and that she learned of the investigation. She states that Tucker and his mother spoke about the possibility that Tucker could go to jail. In his response to the motion for partial summary judgment, Tucker provides sworn statements given by Cathy Mae West, Thomas West, and Donetta LaRue to the plaintiff's investigator, Franklin D. Streets, Jr., prior to the government's depositions. In Cathy Mae West's sworn statement, she states that the IRS agents said that they were investigating Tucker for income tax evasion and that he would go to jail. Thomas West, in his sworn statement, said that the IRS stated that they were building a case against Tucker and that Tucker was going to go to jail. Also in a sworn statement to the plaintiff's investigator, LaRue stated that the agents told her that Tucker was probably going to jail and that he was facing jail time. In its reply, the United States argues that this Court cannot consider the witness statements because the plaintiff failed to authenticate the documents and because the documents contain hearsay. This Court will treat the sworn statements to the investigator as the equivalent of affidavits. Curnow v. The Ridgecrest Police, 952 F.2d 321, 324 (9th Cir. 1991); Am. Nat'l Prop. & Cas. Co., v. Campbell Ins., Inc., 2011 WL 98813, 4 n.4 (M.D. Tenn. Jan. 11, 2011). “A party asserting that a fact ... is genuinely disputed must support the assertion by ... citing to particular parts of materials in the record, including depositions ... affidavits or declarations.” Fed. R. Civ. P. 56(c)(1). The documents cannot be considered depositions as the United States had no opportunity to cross-examine. However, in a case such as this, where “a witness's statements taken in question and answer form, which had neither been subject to cross-examination nor signed, [are] admissible under Rule 56(c).” Curnow, 952 F.2d at 324. The statements are admissible because they are sworn. Id. The testimony in these statements is at least reliable as an admissible affidavit. Id. The evidence here meets Rule 56's requirements for affidavits: the statements are “made on personal knowledge, set out facts that would be admissible in evidence, and show that the [witness] is competent to testify on the matters stated.” 2 Fed. R. Civ. P. 56(c)(4). Because this Court concludes that the sworn witness statements are the equivalent of affidavits, there is no need for additional authentication beyond the plaintiff's counsel's identification of the documents in his response. See Lorraine v. Markel Am. Ins. Co., 241 F.R.D. 534, 542 (D. Md. 2007) (“A party seeking to admit an exhibit need only make a prima facie showing that it is what he or she claims it to be.”); see also Stanley Martin Companies, Inc. v. Universal Forest Products Shoffner LLC, 396 F. Supp. 2d 606, 612 (D. Md. 2005) (“The most natural interpretation of [Rule 56(c)] is that an affidavit is not the sine qua non for the admission of other forms of evidence, provided that such evidence is otherwise admissible”). Hearsay “is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.” The United States contends that this Court cannot consider the witness statements because the plaintiff offers the statements for the truth of the matter asserted -- that Nickerson did make the statements alleged in the complaint. The United States is correct that the plaintiff is offering Cathy Mae West, Thomas West, and Donetta LaRue's statements for the purpose of showing that Nickerson did make the statements. However, because this Court considers the sworn statements to be affidavits, this Court can consider the testimony provided that the affidavits do not contain hearsay. 3 Fed. R. Civ. P. 56(c). Here, the statements at issue are that Nickerson said that Francis Tucker was under investigation by the IRS, going to jail, and committing income tax evasion. These statements are admissible as admissions by a party-opponent. See Fed. R. Evid. 801(d)(2)(D) (“A statement is not hearsay if ... [t]he statement is offered against a party and is ... a statement by the party's agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship”). In this case, Nickerson, an agent of the IRS, allegedly made these statements in the course of an investigation. Accordingly, this Court finds that the affidavits do not contain hearsay. Cathy Mae West and Thomas West are unable to remember what statements the IRS agents made according to the deposition. These witnesses stated under oath, however, that the IRS agents disclosed information about the plaintiff. Donetta LaRue states that the IRS agents did not tell her that Tucker was going to jail, but in her sworn statement, LaRue states that the agents did provide her with that information. These are credibility issues for the finder of fact at trial. Accordingly, this Court finds that there is a genuine issue of material fact as to whether Nickerson disclosed the plaintiff's tax information to these three defendants. Therefore, this Court denies the United States' motion for partial summary judgment on these claims. B. Gary Tucker The United States contends that Nickerson did not disclose the plaintiff's return information to Gary Tucker. It is undisputed that Nickerson told Gary Tucker, without identifying whom he was referring to, that Gary Tucker “should not go up the river for something someone else did.” The United States argues that this statement is a general statement used to elicit cooperation and information from a witness, which does not disclose information. The plaintiff argues that it can be inferred that Nickerson was referring to Francis Tucker and that who Nickerson was referring to in this context is an issue for the fact finder to decide at trial. This Court agrees with the United States that Nickerson's statement here was not a disclosure of the plaintiff's return information. It is simply a general statement and at no time did Nickerson disclose any information in violation of the statute. Accordingly, this Court grants the United States' motion for partial summary judgment as to this claim. C. Actual Damages Finally, the United States believes that the plaintiff is not entitled to actual damages. The United States contends that the plaintiff has no documentary evidence to support his claim. The statute refers to actual damages. Compensatory damages “is a sufficiently comparable term” to actual damages “that conveys the same meaning.” Hofmann v. O'Brien, 367 F. App'x 439, 445 (4th Cir. 2010); see Black's Law Dictionary 445 (9th ed. 2009) (stating that actual damages are also termed “compensatory damages”). The failure of the plaintiff to produce evidence of actual damages does not preclude the award of punitive damages. Mallas v. United States of America, 993 F.2d 1111, 1125 [71 AFTR 2d 93-2036] (4th Cir. 1993). “[A] taxpayer may recover punitive damages, even where his actual damages are zero.” Id. at 1126. Because actual damages and compensatory damages are interchangeable terms, this Court finds that it must deny the United States' motion for partial summary judgment as to actual damages. IV. Conclusion For the reasons stated above, this Court GRANTS IN PART and DENIES IN PART the United States' motion for partial summary judgment. IT IS SO ORDERED. The Clerk is DIRECTED to transmit a copy of this memorandum opinion and order to counsel of record herein. DATED: April 12, 2011 FREDERICK P. STAMP, JR. UNITED STATES DISTRICT JUDGE ________________________________________ 1 The plaintiff styled his response as a reply (Document No. 64). This memorandum opinion and order will refer to this document as the plaintiff's response. ________________________________________ 2 The United States contends that these sworn statements can only be viewed as prior inconsistent statements rather than substantive evidence. This argument is misplaced at this stage. Viewing these statements as affidavits allows this Court to consider them on summary judgment. Fed. R. Civ. P. 56(c). The government directs this Court to Sam's Club v. Nat'l Labor Relations Bd., 173 F.3d 233, 241 (4th Cir. 1999). Sam's Club does not involve the same situation as the present civil action. In that case, the Fourth Circuit stated that an affidavit that was never entered into evidence during an administrative hearing could only be used by the administrative law judge as impeachment evidence. The court found that the ALJ erred “when she used evidence included in the hearing only for impeachment purposes as substantive evidence that an unfair labor practice had occurred.” Id. In this case, this Court just looks to the affidavit to see whether it creates a genuine issue of material fact. This Court is not concerned in making a credibility determination as to whether the statements in the affidavits or in the depositions are more credible. ________________________________________ 3 The United States argues that the sworn statements are hearsay. This Court has found that the sworn statements are the equivalent of affidavits. Thus, Rule 56(c) allows this Court to consider the statements made in the affidavit in considering this summary judgment motion, just as this Court considers the statements made in the deposition testimony of the same witnesses provided by the United States. www.irstaxattorney.com 888-712-7690

Thursday, April 28, 2011

Camp, Boustany Question Health Insurance Reform Implementation Fund Washington, DC – Ways and Means Committee Chairman Dave Camp (R-MI) and Oversight Subcommittee Chairman Charles Boustany (R-LA) sent a letter to Internal Revenue Service (IRS) Commissioner Douglas Shulman today seeking information about how the IRS is spending monies it received from the $1 billion Health Insurance Reform Implementation Fund (“HIRIF”) – a fund established by the Democrats' health care law. In the letter, the Chairmen requested that the IRS provide documents to the Committee so that both lawmakers and taxpayers have a better understanding of how the funds are being used. Specifically, the Chairmen asked the IRS to provide the following information by May 12: 1. All IRS Expenditure Plans related to the HIRIF; 2. The total amounts IRS requested from HHS for FY 2010 and 2011; 3. The total amounts IRS received from HHS for FY 2010 and 2011; 4. The total number of full time employees performing health care overhaul-related work for both FY 2010 and 2011; 5. Whether IRS plans to request additional HIRIF funds in the future, and if so, the estimated amount and purpose of the request; and 6. All correspondence, including email, between the IRS and the Office of Management and Budget regarding the Government Accountability Office’s request for any of the above information and all discussions to withhold or delay providing the information. Read the full text of the letter here. www.irstaxattorney.com 888-712-7690
§ 7403 Action to enforce lien or to subject property to payment of tax. ________________________________________ (a) Filing. In any case where there has been a refusal or neglect to pay any tax, or to discharge any liability in respect thereof, whether or not levy has been made, the Attorney General or his delegate, at the request of the Secretary, may direct a civil action to be filed in a district court of the United States to enforce the lien of the United States under this title with respect to such tax or liability or to subject any property, of whatever nature, of the delinquent, or in which he has any right, title, or interest, to the payment of such tax or liability. For purposes of the preceding sentence, any acceleration of payment under section 6166(g) shall be treated as a neglect to pay tax. (b) Parties. All persons having liens upon or claiming any interest in the property involved in such action shall be made parties thereto. (c) Adjudication and decree. The court shall, after the parties have been duly notified of the action, proceed to adjudicate all matters involved therein and finally determine the merits of all claims to and liens upon the property, and, in all cases where a claim or interest of the United States therein is established, may decree a sale of such property, by the proper officer of the court, and a distribution of the proceeds of such sales according to the findings of the court in respect to the interests of the parties and of the United States. If the property is sold to satisfy a first lien held by the United States, the United States may bid at the sale such sum, not exceeding the amount of such lien with expenses of sale, as the Secretary directs. (d) Receivership. In any such proceeding, at the instance of the United States, the court may appoint a receiver to enforce the lien, or, upon certification by the Secretary during the pendency of such proceedings that it is in the public interest, may appoint a receiver with all the powers of a receiver in equity. U.S. v. MARTIN, Cite as 107 AFTR 2d 2011-XXXX, 04/18/2011 ________________________________________ UNITED STATES OF AMERICA, Plaintiff, v. JOSEPH MARTIN, AVEN KIPP MARTIN, DISCOVER FINANCIAL SERVICES, CITY OF CLARKSBURG, WEST VIRGINIA TAX DEPARTMENT, WEST VIRGINIA DIVISION OF UNEMPLOYMENT COMPENSATION, WEST VIRGINIA INSURANCE COMMISSION and HUNTINGTON BANK, Defendants. Case Information: Code Sec(s): Court Name: IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF WEST VIRGINIA, Docket No.: Civil Action No. 1:10CV116 (STAMP), Date Decided: 04/18/2011. Disposition: HEADNOTE . Reference(s): OPINION IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF WEST VIRGINIA, MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT Judge: FREDERICK P. STAMP, JR. UNITED STATES DISTRICT JUDGE I. Procedural History On July 28, 2010, the United States filed a complaint for federal taxes in this Court. Defendants Joseph Martin and Aven Kipp Martin were personally served with the summons and the complaint. The West Virginia Division of Unemployment Compensation and the West Virginia Insurance Commission both waived service of the summons and the complaint. After this Court granted the plaintiff's motion for alternate process permitting service by publication on defendant Discover Financial Services (“Discover”), the United States caused the notice of service to be published in the Exponent Telegram. Joseph Martin, Aven Kipp Martin, the West Virginia Division of Unemployment Compensation, the West Virginia Insurance Commission, and Discover failed to file an answer or responsive pleading as required by Rule 12(a) of the Federal Rules of Civil Procedure. Accordingly, at the United States' request, the Clerk entered the defaults of those defendants. Huntington Bank (“Huntington”), the West Virginia State Tax Department, and the City of Clarksburg filed answers to the complaint. In its answer, Huntington Bank argues that liens alleged by the plaintiff are subordinate to its deeds of trust. Similarly, the West Virginia State Tax Department denies that the plaintiff is entitled to any relief that supersedes its lien positions. The City of Clarksburg also asks that this Court recognize the priority of its tax liens. On March 21, 2011, the United States filed a motion for default judgment seeking to reduce to judgment the federal employment and unemployment tax assessments made against defendant Joseph Martin for the taxable periods ending between 1998 and 2003, and the federal income tax assessments made against defendants Joseph Martin and Aven Kipp Martin for the tax years of 1996 through 2000. The United States also seeks to foreclose its tax liens against certain real property owned by Joseph and Aven Kipp Martin. None of the defendants filed a response to the motion for default judgment, which is currently pending before this Court. II. Facts The Commissioner of Internal Revenue (“Commissioner”) assessed federal employment taxes, interest, and penalties against Joseph Martin for taxable periods ending between 1998 and 2003. According to the United States, as of February 21, 2011, Joseph Martin owed $72,541.33. The Commissioner also assessed federal income taxes, interest, and penalties against Joseph and Aven Kipp Martin for the tax years between 1996 and 2000. The total amount allegedly owed jointly by Joseph and Aven Kipp Martin as of February 21, 2011 was $617,071.53. On May 9, 1986, John and Anastasia Davis conveyed to Joseph and Aven Kipp Martin the real property located in Harrison County at 146 Carriage Lane, Bridgeport, West Virginia (“Martin property”). According to the United States, federal tax liens arose pursuant to 27 U.S.C. §§ 6321 and 6322 on the date of the assessments described above and attached to the Martin property. Because valid and subsisting federal tax liens encumber the Martin property, the United States requests that this Court enter judgment against Joseph Martin and Aven Kipp Martin foreclosing those federal tax liens. The United States further requests that judgment be entered against the West Virginia Division of Unemployment Compensation, the West Virginia Insurance Commission and Discover adjudicating that they are precluded from asserting an interest in the Martin property. The lien priorities of the United States and the appearing defendants have not yet been established. III. Applicable Law To obtain a default judgment, a party must first seek an entry of default under Federal Rule of Civil Procedure 55(a). Under Rule 55(a), an entry of default is appropriate “[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend ....” Fed. R. Civ. P. 55(a). Once default is entered by the clerk, the party may seek a default judgment under Rule 55(b)(1) or (2), depending on the nature of the relief sought. If the plaintiff's claim is for “a sum certain” or a “sum that can be made certain by computation,” the plaintiff may seek entry of default judgment from the Clerk under Rule 55(b)(1). However, in cases in which the plaintiff seeks a form of relief other than liquidated damages, Rule 55(b)(2) requires plaintiff to seek an entry of default judgment from the court. It is well-established in the United States Court of Appeals for the Fourth Circuit that default judgments are to be granted sparingly. See, e.g., Lolatchy v. Arthur Murray, Inc., 816 F.2d 951, 954 (4th Cir. 1987). “[T]rial judges are vested with discretion, which must be liberally exercised, in entering such judgments and in providing relief therefrom.” United States v. Moradi, 673 F.2d 725, 727 (4th Cir. 1982). However, default judgment is available “when the adversary process has been halted because of an essentially unresponsive party.” S.E.C. v. Lawbaugh, 359 F. Supp. 2d 418, 421 (D. Md. 2005) (citing Jackson v. Beech, 636 F.2d 831, 836 (D.C. Cir. 1980)). A defaulting party admits the plaintiff's well-pleaded factual allegations in the complaint, in contrast to the allegations regarding damages. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001). The party in default, however, is not held to admit conclusions of law. Id. IV. Discussion A. Reducing Federal Tax Assessments to Judgment As discussed above, Joseph Martin and Aven Kipp Martin were personally served with the summons and the complaint, while the West Virginia Division of Unemployment Compensation and the West Virginia Insurance Commission both waived service. Discover was served by publication. None of these parties, however, pleaded or otherwise asserted a defense. As a result, the government's factual allegations, other than those relating to the amount of damages, are deemed admitted. Fed. R. Civ. P. 8(b)(6). It is within this Court's discretion to grant default judgment when defendants are unresponsive. Lawbaugh, 359 F. Supp. 2d at 421. Thus, if the government has established the defaulting defendants' liability, the Court should grant default judgment. The government claims that Joseph Martin is indebted to the United States for unpaid federal employment and unemployment taxes, interest, and penalties in the amount of $72,541.33 as of February 21, 2011, plus interest and statutory additions accruing after that date. The government further alleges that Joseph and Aven Kipp Martin are jointly indebted to the United States for unpaid federal income taxes, interest, and penalties for tax years 1996 through 2000 in the amount of $617,071.53 as of February 21, 2011, plus interest and statutory additions accruing after that date. By supporting its motion for default judgment with Internal Revenue Service (“IRS”) account transcripts, the declaration of Kimberly Alvarez, and certificates of assessments for the applicable periods and tax payers, the government has made a prima facie case of tax liability and shifted the burden to the defendants to refute the government's position. 1 See United States v. Pomponio, 635 F.2d 293, 296 [47 AFTR 2d 81-324] (4th Cir. 1980). Joseph and Aven Kipp Martin did not produce any evidence, and therefore liability is established for unpaid taxes, as well as related penalties and interest as to Joseph Martin for taxable periods between 1998 and 2003 and as to Joseph and Aven Kipp Martin for the tax years between 1996 and 2000. Accordingly, this Court grants the United States' motion for default judgment as to the federal income tax assessments. Damages should be awarded to the United States, against Joseph Martin in the amount of $72,541.33 and against Joseph and Aven Kipp Martin in the amount of $617,071.53, together with all penalties that have accrued and will continue to accrue according to law. B. Foreclosing Federal Tax Liens In addition to its request to reduce to judgment the federal tax assessments, the United States also seeks to foreclose the federal tax liens attached to the Martin property. Further, the government contends that judgment should be entered against the West Virginia Division of Unemployment Compensation, the West Virginia Insurance Commission, and Discover adjudicating that they are precluded from asserting an interest in the real property. Once a lien is established pursuant to 26 U.S.C. § 6321, 26 U.S.C. § 7403 authorizes a sale of the property to satisfy the delinquent taxpayer's debt. Title 26, United States Code, Section 7403 provides, in relevant part: [I]n all cases where a claim or interest of the United States therein is established, [the court] may decree a sale of such property, by the proper officer of the court, and a distribution of the proceeds of such sale according to the findings of the court in respect to the interests of the parties and of the United States. If the property is sold to satisfy a first lien held by the United States, the United States may bid at the sale such sum, not exceeding the amount of such lien with expenses of sale, as the Secretary directs. 28 U.S.C. § 7403. In this case, the United States argues that it is entitled to foreclose the federal tax liens, sell the Martin property, and distribute the proceeds in accordance with the rights of the parties. The complaint seeks a court order foreclosing and selling the real property free and clear of any right, title, lien, claim or interest of any of the defendants. Although the United States seeks default judgment against only the non-appearing defendants, an order foreclosing the federal tax liens requires an adjudication of all liens or interests in the Martin property. Specifically, this Court would have to find that the federal tax liens against Joseph and Aven Kipp Martin have priority over all liens on or other interest in the Martin property. The West Virginia Division of Unemployment Compensation, the West Virginia Insurance Commission, and Discover have failed to file an answer or responsive motion asserting any interest in the Martin property, but Huntington, the West Virginia State Tax Department, and the City of Clarksburg do claim interests in the Martin property. This Court finds that the issue of the priority of interests held in the Martin property must be resolved before the entry of a judgment foreclosing the federal tax liens. The status of this record does not support an order terminating the interests, whatever they may be, of Huntington, the West Virginia State Tax Department, and the City of Clarksburg. An order allowing foreclosure of the tax liens which, by definition, recognizes the termination of the remaining defendants' rights in the Martin property and allows the United States to seek a sale of the property, is not appropriate at this time but may be at a later date, after the positions of the liens on the Martin property have been determined. 2 It seems clear to this Court that the remaining defendants hold competing liens on the Martin property. Accordingly, the United States' request to foreclose the federal tax liens must be denied. V. Conclusion For the reasons stated above, the plaintiff's motion for default judgment is GRANTED as to the federal income tax assessments and DENIED as to the United States' request to foreclose the federal tax liens on the Martin property. Specifically, the United States is entitled to a judgment finding that: ((1)) The United States is entitled to final judgment against Joseph Martin for employment and unemployment taxes, interest, and penalties for the taxable periods ending between 1998 and 2003 in the amount of $72,541.33 as of February 21, 2011, plus penalties and interest pursuant to 28 U.S.C. § 1961(c) and 26 U.S.C. § 6621(a)(2) after that date until the full amount is paid; ((2)) The United States is entitled to final judgment against Joseph Martin and Aven Kipp Martin for federal income taxes, interest, and penalties for tax years 1996 through 2000 in the amount of $617, 071.53 as of February 21, 2011, plus penalties and interest pursuant to 28 U.S.C. § 1961(c) and 26 U.S.C. § 6621(a)(2) after that date until the full amount is paid; ((3)) Judgment is rendered against Discover Financial Services, precluding it from asserting an interest in the real property that is the subject of this civil action; ((4)) Judgment is rendered against the West Virginia Division of Unemployment Compensation, precluding it from asserting an interest in the real property that is the subject of this civil action; ((5)) Judgment is rendered against the West Virginia Insurance Commission, precluding it from asserting an interest in the real property that is the subject of this civil action. IT IS SO ORDERED. The Clerk is directed to transmit a copy of this memorandum opinion and order to the defendants and to counsel of record herein. DATED: April 18, 2011 FREDERICK P. STAMP, JR. UNITED STATES DISTRICT JUDGE ________________________________________ 1 The government also attached to its motion for default judgment the declaration of Katherine M. Walker, which states that Joseph Martin and Aven Kipp Martin are not in the military service of the United States. ________________________________________ 2 A foreclosure is defined as “[a] legal proceeding to terminate ... [an] ... interest in property, instituted ... either to gain title or to force a sale in order to satisfy the unpaid debt secured by the property.” Black's Law Dictionary 674 (9th ed. 2009). www.irstaxattorney.com 888-712-7690

Wednesday, April 27, 2011

New procedures in the works for reportable transaction penalty Large Business and International Division Memo LB&I-20-0211-001 A Memo from IRS's Large Business and International Division reveals that IRS is in the process of changing procedures for the reportable transaction penalty, which was eased and otherwise modified by the Small Business Jobs Act of 2010 (SBJA). As explained below, revenue agents are directed to take or forgo certain actions until the final procedures are released. Background. Code Sec. 6707A imposes a penalty on any person who fails to include on any return or statement any information regarding a “reportable transaction” which is required to be included with the return or statement. Under pre-SBJA law, the penalty applied regardless of whether the transaction resulted in a tax understatement. Under pre-SBJA law, the penalty for failure to report reportable transactions was $10,000 in the case of a natural person and $50,000 for others ($100,000 and $200,000 respectively for listed transactions). For penalties assessed after Dec. 31, 2006, the SBJA completely replaced the Code Sec. 6707A penalty structure. Except as provided below, the amount of the penalty with respect to any reportable transaction is 75% of the decrease in tax shown on the return as a result of the transaction (or which would have resulted from the transaction if it were respected for federal tax purposes). ( Code Sec. 6707A(b)(1) ) The amount of the penalty for any reportable transaction for any tax year can't exceed: (1) for a listed transaction, $200,000 ($100,000 in the case of a natural person); and (2) for any other reportable transaction, $50,000 ($10,000 in the case of a natural person). ( Code Sec. 6707A(b)(2) ) The SBJA also established a minimum penalty for a failure to disclose a reportable or listed transaction. The amount of the penalty for any transaction for any tax year can't be less than $5,000 for a natural person and $10,000 for any other person. ( Code Sec. 6707A(b)(3) ) Since the Act's changes are retroactive (i.e., they are effective for penalties assessed after Dec. 31, 2006), taxpayers who have already paid a Code Sec. 6707A penalty should consider filing a refund claim. Changed procedures in the works. The Memo notes that procedures are being developed to centralize processing of closed cases (i.e., calculation of new penalty amounts, processing of partial abatements, and notices to impacted taxpayers). It stresses that revised case processing procedures for open and future cases will be developed. The Memo instructs Revenue Agents to not issue a 30-day letter or process any assessments until further notice. In addition, until procedures are finalized, Revenue Agents are told to: ... contact their Technical Advisor immediately if a statute of limitations on a case will expire within the next 2 months, and the transaction is coordinated through an Issue Management Team (e.g., Code Sec. 412(i) , Code Sec. 419A , Abusive Roth IRA). ... continue to develop facts related to the application of the Code Sec. 6707A penalty. ... attempt to calculate the revised penalty; and ... seek assistance from Issue Management Team Technical Advisors and Counsel regarding calculation of the Code Sec. 6707A penalty. . ________________________________________ January 19, 2011 MEMORANDUM FOR INDUSTRY DIRECTORS DIRECTOR, FIELD SPECIALISTS DIRECTOR, INTERNATIONAL BUSINESS COMPLIANCE DIRECTOR, INTERNATIONAL INDIVIDUAL COMPLIANCE FROM: Cheryl P. ~~Claybaugh /s/ Cheryl P. Claybaugh Director, Pre-Filing and Technical Guidance SUBJECT: Amended IRC Section 6707A Penalty - Interim Procedures The purpose of this memorandum is to provide guidance on applying the Section 6707A penalty provisions amended by the Small Business Jobs Act of 2010 that was enacted on September 27, 2010. The amount of the penalty was changed, but the application of the Section 6707A penalty did not change. The amendment applies to penalties assessed after December 31,2006. Prior to the Act, the amount of the penalty was unrelated to the tax shown on the tax return as a result of the reportable transaction. Under the amendment, the penalty is "75 percent of the decrease in tax shown on the return" as a result of the reportable transaction. The maximum penal ty in the case of a listed transaction is $100,000 for a natural person and $200,000 for all other taxpayers and in the case of a non-listed reportable transaction is $10,000 for a natural person and $50,000 for all other taxpayers. The minimum penal ty for both listed transactions and non-listed reportable transactions is $5,000 for a natural person and $10,000 for all other taxpayers. Procedures are being developed to centralize processing of closed cases (i.e. calculation of new penalty amounts, processing of partial abatements, and notices to impacted taxpayers). Revised case processing procedures for open and future cases will be developed. Until procedures are finalized Revenue Agents will: • NOT issue a 30-day let ter or process any assessments (This is a temporary suspension unt i l fur ther notice.) • Contact his or her Technical Advisor immediately i f a statute of l imi tat ions on a case wi l l expi re wi thin the next 2 months, and the t ransact ion is coordinated through an Issue Management Team (e.g., 412(i), 419A, Abusive Roth IRA). • Continue to develop facts related to the application of the Section 6707A penalty. • Attempt to calculate the revised penalty. • Seek assistance from Issue Management Team (IMT) Technical Advisors and Counsel regarding calculation of the 6707A penalty. • Contact Samantha Hunt, Penalty Technical Advisor, at 281-721-7581 if uncertain about who to contact for assistance. Please forward this memorandum as appropriate to ensure that field personnel are aware of this amendment and the temporary suspension of the issuance of 3D-day letters and the assessments except in cases with imminent statute expiration dates. Any technical questions may be directed to Samantha Hunt, at (281) 721-7581. www.irstaxattorney.com 888-712-7690
Attorney Roni Deutch, known as the “Tax Lady” to people nationwide who saw her ads extolling her ability to get anyone out of a jam with the IRS, could be headed to jail. California Attorney General Kamala D. Harris has asked a judge to lock up the Tax Lady after accusing Deutch of refusing to refund clients as required by court order and for allegedly destroying thousands of documents sought in a lawsuit accusing her of scamming thousands of consumers. Harris’ office asked a California court to hold Deutch in contempt of court. In response to the allegations, her assets were frozen and a trial was set for July. Deutch was accused in August of running a massive scam that preyed on people desperate for help with their tax problems. The state said Deutch would collect thousands of dollars in up-front payments from consumers who owed the IRS and then provided virtually no assistance. “Deutch showed herself to be a predator for profit, preying on innocent, hard-working people who were simply hoping to settle their accounts with the IRS,” Harris said in a statement. “By defrauding these victims, and then pleading poverty, she created a real danger that her clients will never receive their advance fees back.” Harris’ office said Deutch has systematically destroyed documents for months and may have shredded up to 2.7 million pages of records. The Attorney General said Deutch had been spending $3 million a year on advertising, mainly late at night on cable TV and that only one in 10 clients received any benefit from working with her firm. The state also said Deutch was supposed to pay $435,000 in refunds by January, but instead released the money to other creditors, including family and friends, a NASCAR racing team and a casino. Deutch still bills her firm as the largest tax resolution firm in the country and is promoting a book she wrote. She hasn’t commented on the accusations. www.irstaxattorney.com 888-712-7690
California AG Asks Judge To Throw Tax Lady Roni Deutch In Jail By Chris Morran on April 26, 2011 1:30 PM Last summer, the California Attorney General filed a $34 million lawsuit against daytime TV mainstay "Tax Lady" Roni Deutch, alleging that her firm defrauded customers out of millions each year. Now, the AG's office has asked that Deutch be thrown in jail for allegedly destroying important documents and for not refunding money to customers. The Attorney General has accused Deutch of destroying upward of 2.7 million pages of records pertaining to the current lawsuit. Additionally, she was ordered to pay $435,000 in customer refunds by January, but chose to pay to other creditors, including family, friends, a NASCAR racing team and a casino. "Deutch showed herself to be a predator for profit, preying on innocent, hard-working people who were simply hoping to settle their accounts with the IRS," Said AG Kamala Harris. "By defrauding these victims, and then pleading poverty, she created a real danger that her clients will never receive their advance fees back." The Tax Lady is being charged with defrauding customers by demanding large upfront fees to help people with huge tax debts and then not making good on her advertised promises. www.irstaxattorney.com 888-712-7690

Tuesday, April 26, 2011

An offer to compromise a tax liability must be submitted according to the procedures, and in the form and manner, prescribed by the IRS. The offer must be made in writing, must be signed by the taxpayer under penalty of perjury and must contain all of the information prescribed or requested by the IRS. Reg §301.7122-1(d)(1) . For general standards IRS applies in evaluating compromise offers. A compromise offer is made on Form 656 (in duplicate), whether the taxpayer wishes to pay the entire amount of his offer at once, or in installments. Reg §601.203(b) . None of the standard terms may be stricken or altered. Rev. Proc. 2003-71, 2003-2 CB 517 . Offers, other than those based solely on doubt as to liability, Code Sec. 7122(d)(3)(B)(ii) , Reg §301.7122-1(d)(1) , must be accompanied by a financial statement made on Form 433-A (wage earners, self-employeds and certain corporate officers and individual partners) and/or Form 433-B (corporations or other businesses). Statement of Procedural Rules Reg §601.203(b) ; Rev. Proc. 2003-71, 2003-2 CB 517 . The offer must be accompanied by a partial payment. Code Sec. 7122(c)(1) . Any offer (whether lump-sum or periodic payment that isn't accompanied by the required payment will be returned to the taxpayer as unprocessable. Code Sec. 7122(d)(3)(C) . Before filing a formal offer in compromise, a taxpayer may request a conference to explore the possibility of reaching a compromise with IRS. After all investigations have been made, the taxpayer may request a meeting in the office having jurisdiction of the offer to determine the amount which may be accepted as a compromise. If agreement is not reached at the meeting and the district director has processing jurisdiction over the offer, the taxpayer will be informed that the taxpayer may request consideration of the case by an appeals office. The request may be in writing or oral. If the tax, penalty, and assessed (but not accrued) interest sought to be compromised exceeds $2,500 for any return, tax year or tax period, a written protest is required. Reg §601.203(d) . The offer should be mailed to the appropriate address listed on Form 656. Rev. Proc. 2003-71, 2003-2 CB 517 . IRS may not accept for processing any offer to compromise a liability following reference of a case involving such liability to the Department of Justice for prosecution or defense. Reg §301.7122-1(d)(2) . An offer in compromise becomes pending when it is accepted for processing. A determination is made to accept an offer in compromise for processing when an IRS official with delegated authority to accept an offer for processing signs the Form 656 (above). The date the IRS official signs is recorded on IRS's computers. As of this date, levy is prohibited unless IRS determines that collection is in jeopardy. Rev. Proc. 2003-71, 2003-2 CB 517 . As additional consideration for the acceptance of an offer in compromise, IRS may request that a taxpayer enter into any collateral agreement or post any security which is deemed necessary for the protection of the interests of the U.S. Reg §301.7122-1(e)(2) . And for any offer in compromise, IRS may require that the taxpayer extend the statute of limitations on assessment. But IRS must notify the taxpayer that he has the right to refuse to extend the limitations period or to limit the extension to particular issues or time periods. Reg §301.7122-1(i)(2) . If an offer accepted for processing doesn't contain sufficient information to permit the IRS to evaluate whether the offer should be accepted, the IRS will request that the taxpayer provide the needed additional information. If the taxpayer doesn't submit the additional information within a reasonable time after the request, the IRS may return the offer to the taxpayer. Reg §301.7122-1(d)(2) . An offer won't be returned for failure to submit requested financial information until a managerial review of the proposed return (i.e., review by an IRS manager) is completed. Reg §301.7122-1(f)(5)(ii) . IRS may also return an offer if IRS determines: • the offer was submitted solely to delay collection; Reg §301.7122-1(d)(2) . • the taxpayer fails to file a return or pay a liability; • the taxpayer files for bankruptcy; • the offer is no longer processable; or • the offer was accepted for processing in error. Rev. Proc. 2003-71, 2003-2 CB 517 . An offer returned following acceptance for processing is deemed pending only for the period between the date the offer is accepted and the date the IRS returns the offer to the taxpayer. Reg §301.7122-1(d)(2) . An offer is considered to be returned on the day the IRS mails, or personally delivers, a written letter to the taxpayer informing the taxpayer of the decision to return the offer. Rev. Proc. 2003-71, 2003-2 CB 517 . A compromise offer can be withdrawn by the taxpayer or the taxpayer's representative at any time before the IRS's acceptance (see below) of the offer. Reg §301.7122-1(d)(3) . The taxpayer may withdraw an offer by delivery of written notification in person, by mail, by fax, or telephonically. The offer will be considered withdrawn when written notification is received by the IRS, if withdrawn by personal delivery or by certified mail, or, in all other cases, including withdrawal by noncertified mail, fax, or phone, on the date the IRS mails or personally delivers a written letter to the taxpayer acknowledging the withdrawal. An offer that has been withdrawn is no longer pending and the IRS may levy to collect the liability that was the subject of the offer. Rev. Proc. 2003-71, 2003-2 CB 517 . The decision when to accept an offer in compromise is within IRS's discretion. Rev. Proc. 2003-71, Sec. 6.03, 2003-2 CB 517 . However, if IRS doesn't reject an offer within 24 months after it's submitted, the offer is deemed to be accepted. For this purpose, any period during which any tax liability that's the subject of an offer in compromise is in dispute in any judicial proceeding isn't taken into account in determining the expiration of the 24-month period. Code Sec. 7122(f) . Before the 24-month time limit expires, an offer in compromise hasn't been accepted until IRS issues a written notification of acceptance to the taxpayer or the taxpayer's representative. Reg §301.7122-1(e)(1) . Taxpayers' attempts to have acceptance of tax payments or deposits, or other acts by the IRS, considered to be an acceptance of compromise offers, have been generally unsuccessful. Except as otherwise provided below, when a compromise is made by the IRS, the opinion of the General Counsel for the IRS or his delegate must be placed on file, along with his reasons for the compromise and a statement of: • the amount of tax assessed, • the amount of interest, additional amount, addition to the tax, or assessable penalty, imposed by law on the person against whom the tax is assessed, and • the amount actually paid in accordance with the terms of the compromise. Code Sec. 7122(b) ; Reg §301.7122-1(e)(6) . The Counsel opinion described above isn't required with respect to the compromise of any civil case in which the unpaid amount of tax assessed (including any interest, additional amount, addition to tax, or assessable penalty) is less than $50,000. However, compromises below this $50,000 threshold are subject to continuing quality review by IRS. Code Sec. 7122(b) . A user fee is imposed for processing an offer in compromise. Reg §300.0(b)(3) . The fee is $150 ( Reg §300.3(b)(1) ) and applies to all offers in compromise accepted for processing ( Reg §300.3(a) ), except that no fee will be charged if an offer is: (1) based solely on doubt as to liability (as defined in Reg §301.7122-1(b)(1) , see ¶71,224.02 ) ( Reg §300.3(b)(1)(i) ); or (2) made by a low-income taxpayer, defined as an individual who falls at or below the dollar criteria established by the poverty guidelines updated annually in the Federal Register by the Department of Health and Human Services (DHHS) under section 673(2) of the Omnibus Budget Reconciliation Act of 1981 (95 Stat. 357, 511) or such other measure that is adopted by IRS. Reg §300.3(b)(1)(ii) . The taxpayer whose tax liabilities are the subject of the offer is liable for the fee. Reg §300.3(c) . Taxpayers who claim the poverty guideline exception in (2), above, must certify their eligibility using Form 656-A . IR 2003-99, 8/15/2003. Taxpayers with offers that don't fall within (1) or (2), above, must submit the user fee along with the offer in compromise. Preamble to TD 9086, 8/14/2003 . Any assessed tax or other amounts (i.e., interest or penalties) imposed with respect to a tax that is the subject of an offer in compromise subject to the above rules will be reduced by any user fee imposed with respect to that offer in compromise. Code Sec. 7122(c)(2)(B) . Thus, the fee will be applied against the amount of the offer, unless the taxpayer requests that it be refunded if the offer is: • accepted to promote effective tax administration (under Reg §301.7122-1(b)(3) , see ¶71,224.02 ) ( Reg §300.3(b)(2)(i) ); or • accepted based on doubt as to collectibility (see ¶71,224.02 ) and a determination that collection of an amount greater than the amount offered would create economic hardship (within the meaning of Reg §301.6343-1 ). Reg §300.3(b)(2)(ii) . Except as provided above, the fee won't be refunded to the taxpayer if the offer is accepted, rejected, withdrawn, or returned as nonprocessable after acceptance for processing. Reg §300.3(b)(3) . No additional fee will be charged if a taxpayer resubmits an offer IRS determines to have been rejected in error or returned in error after acceptance for processing. Reg §300.3(b)(4) . The IRS may treat any portion of an application for an offer in compromise or installment agreement as if it had never been submitted if the IRS determines that the portion either (a) is based on a position that IRS has identified as frivolous, or (b) reflects a desire to delay or impede the administration of federal tax law. The portion will not be subject to any further administrative or judicial review. Code Sec. 7122(f) . A $5,000 penalty applies on any person who submits an application for an offer in compromise or installment agreement if any portion of the submission either is based on a position which the IRS has identified as frivolous, or reflects a desire to delay or impede the administration of federal tax laws. For details on the penalty, see ¶67,024 . For submissions made and issues raised before Mar. 16, 2007, the above frivolous submission rules didn't apply. Sec. 407(f), PL 109-432, 12/20/2006 ; Code Sec. 6702 before amend by Sec. 407(a), PL 109-432, 12/20/2006 Code Sec. 7122 before amend by Sec. 407(d), PL 109-432, 12/20/2006 . Sec. 407(f), PL 109-432, 12/20/2006 actually provides that the frivolous submission rules apply for submissions made and issues raised after the date on which the IRS first prescribes a list of frivolous positions under Code Sec. 6702(c) . Such a list was first prescribed on Mar. 15, 2007. For offers in compromise submitted before July 16, 2006, ( Sec. 509(d), PL 109-222, 5/17/2006 ) an offer in compromise didn't expire no matter how long the IRS took in deciding whether to accept or reject it. Hence, the limitations period remained suspended while the offer was pending. U.S. v. Mortell, Charles, (1965, DC IL) 16 AFTR 2d 6047 , 248 F Supp 706 , 66-1 USTC ¶9111 . And the rule that any assessed tax or other amounts (i.e., interest or penalties) imposed with respect to a tax that is the subject of an offer in compromise subject to the above rules will be reduced by any user fee imposed with respect to that offer in compromise didn't apply. www.irstaxattorney.com 888-712-7690
ERRATA “GENERAL EXPLANATION OF TAX LEGISLATION ENACTED IN THE 111TH CONGRESS” 1. On page 555, add the following footnote 1582A to the word “amount” in the next to last sentence in example 3: The provision adds new section 2010(c)(4), which generally defines “deceased spousal unused exclusion amount” of a surviving spouse as the lesser of (a) the basic exclusion amount, or (b) the excess of (i) the basic exclusion amount of the last deceased spouse of such surviving spouse, over (ii) the amount with respect to which the tentative tax is determined under section 2001(b)(1) on the estate of such deceased spouse. A technical correction may be necessary to replace the reference to the basic exclusion amount of the last deceased spouse of the surviving spouse with a reference to the applicable exclusion amount of such last deceased spouse, so that the statute reflects intent. Applicable exclusion amount is defined in section 2010(c)(2), as amended by the provision. 2. Beginning on page 706, replace the entire Appendix: The Estimated Budget Effects of Tax Legislation Enacted in the 111th Congress with the attached revenue table. The Appendix printed in JCS-2-11 contains errors as a result of the printing process, including unreadable characters and an omission of an outlay from footnote 38 that necessitated moving footnote 38 (to become footnote 25 in the corrected revenue table) and renumbering footnotes 25 through 37. Due to formatting differences, the pagination of the corrected revenue table differs from the pagination of the revenue table printed in JCS-2-11. JOINT COMMITTEE ON TAXATION March 23, 2011 JCX-20-11 APPENDIX: ESTIMATED BUDGET EFFECTS OF TAX LEGISLATION ENACTED IN THE 111TH CONGRESS Fiscal Years 2009 - 2020 [Millions of Dollars] Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 PART ONE: THE CHILDREN'S HEALTH INSURANCE PROGRAM REAUTHORIZATION ACT OF 2009 (P.L. 111-3, signed into law by the President on February 4, 2009) I. Requirements for Group Health Plans [1] [2]……………… DOE --- -150 -275 -325 -350 -375 -375 -425 -450 -475 --- --- -3,200 II. Other Revenue Provisions A. Increase in Excise Tax Rate on Tobacco Products and Cigarette Papers and Tubes [3] 1. Small Cigars............................................................... ara 3/31/09 46 108 91 91 91 92 92 92 92 92 --- --- 886 2. Large Cigars............................................................... ara 3/31/09 75 424 419 425 433 442 451 458 466 474 --- --- 4,070 3. Cigarettes.................................................................... ara 3/31/09 3,489 6,479 6,173 6,117 6,066 6,014 5,960 5,906 5,849 5,795 --- --- 57,850 4. All other tobacco products.......................................... ara 3/31/09 145 307 289 286 285 283 281 279 276 274 --- --- 2,705 B. Modify Definition of Roll-Your-Own Tobacco......... ara 3/31/09 [4] [4] [4] [4] [4] [4] [4] [4] [4] [4] --- --- 2 C. Permit, Reporting, and Recordkeeping Requirements for Manufacturers and Importers of Processed Tobacco..................................................... 4/1/09 Negligible Revenue Effect D B d A h i D S d dR k - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - D. Broaden Authority to Deny, Suspend, and Revoke Tobacco Permits DOE - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Negligible Revenue 7 Permits......................................................... E Clarif Stat te E cise Effect - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 706 E. Clarify Statute of Limitations Pertaining to Excise 6 Taxes Imposed on Imported Alcohol, Tobacco Products, and Cigarette Papers and Tubes.................. aiiUSa DOE Negligible Revenue Effect F I I di T U l f ll - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - F. Impose Immediate Tax on Unlawfully Manufactured Tobacco Products and Cigarette Papers and Tubes........................................................ DOE - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Negligible Revenue Effect - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - G. Use of Tax Information in Tobacco Transition Payment Assessments [5]........................................... DOE [4] 1 [4] [4] [4] [4] [4] [4] [4] [4] --- --- 2 H. Study Concerning Magnitude of Tobacco Smuggling in the United States.................................. [6] - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Revenue I Modify No Effect - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - I. Timing for Corporate Estimated Tax Payment [7] ………………………………………… DOE --- --- --- --- 302 -302 --- --- --- --- --- --- --- TOTAL OF PART ONE…………………………………………………………… 3,755 7,169 6,697 6,594 6,827 6,154 6,409 6,310 6,233 6,160 --- --- 62,315 PART TWO: THE AMERICAN RECOVERY AND REINVESTMENT TAX ACT OF 2009 (P.L. 111-5, signed into law by the President on February 17, 2009) I. Tax Provisions A. Tax Relief for Individuals and Families 1. Making Work Pay Credit - credit of 6.2% of earned income up to a maximum of $400 single ($800 joint) for tax years 2009 and 2010; phaseout for taxpayers with modified AGI in excess of $75,000 ($150,000 joint); and treatment of the U.S. Possessions [8]......................... tyba 12/31/08 -19,900 -66,133 -30,166 --- --- --- --- --- --- --- --- --- -116,199 Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 2. $250 Refundable Credit for Federal and State Pensioners not Eligible for Social Security Benefits for Tax Year 2009 [9] [10]........................... tyba 12/31/08 -44 -174 --- --- --- --- --- --- --- --- --- --- -218 3. Temporary increase in earned income tax credit for taxable years 2009 and 2010................................. tyba 12/31/08 -23 -2,349 -2,291 --- --- --- --- --- --- --- --- --- -4,663 4. Temporarily reduce the earnings threshold for the refundable portion of the child tax credit for taxable years 2009 and 2010 to $3,000...................... tyba 12/31/08 [11] -7,489 -7,342 --- --- --- --- --- --- --- --- --- -14,830 5. American Opportunity Tax Credit a. Amend the HOPE scholarship credit for taxable years 2009 and 2010 so that it is available for four years at a rate of 100% of first $2,000 of expenses and 25% of next $2,000; phaseout for taxpayers with modified AGI between $80,000 - $90,000 ($160,000- $180,000 joint); make textbooks a qualifying expense; allow against the AMT [9].... tyba 12/31/08 -791 -4,425 -5,040 --- --- --- --- --- --- --- --- --- -10,256 b. Make 40% of the allowable American Opportunity Tax Credit refundable; and treatment of the U.S. Possessions [9] ................... tyba 12/31/08 -331 -1,725 -1,595 --- --- --- --- --- --- --- --- --- -3,651 6. Temporarily allow computer technology and equipment as a qualified higher education expense for qualified tuition programs for 2009 and 2010 [11] [11] [11] 7 2010..................................................................... epoia 12/31/08 -1 -1 -1 -1 -1 -1 -1 -1 --- -6 7E i ffi i h b di i 70 7. Extension of first-time homebuyer credit; increase 07 y ; maximum credit to $8,000; waiver of requirement to repay first-time homebuyer credit unless home is sold within 36 months of purchase (sunset 11/30/09)..................................................................... qhpa 12/31/08 -1,115 -3,261 235 38 -102 -680 -597 -514 -384 -164 -94 --- -6,638 8. Grants to States for low-income housing projects in lieu of low-income housing credit allocations for 2009 [12]............................................. DOE -3,006 28 150 309 350 350 350 350 350 350 350 --- -69 9. Provide that certain Federal grant monies do not reduce basis for purposes of determining the applicable low-income housing tax credit for such building [10]............................................................... DOE -1 -3 -8 -12 -14 -16 -17 -18 -18 -18 -18 --- -143 10. Exclude up to $2,400 of unemployment insurance benefits from gross income for taxable year 2009.................................................................... tyba 12/31/08 -948 -3,792 --- --- --- --- --- --- --- --- --- --- -4,740 11. Sales tax deduction for purchase (up to $49,500) of new cars, light trucks, motorcycles, and motor homes; phaseout for taxpayers with modified AGI in excess of $125,000 ($250,000 joint) (sunset 12/31/09)..................................................................... po/a DOE -424 -1,269 9 --- --- --- --- --- --- --- --- --- -1,684 12. Increase individual AMT exemption amount to $46,700 ($70,950 joint) and allow personal credits against the AMT (sunset 12/31/09)................. tyba 12/31/08 -2,054 -82,720 15,015 --- --- --- --- --- --- --- --- --- -69,759 B. Tax Incentives for Business 1. Special allowance for certain property acquired during 2009: a. One-year extension of special allowance............... ppisa 12/31/08 -23,503 -14,301 8,047 6,501 5,574 4,553 3,046 1,941 1,217 929 922 --- -5,074 b. One-year extension of election to accelerate AMT and R&E credits in lieu of bonus depreciation........................................................... tyea 12/31/08 -20 -984 49 47 33 21 15 10 8 8 8 --- -805 Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 2. One-year extension of temporary increase in limitation on expensing of certain depreciable business assets............................................................ tyba 12/31/08 -642 -425 352 222 162 125 79 45 22 10 10 --- -41 3. 5-year carryback of 2008 NOLs for businesses with gross receipts of $15 million or less................... [13] -4,741 708 753 648 486 365 274 205 154 115 87 --- -947 4. Reduce required estimated tax payments in 2009 for certain small businesses........................................ tybi 2009 -275 275 --- --- --- --- --- --- --- --- --- --- --- 5. Modification of the work opportunity tax credit - incentives to hire unemployed veterans and iwbwa 12/31/08 & disconnected youth..................................................... [14] -32 -81 -70 -28 -11 -6 -2 [11] --- --- --- --- -231 6. Clarification of regulations related to limitations on certain built-in losses following an ownership change......................................................................... DOE 1,437 1,775 646 261 225 304 419 457 470 484 499 --- 6,977 7. Treatment of certain ownership changes of manufacturing firms for purposes of limitation on net operating loss carryforwards and certain built-in losses.............................................................. oca DOE --- --- -19 -19 -181 -289 -289 -491 -625 -625 -625 --- -3,163 8. Deferral and ratable inclusion of income arising from business indebtedness discharged by the reacquisition of a debt instrument, and temporary ra 12/31/08 & AHYDO exception for debt exchange or before 1/1/11; modification................................................................ [15] -12,113 -22,803 -7,479 -483 -269 4,948 8,349 8,328 8,306 8,285 3,310 --- -1,622 9 7 9. Special rules applicable to qualified small b i k f 2009 d 2010 2 6 2 50 36 22 70 business stock for and 2010............................... saa DOE --- --- -207 -360 -163 ------ -829 08 10. Temporarily reduce the S corporation built-in tyba 12/31/08 and gains holding period from 10 to 7 years..................... before 1/1/11 -31 -154 -73 -32 -28 -19 -20 -16 -14 -13 -15 --- -415 C. Fiscal Relief for State and Local Governments 1. Modification of rules applicable to financial institutions for interest expense relating to oia 12/31/08 & tax-exempt income..................................................... before 1/1/11 -79 -239 -326 -340 -336 -331 -326 -321 -317 -312 -307 --- -3,234 2. For bonds issued during 2009 and 2010, suspend alternative minimum tax limitations on private-activity tax-exempt bonds and modify ACE to exclude interest from all tax-exempt bonds; and provide AMT relief for current refundings of certain private activity bonds during 2009 and 2010 (refundings of private activity bonds issued since 1/1/04).......................................... oia 12/31/08 -27 -69 -76 -49 -49 -49 -49 -48 -47 -46 -46 --- -555 3. For bonds issued in 2009 and 2010, expand industrial development bonds to include creation of intangible property and eliminate 25% of proceeds restriction for facilities functionally oia DOE & related and subordinate to a manufacturing facility... before 1/1/11 -1 -6 -16 -23 -24 -23 -23 -23 -22 -22 -21 --- -203 4. Qualified school construction bonds ($11 billion in 2009 and 2010)................................... oia DOE -19 -110 -315 -611 -918 -1,179 -1,345 -1,390 -1,362 -1,325 -1,303 --- -9,877 5. Extend and expand qualified zone academy bonds ($1.4 billion in 2009 and 2010)........................ oia 12/31/08 -1 -10 -40 -90 -130 -140 -137 -131 -125 -121 -120 --- -1,045 6. Build America Bonds - general rule: 35% credit to bondholders for bonds issued in 2009 and 2010 35% refundable credit to issuers for bonds issued 2009 and 2010............................................................ oia DOE -53 -323 -506 -495 -475 -455 -436 -417 -406 -396 -386 --- -4,348 Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 7. Recovery zone bonds ($15 billion private activity bond allocation; $10 billion allocation for oia DOE & refundable issuer credit bonds, credit rate 45%)........ before 1/1/11 -175 -313 -503 -565 -568 -561 -554 -545 -537 -529 -521 --- -5,371 8. Tribal economic development bonds - create a national pool of tax-exempt bonds for use by Indian tribes for economic development ($2 billion allocation)................................................................... oia DOE -1 -4 -15 -31 -39 -39 -39 -38 -37 -36 -36 --- -315 9. Specify treatment of tax-credit bonds held by regulated investment companies................................. tyea DOE - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - No Revenue Effect - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 10. Delay ff 3% withholding on government contracts by one year.................................................................. DOE --- --- -5,819 5,528 --- --- --- --- --- --- --- --- -291 11. Extend and modify the new markets tax credit - increase new markets tax credit equity limitation to a total of $5 billion for calendar years 2008 and 2009............................................................................ DOE -51 -31 -48 -103 -115 -138 -131 -117 -86 --- 4 --- -815 D. Energy Incentives 1. Extend by three years the placed-in-service date for each section 45 qualified facility, (two years for marine renewables), excluding coal and solar ppisa 12/31/09 facilities...................................................................... & 12/31/10 --- -127 -440 -921 -1,365 -1,603 -1,649 -1,700 -1,743 -1,788 -1,806 --- -13,143 2. Election of investment credit for section 45 facilities in lieu of production credits......................... ppisa 12/31/08 -96 -131 -71 -16 9 12 6 2 1 1 --- --- -285 3 Modify section 48 energy credit remove cap 7 3. – f ll id d b k 70 for small wind systems, and remove cutback to 09 y , credit for subsidized energy financing........................ pa 12/31/08 -31 -33 -42 -50 -59 -71 -87 -104 -66 -32 -26 --- -604 4. Grants for specified energy property in lieu of ppisa 12/31/08 & tax credits [12]............................................................ before 1/1/11 -27 -77 -18 41 41 27 8 --- --- --- --- --- -5 5. Increased limitation on issuance of new clean renewable energy bonds ($1.6 billion additional allocation)................................................................... DOE -1 -4 -15 -36 -59 -73 -78 -78 -78 -78 -78 --- -578 6. Increased limitation on issuance of qualified energy conservation bonds ($2.4 billion additional allocation); and clarify green community programs for purposes of loans, grants and other repayment mechanisms................................................................ DOE -1 -5 -17 -41 -69 -95 -111 -116 -116 -116 -116 --- -803 7. Modify speed requirement for high-speed rail exempt facility bonds.................................................. oia DOE [11] -1 -3 -7 -13 -20 -29 -38 -48 -58 -71 --- -288 8. Extension and temporary increase to 30% ($1,500 per residence cap) credit for all section 25C nonbusiness energy property, repeal reduction in section 25C credits by reason of receipt of subsidized energy financing, and modify definition of qualified energy property and wood stoves (sunset 12/31/10)........................................................ tyba 12/31/08 [16] -186 -1,006 -842 --- --- --- --- --- --- --- --- --- -2,034 9. Credit for residential energy efficient property - remove credit cap for residential wind, geothermal property, and residential solar thermal property under section 25D, repeal reduction in all section 25D credits (residential solar, geothermal, wind, fuel cells) by reason of receipt of subsidized energy................................................... tyba 12/31/08 -7 -29 -30 -32 -33 -34 -36 -37 -28 --- --- --- -268 Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 10. Temporarily increase credit rate for nonhydrogen refueling property to 50%; increase max credit to $50,000 for business property ($200,000 in the case of hydrogen) and $2,000 for nonbusiness property (sunset 12/31/10).......................................... tyba 12/31/08 -11 -21 -14 -6 -4 -2 1 1 1 1 1 --- -54 11. Modify carbon dioxide sequestration credit to require permanent geologic storage for CO2 used as a tertiary injectant................................................... DOE - Revenue Effect - - - - - - - - - - - 12 M difi ti f th lt ti t hi l - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Negligible - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 12. Modification of the alternative motor vehicle credit and the credit for qualified plug-in electric generally drive motor vehicles................................................... DOE [17] -3 -20 -39 -74 -39 4 -85 -232 -383 -540 -589 --- -2,002 13. Credit for plug-in electric vehicle conversion (sunset 12/31/11)........................................................ ppisa DOE - Included in C 12 - - - - - - 14T f l i hi l di - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Estimate C.12. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 14. Treatment of alternative motor vehicle credit as a personal credit allowed against AMT......................... tyba 12/31/08 - Included in C.12. - - - - - - 15 Equalize tax benefits - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Estimate - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 15. tax-free transit and parking benefits, set both at $230 for 2009 and then index equally in 2010............................................................................ mbo/a DOE -57 -106 -29 --- --- --- --- --- --- --- --- --- -192 16. Credit for investment in advanced energy property ($2.3 billion of credits to allocate)............... ppisa DOE --- -168 -281 -319 -193 -152 -159 -152 -126 -72 -26 --- -1,647 E. Other Provisions 1. Prohibition on Collection of Certain Payments Made Under Continued Dumping and 7 the Subsidy Off A f 2000 5] 10] DOE 10 30 30 10 10 90 71 Offset Act of 10]......................................... -------- --- --- --- --- --- --- -10 [ ] [ ] 2. Economic Recovery Payments to Certain Individuals - economic recovery payments to recipients of Social Security, supplemental security income, railroad retirement benefits, and veterans disability compensation or pension benefits [5] [10]. DOE -14,041 -169 -15 --- --- --- --- --- --- --- --- --- -14,225 III. Health Insurance Assistance A. Premium Assistance for COBRA Continuation Coverage for Unemployed Workers and Their Families - 65% subsidy for up to 9 months; phased out for taxpayers with AGI above $125,000 single ($250,000 joint) [18] [19]................ [20] -14,302 -9,154 -1,407 26 75 46 29 10 1 --- --- --- -24,677 B. Modifications to Health Coverage Tax Credit, including increase to 80% (sunset 12/31/10) [21]...... generally DOE -108 -267 -80 -1 --- --- --- --- --- --- --- --- -457 TOTAL OF PART TWO…………………………………………………………… -97,843 -221,749 -39,862 9,226 1,851 4,572 6,016 4,659 3,911 3,855 -1,036 --- -326,412 PART THREE: AIRPORT AND AIRWAY TRUST FUND EXTENSIONS (P.L. 111-12, signed into law by the President on March 30, 2009; P.L. 111-69, signed into law by the President on October 1, 2009; P.L. 111-116, signed into law by the President on December 16, 2009; P.L. 111-153, signed into law by the President on March 31, 2010; P.L. 111-161, signed into law by the President on April 30, 2010; P.L. 111-197, signed into law by the President on July 2, 2010; P.L. 111-216, signed into law by the President on August 1, 2010; P.L. 11-249, signed into law by the President on September 30, 2010; and P.L. 111-329, signed into law by the President on December 22, 2010)………………………………………… DOE - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - No Revenue Effect - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 PART FOUR: THE HIGHWAY TRUST FUND PURPOSES (P.L. 111-46, signed into law by the President on August 7, 2009; P.L. 111-68, signed into law by the President on October 1, 2009; P.L. 111-118, signed into law by the President on December 19, 2009; P.L. 111-144, signed into law by the President on March 2, 2010; P.L. 111-147, signed into law by the President on March 18, 2010; and P.L. 111-322 signed into law by the President on December 22, 2010)……………………… various - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - No Revenue Effect - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - PART FIVE: THE WORKER, HOMEOWNERSHIP, AND BUSINESS ASSISTANCE ACT OF 2009 (P.L. 111-92, signed into law by the President on November 6, 2009) A. Extension and Modification of First-Time Homebuyer Credit (sunset 4/30/10)........................... [22] --- -9,960 -2,755 678 668 473 30 24 11 4 3 --- -10,823 B. Increase Carryback Period to Five Years for Net Operating Losses Arising in Either 2008 or 2009...... [23] --- -33,197 5,870 5,202 3,808 2,673 1,877 1,319 928 653 461 --- -10,407 C. Exclude From Gross Income Qualified Military Base Realignment and Closure Fringe....................... pma 2/17/09 --- -119 -41 -15 -12 -11 -11 -8 -8 -8 -9 --- -243 D. Delay in Application of Worldwide Allocation of Interest Until 2018...................................................... tyba 12/31/10 --- --- 494 1,362 3,077 3,200 3,328 3,361 3,475 1,826 --- --- 20,123 E. Modification of Penalty for Failure to File Partnership 7 or S Corporation Returns 71 1. Increase the penalty for failure to file partnership 11 p y p p return by $106 to $195................................................ tyba 12/31/09 --- --- --- 2 39 92 95 98 102 105 109 --- 642 2. Increase the penalty for failure to file an S Corporation return by $106 to $195........................... tyba 12/31/09 --- --- --- 2 36 84 87 90 93 96 99 --- 587 F. Expansion of Electronic Filing by Return Preparers..................................................................... rfa 12/31/10 ---- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Revenue Effect - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - G Increase the Required Corporate Estimated Tax Negligible evenue ffect G. Payments Factor for Corporations with Assets of at Least $1 Billion for Payments Due in July, August, and September 2014 by 33 Percentage Points............ DOE --- --- --- --- --- 18,298 -18,298 --- --- --- --- --- --- TOTAL OF PART FIVE…………………………………………………………… --- -43,276 3,568 7,231 7,616 24,809 -12,892 4,884 4,601 2,676 663 --- -121 PART SIX: HAITI TAX RELIF - ACCELERATE THE INCOME TAX BENEFITS FOR CHARITABLE CASH CONTRIBUTIONS FOR THE RELIEF OF VICTIMS OF EARTHQUAKE IN HAITI (P.L. 111-126, signed cma 1/11/10 & into law by the President on January 22, 2010)…………… before 3/1/20 --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Loss of Less Than $2 Million - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - PART SEVEN: THE HIRING INCENTIVES TO RESTORE EMPLOYMENT ACT (P.L. 111-147, signed into law by the President on March 18, 2010) A. Incentives for Hiring and Retaining Unemployed Workers 1. Payroll tax forgiveness for hiring unemployed workers (sunset 12/31/10) [24]................................... wpa DOE --- -4,184 -3,432 --- --- --- --- --- --- --- --- --- -7,616 2. Business credit for retention of certain newly hired individuals in 2010............................................ wpa DOE --- --- -2,169 -2,467 -428 -196 -114 -49 --- --- --- --- -5,422 B. Expensing - Increase in Expensing of Certain Depreciable Business Assets (sunset 12/31/10)……… tyba 12/31/09 --- -556 -368 305 192 140 108 68 39 19 9 8 -35 Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 C. Qualified Tax Credit Bonds - Allow a Refundable Credit to the Issuers of Qualified Zone Academy Bonds, Qualified School Construction Bonds, New Clean Renewable Energy Bonds, and Qualified Energy Credit Bonds (Refundable at 100% of Applicable Tax Credit Bond Rate) [25]..................... bia DOE --- -81 -559 -813 -895 -713 -550 -393 -260 -159 -81 -57 -4,561 D. Revenue Provisions Contained in Extension of Current Surface Transportation Programs - Extend Highway Trust Fund (sunset 12/31/10), Provide for Interest and Certain Fund Transfers [26]……………… DOE --- - Revenue Effect - - - - - - - - - - - - - - - E Offset Provisions - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - No - - - - - - - - - - - - - - - - - - - - - - - - - E. 1. Foreign account tax compliance……………………… various --- 343 448 710 769 804 840 878 917 958 1,001 1046 8,714 2. Delay implementation of worldwide interest allocation until 2021................................................... tyba 12/31/17 --- --- --- --- --- --- 12 97 131 1,897 3,811 3,963 9,911 3. Increase the required corporate estimated tax payments due in July, August, and September 2014 to 157.75% of the payment otherwise due for corporations with assets of at least $1 billion [27].................................................................. DOE --- --- --- --- --- 13,611 -13,611 --- --- --- --- --- --- 4. Increase the required corporate estimated tax payments due in July, August, and September 2015 to 121.5% of the payment otherwise due for corporations with assets of at least 7 $1 billi DOE 13 267 13 267 71 billion.......................................................................... --- --- --- --- --- --- 13,267 -13,267 --- --- --- --- --- 12 , , 5. Increase the required corporate estimated tax payments due in July, August, and September 2019 to 106.5% of the payment otherwise due for corporations with assets of at least $1 billion.......................................................................... DOE --- --- --- --- --- --- --- --- --- --- 4,428 -4,428 --- TOTAL OF PART SEVEN………………………………………………………… --- -4,478 -6,080 -2,265 -362 13,646 -48 -12,666 827 2,715 9,168 532 991 PART EIGHT: HEALTH CARE PROVISIONS I. THE PATIENT PROTECTION AND AFFORDABLE CARE ACT (P.L. 111-148 signed into law by the President on March 23, 2010) IN COMBINATION WITH THE HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010 (P.L. 111-152, signed into law by the President on March 30, 2010) THE PATIENT PROTECTION AND AFFORDABLE CARE ACT Title I. Quality, Affordable Health Care for All Americans 1. Tax exemption for certain member-run health insurance issuers......................................................... DOE ---- - - - - - - - - 2 Tax exemption for entities established pursuant to - - - - - - - - - Estimate Provided by the Congressional Budget Office in Collaboration with the Joint Committee on Taxation [28] 2. transitional reinsurance program for individual market in each State.................................................... DOE --- 28] 3 R f d bl di idi i i - - - - - - - - - Estimate Provided by the Congressional Budget Office in Collaboration with the Joint Committee on Taxation [- - - - - - - - 3. Refundable tax credit providing premium assistance for coverage under a qualified health plan................. tyea 12/31/13 --- --- --- --- --- -5,000 -11,000 -18,000 -22,000 -24,000 -26,000 --- -107,000 4. Reduced cost-sharing for individuals enrolling in qualified health plans.................................................. DOE ---- - - - - - - - - Estimate Provided by the Congressional Budget Office in - - - - - - - - 5 Disclosures to carry out Collaboration with the Joint Committee on Taxation [28] 5. eligibility requirements for certain programs......................................................... DOE ---- - - - - - - - - Estimate Provided by the Congressional Budget Office in Collaboration with the Joint Committee on Taxation [28] - - - - - - - - Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 6. Premium tax credit and cost-sharing reduction payments disregarded for Federal and federally assisted programs........................................................ DOE ---- - - - - - - - - 7 S llb i t dit t b 12/31/2 000 4 000 5 000 6 000 5 000 4 000 3 000 3 000 4 000 4 000 40 000 - - - - - - - - - Estimate Provided by the Congressional Budget Office in Collaboration with the Joint Committee on Taxation [28] 7. Small business tax credit............................................ tyba 09 --- -2,000 -4,000 -5,000 -6,000 -5,000 -4,000 -3,000 -3,000 -4,000 -4,000 --- -40,000 8. Excise tax on individuals without essential health benefits coverage........................................................ tyba 12/31/13 --- --- --- --- --- --- 2,000 3,000 4,000 4,000 4,000 --- 17,000 9. Reporting of health insurance coverage..................... cyba 2013 ---- - - - - - - - - Estimate Provided by the Congressional Budget Office in - - - - - - - - 10 Shared employers 12/--- --- --- --- --- 3 000 8 000 10 000 10 000 10 000 11 000 --- 52 000 Collaboration with the Joint Committee on Taxation [28] 10. responsibility for employers........................... mba 31/13 3,000 8,000 10,000 10,000 10,000 11,000 52,000 11. Reporting of employer health insurance coverage..... pba 12/31/13 ---- - - - - - - - - Estimate Provided by the Congressional Budget Office in Collaboration with the Joint Committee on Taxation [ 28] - - - - - - - - 12. Offering y g g ff ] of qualified health plans through cafeteria plans............................................................................ tyba 12/31/13 ---- - - - - - - - - Estimate Provided by the Congressional Budget Office in Collaboration with the Joint Committee on Taxation [28] - - - - - - - - 13. Conforming amendments........................................... DOE ---- - - - - - - - - Estimate Provided by the Congressional Budget Office in - - - - - - - - Title III Improving the Quality and Efficiency of Health Care Collaboration with the Joint Committee on Taxation [28] III. 1. Disclosures to carry out the reduction of Medicare Part D subsidies for high income beneficiaries.......... DOE ---- - - - - - - - - Title VI Transparency and Program Integrity - - - - - - - - - Estimate Provided by the Congressional Budget Office in Collaboration with the Joint Committee on Taxation [28] VI. 1. Impose Fee on Insured and Self-Insured Health Plans; Patient- Centered Outcomes Research Trust Fund…………………………………………………… [29] --- --- --- --- 110 267 325 360 418 512 659 --- 2,649 Title IX. Revenue Provisions 1. 40% excise tax on health coverage in excess of $10,200/$27,500 (subject to adjustment for unexpected increase in medical costs prior to 7 ff i d ) d i d h h ld f 71 effective date) and increased thresholds of 13 $1,650/$3,450 for over age 55 retirees or certain high-risk professions, both indexed for inflation by CPI-U plus 1%; adjustment based on age and gender profile of employees; vision and dental excluded from excise tax; levied at insurer level; employer aggregates and issues information return for insurers indicating amount subject to the excise tax; nondeductible [30]............................................... tyba 12/31/17 --- --- --- --- --- --- --- --- --- 12,200 19,800 --- 32,000 2. Employer W-2 reporting of value of health benefits........................................................................ tyba 12/31/10 ---- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Negligible Revenue Effect - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3 Conform g g ff 3. the definition of medical expenses for health savings accounts, Archer MSAs, health flexible spending arrangements, and health reimbursement arrangements to the definition of the itemized deduction for medical expenses (excluding over-the-counter medicines prescribed by a physician)............................................................ eia 12/31/10 --- --- 400 600 600 600 600 600 600 600 600 --- 5,000 4. Increase in additional tax on distributions from HSAs and Archer MSAs not used for qualified medical expenses to 20%............................................ dma 12/31/10 --- --- [31] [31] 100 100 100 200 200 300 300 --- 1,400 5. Limit health flexible spending arrangements in cafeteria plans to $2,500; indexed to CPI-U after 2013 [30] [32]..................................................... tyba 12/31/12 --- --- --- --- 1,500 2,100 2,100 2,000 1,900 1,700 1,700 --- 13,000 6. Require information reporting on payments to corporations................................................................ pma 12/31/11 --- --- --- 400 3,300 2,000 2,100 2,200 2,300 2,400 2,500 --- 17,100 7. Additional requirements for section 501(c)(3) hospitals...................................................................... tyba DOE --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Negligible Revenue Effect - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 8. Impose annual fee on manufacturers and importers of branded drugs ($2.5 billion for 2011, $2.8 billion per year for 2012 and 2013, $3.0 billion per year for 2014 through 2016, $4.0 billion for 2017, $4.1 billion for 2018, and $2.8 billion for 2019 and thereafter) [30]............................................................ cyba 12/31/10 --- --- 2,200 2,900 2,900 2,900 2,900 2,900 3,400 4,000 2,900 --- 27,000 9. Impose annual fee on manufacturers and importers of certain medical devices ($2 billion per year for 2011 through 2017; and $3 billion per year thereafter).................................................................... DOE --- - Enactment of the "Health Care Education Reconciliation Act of 2010" - - - - 10 annual - - - - - - - - - - - - - - - Provision Repealed by 2010 - - - - - - - - - - - 10. Impose fee on health insurance providers ($8 billion in 2014, $11.3 billion in 2015 and 2016, $13.9 billion in 2017, $14.3 billion in 2018, and indexed to medical cost growth thereafter) [30]......... [33] --- --- --- --- --- 6,100 9,300 9,500 11,400 11,700 12,100 --- 60,100 11. Study and report of effect on veterans health care..... DOE --- - Revenue Effect - - - - - - - - - - - - - - - - 12 Eliminate deduction to - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - No - - - - - - - - - - - - - - - - - - - - - - - - - 12. for expenses allocable Medicare Part D subsidy [30]..................................... tyba 12/31/12 --- --- --- --- 400 600 600 600 700 700 800 --- 4,500 13. Raise 7.5% AGI floor on medical expenses deduction to 10%; AGI floor for individuals age 65 and older (and their spouses) remains at 7.5% through 2016............................................................... tyba 12/31/12 --- --- --- --- 400 1,500 1,600 1,700 2,500 3,700 3,900 --- 15,200 14. $500,000 deduction limitation on taxable year remuneration officers employees directors 7 to officers, employees, directors, d i id f dh lhi 71 and service providers of covered health insurance 14 p providers..................................................................... [34] --- --- --- --- 100 100 100 100 100 100 100 --- 600 15. Broaden Medicare Hospital Insurance Tax Base for High-Income Taxpayers - additional HI tax of of 0.9% on earned income in excess of $200,000/$250,000 (unindexed)................................. tyba 12/31/12 --- --- --- --- 13,300 6,000 10,400 13,100 14,100 14,700 15,200 --- 86,800 16. Modification of section 833 treatment of certain health organizations.................................................... tyba 12/31/09 --- [31] 100 100 [31] [31] [31] [31] [31] [31] [31] --- 400 17. Impose 10% excise tax on indoor tanning services.... tspo/a 7/1/10 --- [31] 200 200 300 300 300 300 300 300 300 --- 2,700 18. Provide income exclusion for specified Indian tribe health benefits.................................................... [35] --- --- [36] [36] [36] [36] [36] [36] [36] [36] [36] --- [36] 19. Simple cafeteria plan nondiscrimination safe harbor for certain small employers............................. tyba 12/31/10 --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Negligible Revenue Effect - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 20. Qualifying therapeutic discovery project credit (sunset 12/31/10)........................................................ [37] --- -400 -200 -100 -100 [36] [36] --- --- --- --- --- -900 Title X. Strengthening Qualify, Affordable Health Care for All Americans 1. Study of geographic variation in application of FPL............................................................................. DOE --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - No Revenue - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2 Free choice vouchers after 31/13 Effect 2. vouchers.................................................. 12/--- 28] l i f i id d i i i - - - - - - - - - Estimate Provided by the Congressional Budget Office in Collaboration with the Joint Committee on Taxation [- - - - - - - - 3. Exclusion for assistance provided to participants in State student loan repayment programs for certain health professionals.................................................... tyba 12/31/08 --- [36] [36] [36] [36] [36] [36] [36] [36] [36] [36] --- -100 4. Make the adoption credit refundable; increase qualifying expenses threshold, and extend the adoption credit through 2011...................................... tyba 12/31/09 --- -168 -586 -452 [31] --- --- --- --- --- --- --- -1,206 THE HEALTH CARE AND EDUCATION RECONCILIATION ACT OF 2010 1. Adult dependents........................................................ DOE ---- - - - - - - - - Estimate Provided by the Congressional Budget Office in Collaboration with the Joint Committee on Taxation [28] - - - - - - - - Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 2. Unearned Income Medicare Contribution on 3.8% on investment income for taxpayers with AGI in excess of $200,000/$250,000 (unindexed)................. tyba 12/31/12 --- --- --- 1,300 7,200 10,600 18,900 19,600 20,700 21,900 23,300 --- 123,400 3. Impose 2.3% excise tax on manufacturers and importers of certain medical devices.......................... sa 12/31/12 --- --- --- --- 1,800 2,700 2,800 3,000 3,100 3,200 3,400 --- 20,000 4. Exclusion of unprocessed fuels from the cellulosic biofuel producer credit................................................ fsouo/a 1/1/10 --- --- 6,600 6,500 5,500 3,000 1,500 400 --- --- --- --- 23,600 5. Codify economic substance doctrine and impose penalties for underpayments....................................... teia DOE --- 67 316 409 471 505 523 536 551 566 601 --- 4,545 6. Increase by 15.75 percentage points the required corporate estimated tax payments factor for corporations with assets of at least $1 billion for payments due in July, August, and September 2014............................................................................ DOE --- --- --- --- --- 8,800 -8,800 --- --- --- --- --- --- II. CLARIFICATION THAT THE HEALTH CARE PROVIDED BY THE SECRETARY OF VETERANS AFFAIRS CONSTITUTES MINIMUM ESSENTIAL COVERAGE - (P.L. 111-173, signed into law by the President on May 27, 2010)……………………………… [38] --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - No Revenue Effect - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - III. MEDICARE ff AND MEDICAID EXTENDERS ACT OF 2010 - LIMITATIONS ON AGGREGATE AMOUNT RECOVERED ON RECONCILIATION OF THE HEALTH INSURANCE TAX CREDIT AND 7 THE ADVANCE OF THAT CREDIT P L 111 309 71 P.L. 111-309, 15 ( , signed into law by the President on December 15, 2010) [1] [25]……………………………………………… tyba 12/31/13 --- --- --- --- --- 546 1416 2425 3181 3533 3787 4106 18,995 TOTAL OF PART EIGHT………………………………………………………… --- -2,501 5,030 6,857 31,881 41,718 41,764 51,521 54,450 68,111 76,947 4,106 378,783 PART NINE: PRESERVATION OF ACCESS TO CARE FOR MEDICARE BENEFICIARIES AND PENSION RELIEF ACT OF 2010 COVERAGE (P.L. 111-192, signed into law by the President on June 25, 2010) A. Authority to Disclose Return Information Concerning Outstanding Tax Debts for Purposes of Enhancing Medicare Program Integrity [5] [25]........ DOE --- --- --- 38 38 50 50 50 50 50 50 50 425 B. Pension Funding Relief 1. Single-employer plans [39]........................................ various --- 110 777 1,595 1,524 859 468 239 -134 -1,006 -1,743 -1,380 1,309 2. Multiemployer plans [39]........................................... various --- 9 34 56 79 99 117 134 132 99 40 -2 797 TOTAL OF PART NINE………………………………………………………… --- 119 811 1,689 1,641 1,008 635 423 48 -857 -1,653 -1,332 2,531 PART TEN: THE HOMEBUYER ASSISTANCE AND IMPROVEMENT ACT OF 2010 (P.L. 111-198, signed into law by the President on July 2, 2010) A. Extend the Time for Closing on a Principal Residence Eligible for the First-Time Homebuyer Credit (Sunset 9/30/10)............................................... rpa 6/30/10 --- -26 -114 --- --- --- --- --- --- --- --- --- -140 B. Revenue Offsets 1. Application of bad checks penalty to electronic payments..................................................................... ita DOE --- 1 4 4 4 5 5 5 5 5 5 5 48 2. Disclosure of prisoner return information to State prisons [40]........................................................ Dma DOE --- [4] [4] [4] 1 1 1 1 1 1 1 1 6 Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 3. Amendment of the Travel Promotion Act of 2009 [5] [10]............................................................... DOE --- 6 -14 -6 23 7 120 -30 -10 --- --- --- 95 TOTAL OF PART TEN…………………………………………………………… --- -19 -124 -2 28 13 126 -24 -4 6 6 6 9 PART ELEVEN: THE DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT - CERTAIN SWAPS, ETC., NOT TREATED AS SECTION 1256 CONTRACTS (P.L. 111-203, signed into law by the President on July 21, 2010)……………………… tyba DOE --- --- 1 6 7 8 11 13 15 18 19 21 120 PART TWELVE: THE _____ ACT OF _____ (P.L. 111-226, signed into law by the President on August 10, 2010) A. Rules to Prevent Splitting Foreign Tax Credits generally from the Income to Which They Relate..................... fitpoaa 12/31/10 --- --- 170 240 375 390 575 600 550 500 450 400 4,250 B. Denial of Foreign Tax Credit With Respect to Foreign Income Not Subject to United States Taxation by generally Reason of Covered Asset Acquisitions...................... caaa 12/31/10 --- --- 45 400 400 400 400 400 400 400 400 400 3,645 C. Separate Application of Foreign Tax Credit Limitation, etc., to Items Resourced Under Treaties....................................................................... tyba DOE --- --- 25 25 25 25 25 25 25 25 25 25 250 D Li it ti th A t f F i T D d 7 D. Limitation on the Amount of Foreign Taxes Deemed 71 g Paid [41] --- --- 5 20 40 60 80 99 100 100 100 100 704 16 with Respect to Section 956 Inclusions.............. E Special Rule with Respect to Certain Redemptions 6 E. by Foreign Subsidiaries.............................................. aa DOE --- --- 25 25 25 25 25 25 25 25 25 25 250 F. Modification of Affiliation Rules for Purposes of Rules Allocating Interest Expense.............................. tyba DOE --- --- 225 150 10 5 [4] [4] [4] [4] [4] [4] 390 G. Termination of Special Rules for Interest and Dividends Received from Persons Meeting the generally 80% Foreign Business Requirements......................... tyba 12/31/10 --- --- 1 2 6 9 12 15 21 25 29 33 153 H. Limitation on Extension of Statute of Limitations for Failure to Disclose Certain Foreign Transactions...... [42] --- --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - No Revenue Effect - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - I. Elimination of Advanced Refundability of Earned ff Income Credit ............................................................ tyba 12/31/10 --- --- 153 122 102 102 103 105 107 110 112 114 1,131 TOTAL OF PART TWELVE……………………………………………………… --- --- 649 984 983 1,016 1,220 1,269 1,228 1,185 1,141 1,097 10,773 PART THIRTEEN: THE FIREARMS EXCISE TAX IMPROVEMENT ACT OF 2010 (P.L. 111-237, signed into law by the President on August 17, 2010) A. Time For Payment Of Manufacturers' Excise Tax On Recreational Equipment [43]................................ [44] --- -82 31 29 10 5 1 1 1 [4] [4] [11] -5 B. Assessment Of Certain Criminal Restitution.............. [45] --- [4] 1 1 1 1 1 1 1 1 1 1 9 C. Increase by 0.25 Percentage Points the Required Corporate Estimated Tax Payments Factor for Corporations with Assets of at Least $1 Billion for Payments Due in July, August, and September 2015............................................................................ DOE --- --- --- --- --- --- 153 -153 --- --- --- --- --- TOTAL OF PART THIRTEEN…………………………………………………… --- -82 32 30 11 6 155 -151 2 1 1 1 4 Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 PART FOURTEEN: THE SMALL BUSINESS JOBS ACT OF 2010 (P.L. 111-240, signed into law by the President on September 27, 2010) I. Small Business Relief A. Providing Access to Capital 1. Modification to exclusion for gain from certain small business stock (sunset 12/31/10)....................... saa DOE --- --- 2 --- --- --- -276 -155 -34 -26 -17 -9 -518 2. Five-year carryback of general business credit of eligible small business (sunset 12/31/10)............... [46] --- --- -1,440 241 192 180 156 144 132 114 96 78 -107 3. General business credits of eligible small business not subject to alternative minimum tax (sunset 12/31/10).................................................. [46] --- --- -1,031 8 4 4 3 5 6 4 7 12 -977 4. Reduction in recognition period for built-in gains tax (sunset 12/31/11)......................................... tyba 12/31/10 --- --- -45 -23 -2 --- --- --- --- --- --- --- -70 B. Encouraging Investment 1. Expand definition of eligible section 179 property to include certain real property and increase maximum amount and phase-out thresholds to $500,000 and $2,000,000, tyba 12/31/09 respectively................................................................. & before 1/1/12 --- --- -9,735 -3,024 3,441 2,280 1,705 1,291 838 509 302 215 -2,177 2. One-year extension of bonus depreciation................. ppisa 12/31/09 --- --- -40,065 10,571 7,120 5,620 4,427 2,848 1,736 981 668 641 -5,454 3. Special rule for long-term contract accounting.......... ppisa 12/31/09 --- --- -1,785 751 463 276 163 82 38 12 --- --- --- C Promoting Entrepreneurship 7 C. 1I i ll d dd i f 71 1. Increase in amount allowed as a deduction for 17 start-up expenditures................................................... apoii tyba 12/31/09 --- --- -347 4 18 17 16 15 14 13 11 9 -230 D. Promoting Small Business Fairness 1. Limitation on penalty for failure to disclose reportable transactions based on resulting tax benefits........................................................................ paa 12/31/06 --- --- -85 -21 -16 -8 -8 -8 -8 -8 -8 -8 -176 2. Deduction for health insurance costs in tyba 12/31/09 & computing self-employment taxes [47]...................... before 1/1/11 --- --- -1,754 -165 --- --- --- --- --- --- --- --- -1,919 3. Remove cellular telephones and similar telecommunications equipment from listed property....................................................................... tyba 12/31/09 --- --- -29 -25 -31 -34 -38 -42 -46 -51 -55 -59 -410 II. Revenue Provisions A. Reducing the Tax Gap 1. Require information reporting for rental property expense payments........................................ pma 12/31/10 --- --- [48] 227 247 259 269 284 294 309 324 335 2,546 2. Increase penalties related to information returns and payee statements.................................................. rtbfo/a 1/1/11 --- --- 30 41 42 42 43 43 43 44 45 47 421 3. Annual reports on certain penalties and other enforcement tools....................................................... DOE [49] --- --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - No Revenue - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 4 Effect 4. Application of continuous levy to tax liabilities of certain Federal contractors..................................... lia DOE --- --- 127 98 100 102 104 106 108 110 112 114 1,080 B. Promoting Retirement Preparation 1. Allow participants in governmental 457 plans to treat elective deferrals as Roth contributions........... tyba 12/31/10 --- --- 12 17 25 36 48 56 60 69 83 100 506 2. Allow rollovers from elective deferral plans to Roth designated accounts........................................... da DOE --- --- 226 529 486 389 487 596 711 661 494 520 5,099 3. Permit partial annuitization of a nonqualified annuity contract.......................................................... tyba 12/31/10 --- --- 5 20 37 56 77 99 124 149 179 210 956 Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 C. Closing Unintended Loopholes 1. Crude tall oil ineligible for cellulosic biofuel producer credit............................................................ fsouo/a 1/1/10 --- --- 523 512 425 237 118 34 --- --- --- --- 1,849 2. Source rules for income on guarantees....................... gia DOE --- --- 200 200 200 200 200 200 200 200 200 200 2,000 D. Increase by 36 percentage points the required corporate estimated tax payments factor for corporations with assets of at least $1 billion for payments due in July, August, and September 2015 [50]..................................................................... DOE --- --- --- --- --- --- 21,234 -21,234 --- --- --- --- --- TOTAL OF PART FOURTEEN………………………………………………… --- --- -55,191 9,961 12,751 9,656 28,728 -15,636 4,216 3,090 2,441 2,405 2,419 PART FIFTEEN: THE CLAIMS RESOLUTION ACT OF 2010 (P.L. 111-291, signed into law by the President on December 8, 2010) A. The Individual Indian Money Account Litigation...... DOE --- --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - No Revenue Effect - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - B Collection Due ff B. of Past-Due, Legally Enforceable State Debts [25] [51]............................................................ [52] --- --- --- 1,308 960 211 7 -67 -60 -28 152 178 2,662 TOTAL OF PART FIFTEEN……………………………………………………… --- --- --- 1,308 960 211 7 -67 -60 -28 152 178 2,662 PART SIXTEEN: THE TAX RELIEF, UNEMPLOYMENT INSURANCE REAUTHORIZATION, AND JOB 7 CREATION ACT OF 2010 P L 111 312 718 (P.L. 111-312, signed into law b h P id D b 17 8 by the President on December 17, 2010) I. Temporary Extension of Tax Relief A. Marginal Individual Income Tax Rate Reductions 1. Retain 10% income tax bracket (sunset 12/31/12) [25].............................................................................. tyba 12/31/10 --- --- -30,990 -44,807 -13,511 [11] --- --- --- --- --- --- -89,308 2. Retain the 25% and the 28% income tax brackets (sunset 12/31/12)........................................................ tyba 12/31/10 --- --- -12,792 -18,376 -5,526 [11] --- --- --- --- --- --- -36,693 3. Retain the 33% and the 35% income tax brackets (sunset 12/31/12)........................................................ tyba 12/31/10 --- --- -19,714 -31,276 -9,783 [11] --- --- --- --- --- --- -60,774 B. Repeal Overall Limitation on Itemized Deduction and the Personal Exemption Phaseout (sunset 12/31/12)..................................................................... tyba 12/31/10 --- --- -4,862 -10,384 -5,489 [11] --- --- --- --- --- --- -20,735 C. Child Tax Credit - retain the child tax credit at $1,000; refundable up to greater of 15% of earned income in excess of $10,000 (indexed from 2001) or the taxpayer's social security tax liability to the extent that it exceeds the taxpayer's earned income credit; allow credit against the AMT; repeal AMT offset of refundable credits (sunset 12/31/12) [25].... tyba 12/31/10 --- --- -7,075 -35,565 -29,056 --- --- --- --- --- --- --- -71,697 D. Marriage Penalty Relief and Earned Income Tax Credit Simplification 1. Standard deduction and 15% rate bracket set at 2 times single for married filing jointly (sunset 12/31/12) [25]............................................................. tyba 12/31/10 --- --- -6,287 -8,962 -2,686 [11] --- --- --- --- --- --- -17,935 Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 2. EIC modification and simplification - increase in joint returns beginning and ending income level for phaseout by $3,000 indexed after 2008; simplify definition of earned income; use AGI instead of modified AGI; simplify definition of qualifying child and tie-breaker rules; and allow math error procedure with Federal Case registry data beginning in 2004 (sunset 12/31/12) [25].................. tyba 12/31/10 --- --- -44 -4,424 -4,469 --- --- --- --- --- --- --- -8,937 E. Education Incentives 1. Coverdell Education Savings Accounts ("ESAs") - increase the annual contribution limit to $2,000; allow ESA contributions for special needs beneficiaries above the age of 18; allow corporations and other entities to contribute to ESAs; allow contributions until April 15 of the following year; allow a taxpayer to exclude ESA distributions from gross income and claim the HOPE or Lifetime Learning credits as long as they are not used for the same expenses; repeal excise tax on contributions made to ESA when contribution made by anyone on behalf of same beneficiary to QTP; modify phaseout range for married allow tax expenditures for 7 taxpayers; tax-free l d d h l 71 elementary and secondary school expenses; 19 y y p ; expand the definition of qualified expenses to include certain computers and related items (sunset 12/31/12)..................................................................... tyba 12/31/10 --- --- -11 -17 -5 --- --- --- --- --- --- --- -32 2. Employer provided educational assistance - extend the exclusion for undergraduate courses and graduate level courses (sunset 12/31/12) [53]............ cba 12/31/10 --- --- -707 -964 -243 --- --- --- --- --- --- --- -1,914 3. Student loan interest deduction - eliminate the 60-month rule and the disallowance for voluntary payments; increase phaseout ranges to $50,000-$65,000 single/ $100,000-$130,000 joint, indexed for inflation (sunset 12/31/12)...................... ipa 12/31/10 --- --- -63 -631 -560 --- --- --- --- --- --- --- -1,254 4. Eliminate the tax on awards under the National Health Service Corps Scholarship program and F. Edward Hebert Armed Forces Health Professions Scholarship and Financial Assistance Program (sunset 12/31/12)........................................................ tyba 12/31/10 --- --- -9 -35 -27 --- --- --- --- --- --- --- -70 5. Increase arbitrage rebate exception for governmental bonds used to finance qualified school construction from $10 million to $15 million (sunset 12/31/12)........................................................ bia 12/31/10 --- --- [11] -1 -2 -3 -3 -3 -3 -3 -3 -3 -24 6. Issuance of tax-exempt private activity bonds for qualified education facilities with annual State volume caps the greater of $10 per resident or $5 million (sunset 12/31/12)............................................ bia 12/31/10 --- --- [11] -1 -3 -5 -5 -5 -5 -5 -5 -5 -39 Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 F. Other Incentives for Families and Children 1. Dependent care tax credit - increase the credit rate to 35%, increase the eligible expenses to $3,000 for one child and $6,000 for two or more children (not indexed), and increase the start of the phase-out to $15,000 of AGI (sunset 12/31/12) [25]...................... tyba 12/31/10 --- --- -76 -302 -222 --- --- --- --- --- --- --- -600 2. Adoption credit - increase the expense limit and the exclusion to $10,000 for both non-special needs and special needs adoptions, make the credit independent of expenses for special needs adoptions, extend the credit and the exclusion, increase the phase-out start point to $150,000, index for inflation the expenses limit and the phase-out start point for both the credit and the exclusion, and allow the credit to apply to the AMT (sunset 12/31/12) [25]............................................................. tyba 12/31/10 --- --- --- -95 -221 --- --- --- --- --- --- --- -315 3. Employer-provided child care credit of 25% for childcare expenditures and 10% for child care resource (sunset 12/31/12).......................................... tyba 12/31/10 --- --- -11 -33 -15 --- --- --- --- --- --- --- -58 G. Allow Electing Alaska Native Settlement Trusts to Tax Income to the Trust not the Beneficiaries (sunset 12/31/12)........................................................ tyba 12/31/10 --- --- -2 -5 -2 --- --- --- --- --- --- --- -9 H Reduced on Dividends and Capital Gains 7 H. Rate 1 T i l i i h 72 1. Tax capital gains with a 0%/15% rate structure 20 p g (sunset 12/31/12)........................................................ tyba 12/31/10 --- --- -10,477 2,355 -1,915 -15,840 --- --- --- --- --- --- -25,877 2. Tax dividends with a 0%/15% rate structure (sunset 12/31/12)..................................................................... tyba 12/31/10 --- --- -4,677 -13,555 -9,042 --- --- --- --- --- --- --- -27,274 I. Extension of American Opportunity Tax Credit (sunset 12/31/12) [25]...................................... tyba 12/31/10 --- --- -1,194 -7,094 -9,277 --- --- --- --- --- --- --- -17,566 J. Reduce the Earnings Threshold for the Refundable Portion of the Child Tax Credit to $3,000 (sunset 12/31/12) [25]............................................................. tyba 12/31/10 --- --- --- -9,826 -9,917 --- --- --- --- --- --- --- -19,743 K. Earned Income Credit 1. Increase in earned income tax credit percentage (sunset 12/31/12) [25]................................................. tyba 12/31/10 --- --- -18 -1,845 -1,822 --- --- --- --- --- --- --- -3,685 2. EIC modification and simplification - increase in joint returns beginning and ending income level for phaseout by $5,000 indexed after 2008 (sunset 12/31/12) [25]............................................................. tyba 12/31/10 --- --- -16 -1,553 -1,532 --- --- --- --- --- --- --- -3,101 II. Temporary Alternative Minimum Tax Relief - Set the AMT Exemption Amount at $47,450 ($72,450 Joint) in 2010 and $48,450 ($74,450 Joint) in 2011 and Allow Personal Credits against the AMT (sunset 12/31/11)……… tyba 12/31/09 --- --- -85,833 -67,597 16,754 --- --- --- --- --- --- --- -136,676 III. Temporary Estate and Gift Tax Relief - $5 Million Unified and Indexed Exemption Amount; 35% Maximum Rate; Portability of Exemption Amount; and Decedents Dying in 2010 Can Elect into dda/gsta 12/31/09 EGTRRA (sunset 12/31/12)……………………………… & gma 12/31/10 --- --- -4,546 -28,050 -29,349 -3,483 -2,088 -981 -53 130 135 136 -68,149 IV. Temporary Extension of Investment Incentives A. Increase Additional First-Year Depreciation to 100 Percent (sunset 12/31/11); Extend 50 Percent Additional First-Year Depreciation for Property Placed in Service after 12/31/11 (sunset 12/31/12).... ppisa 9/8/10 --- --- -55,419 -54,422 2,687 25,519 19,778 15,671 11,161 7,071 4,297 2,775 -20,883 Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 B. Election To Accelerate AMT Credit in Lieu of Additional First-Year Depreciation (sunset 12/31/12)..................................................................... [54] --- --- -11 -536 -212 37 29 19 13 9 7 6 -639 C. Section 179 Expensing Amounts and Threshold Limits $125,000/ $500,000 (sunset 12/31/12)............ tyba 12/31/11 --- --- --- -3,266 -2,160 1,791 1,131 822 636 401 227 110 -307 V. Temporary Extension of Unemployment Insurance and Related Matters [5] [25] [10]………………………… various --- --- -34,515 -21,642 -100 -102 -76 -41 -29 -4 --- --- -56,510 VI. Temporary Payroll Tax Reduction (Employee Side of OASDI) by 2 Percentage Points (sunset 12/31/11) [55]…… tyba 12/31/10 --- --- -67,239 -44,414 --- --- --- --- --- --- --- --- -111,653 VII. Temporary Extension of Certain Expiring Provisions A. Energy 1. Incentives for biodiesel and renewable diesel (sunset 12/31/11)..................................................................... fsoua 12/31/09 --- --- -1,677 -300 --- --- --- --- --- --- --- --- -1,977 2. Placed-in-service date for facilities eligible to claim the refined coal production credit (excluding steel industry fuel) (sec. 45(d)) (sunset 12/31/11).............. ppisa 12/31/09 --- --- -15 -20 -23 -24 -24 -24 -25 -26 -26 -24 -230 3. Credit for construction of energy efficient new homes (sunset 12/31/11)............................................. haa 12/31/09 --- --- -66 -25 -12 -11 -9 -8 -5 -1 --- --- -138 4. Incentives for alternative fuel and alternative fuel mixtures (modified to exclude black liquor) (sunset 12/31/11)........................................................ fsoua 12/31/09 --- --- -176 -26 --- --- --- --- --- --- --- --- -202 5. Special rule to implement electric transmission restructuring (sunset 12/31/11) 12/31/09 92 51 51 51 51 51 51 18 7 11)................................... Da --- --- -232 ---- --- 6 E i f i f 100 f 72 6. Extension of suspension of percent-of-net- 21 p p income limitation on percentage depletion for oil and natural gas from marginal properties (sunset 12/31/11)..................................................................... tyba 12/31/09 --- --- -182 -42 --- --- --- --- --- --- --- --- -224 7. Grants for specified energy property in lieu of tax credits (sunset 12/31/11) [25]..................................... ppisa DOE --- --- -1,941 -1,045 --- --- --- --- --- --- --- --- -2,987 8. Extension of provisions related to alcohol used as fuel (extension of present law): a. Extension of income tax credits for alcohol fuels; and extension of excise tax credits and outlay payments for alcohol fuel mixtures (sunset pa 12/31/10 & 12/31/11)................................................................ saua 12/31/10 --- --- -3,558 -1,311 --- --- --- --- --- --- --- --- -4,869 b. Extension of additional duties on ethanol (sunset 12/31/11) [5].............................................. 1/1/11 --- --- 8 3 --- --- --- --- --- --- --- --- 10 9. Credit for energy efficient appliances (sunset 12/31/11)..................................................................... apa 12/31/10 --- --- -7 -17 -14 -9 -8 -6 -5 -4 -4 -3 -78 10. Extension and modification of section 25C nonbusiness energy property (sunset 12/31/11)......... ppisa 12/31/10 --- --- -119 -477 --- --- --- --- --- --- --- --- -596 11. Alternative fuel vehicle refueling property (non-hydrogen refueling property) (sunset 12/31/11)..................................................................... ppisa 12/31/10 --- --- -7 -6 -2 -1 -1 [4] [4] [4] [4] [4] -16 B. Individual Tax Relief 1. Above-the-line deduction of up to $250 for teacher classroom expenses (sunset 12/31/11)........... tyba 12/31/09 --- --- -39 -195 -156 --- --- --- --- --- --- --- -390 2. Deduction of State and local general sales taxes (sunset 12/31/11)........................................................ tyba 12/31/09 --- --- -2,829 -2,393 -314 --- --- --- --- --- --- --- -5,536 3. Contributions of capital gain real property made for cmi qualified conservation purposes (sunset 12/31/11).... tyba 12/31/09 --- --- -63 -48 --- --- --- --- --- --- --- --- -111 4. Deduction for qualified tuition and related expenses (sunset 12/31/11) [56]................................. tyba 12/31/09 --- --- -711 -450 --- --- --- --- --- --- --- --- -1,161 Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 5. Tax-free distributions from IRAs to certain public charities for individuals age 70 1/2 or older, not to exceed $100,000 per taxpayer per year; distributions made in January 2011 may count against the 2010 $100,000 limit and satisfy the 2010 minimum distribution requirement (sunset 12/31/11)................. dmi tyba 12/31/09 --- --- -517 -197 -29 -30 -31 -32 -34 -35 -36 -38 -979 6. Estate tax look-through for certain RIC stock held by nonresidents (sunset 12/31/11)...................... dda 12/31/09 --- --- -5 -5 --- --- --- --- --- --- --- --- -10 7. Parity for exclusion for employer-provided mass transit and parking benefits (sunset 12/31/11) [1]...... ma 12/31/10 --- --- -102 -34 --- --- --- --- --- --- --- --- -136 8. Refunds disregarded in the administration of Federal programs and federally assisted programs (sunset 12/31/12) [5] [25]....................................................... Ara 12/31/09 --- --- -4 -4 --- --- --- --- --- --- --- --- -8 C. Business Tax Relief 1. Tax credit for research and experimentation expenses (sunset 12/31/11)......................................... apoia 12/31/09 --- --- -5,984 -2,055 -923 -813 -715 -631 -575 -547 -530 -501 -13,272 2. Indian employment tax credit (sunset 12/31/11)........ tyba 12/31/09 --- --- -59 -33 -9 -1 --- --- --- --- --- --- -102 3. New markets tax credit ($3.5 billion allocation for 2010 and $3.5 billion allocation for 2011) (sunset 12/31/11)..................................................................... cyba 12/31/09 --- --- -5 -29 -94 -180 -221 -252 -279 -288 -267 -194 -1,810 4. 50% tax credit for certain expenditures for epoid maintaining railroad tracks (sunset 12/31/11)............ tyba 12/31/09 --- --- -232 -99 [11] --- --- --- --- --- --- --- -331 5 Mine rescue team training credit (sunset 11) 12/31/09 [11] [11] [11] 7 5. 12/31/11)... tyba --- --- -2 -1 -1 --- --- --- --- -5 6 E l di f i d ili 72 6. Employer wage credit for activated military 22 p y g y reservists (sunset 12/31/11)........................................ pma 12/31/09 --- --- -2 -1 [11] [11] [11] [11] [11] [11] [11] [11] -3 7. 15-year straight-line cost recovery for qualified leasehold, restaurant, and retail improvements and new restaurants (sunset 12/31/11).............................. ppisa 12/31/09 --- --- -281 -359 -397 -395 -389 -385 -380 -369 -350 -324 -3,629 8. 7-year recovery period for certain motorsports racing track facilities (sunset 12/31/11)...................... ppisa 12/31/09 --- --- -40 -3 -1 --- --- -1 1 3 3 3 -36 9. Accelerated depreciation for business property on Indian reservations (sunset 12/31/11).................... ppisa 12/31/09 --- --- -98 -23 5 17 27 22 12 1 -2 -1 -41 10. Enhanced charitable deduction for contributions of food inventory (sunset 12/31/11)........................... cma 12/31/09 --- --- -92 -42 --- --- --- --- --- --- --- --- -134 11. Enhanced charitable deduction for contributions of book inventories to public schools (sunset 12/31/11)..................................................................... cma 12/31/09 --- --- -37 -16 --- --- --- --- --- --- --- --- -53 12. Enhanced charitable deduction for corporate contributions of computer inventory for educational purposes (sunset 12/31/11)......................................... cmd tyba 12/31/09 --- --- -245 -105 --- --- --- --- --- --- --- --- -350 13. Election to expense mine safety equipment (sunset 12/31/11)..................................................................... ppisa 12/31/09 --- --- -20 1 5 4 3 3 2 1 [4] --- -1 14. Special expensing rules for certain film and television productions (sunset 12/31/11).................... qfatpca 12/31/09 --- --- -162 -158 39 45 34 29 23 21 16 12 -101 15. Expensing of "Brownfields" environmental remediation costs (sunset 12/31/11)........................... epoia 12/31/09 --- --- -493 -536 -66 83 91 86 77 67 57 50 -583 16. Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico (sunset 12/31/11)................................ tyba 12/31/09 --- --- -229 -186 --- --- --- --- --- --- --- --- -415 17. Modify tax treatment of certain payments under existing arrangements to controlling exempt organizations (sunset 12/31/11)..................... proaa 12/31/09 --- --- -34 -5 --- --- --- --- --- --- --- --- -40 Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 18. Treatment of certain dividends of regulated investment companies ("RICs") (sunset 12/31/11)..... [57] --- --- -108 -66 --- --- --- --- --- --- --- --- -174 19. Extend the treatment of RICs as "qualified investment entities" under section 897 (FIRPTA) (sunset 12/31/11)........................................................ 1/1/10 --- --- -23 -36 --- --- --- --- --- --- --- --- -59 20. Exception under subpart F for active financing income (sunset 12/31/11)............................................ tyba 12/31/09 --- --- -5,200 -3,957 --- --- --- --- --- --- --- --- -9,157 21. Look-through treatment of payments between related CFCs under foreign personal holding company income rules (sunset 12/31/11)................... tyba 2009 --- --- -814 -691 --- --- --- --- --- --- --- --- -1,505 22. Basis adjustment to stock of S corporations making charitable contributions of property (sunset 12/31/11)........................................................ cmi tyba 12/31/09 --- --- -19 -36 -6 -3 -3 -3 -3 -3 -3 -3 -82 23. Empowerment zone tax incentives (sunset 12/31/11)..................................................................... pa 12/31/09 --- --- -330 -46 3 1 --- -4 -1 -4 -4 -4 -387 24. Tax incentives for investment in the District of Columbia (sunset 12/31/11)................................... pa 12/31/09 --- --- -88 -21 -2 -1 -4 -7 -4 -4 -4 -4 -138 25. Temporary increase in limit on cover over of rum excise tax revenues (from $10.50 to $13.25 per proof gallon) to Puerto Rico and the Virgin Islands (sunset 12/31/11) [58].................................... abiUSa 12/31/09 --- --- -235 -27 --- --- --- --- --- --- --- --- -262 26. Economic development credit for American Samoa (sunset 12/31/11) 12/31/09 15 12 27 7 11)............................................ tyba --- --- ----- --- --- --- --- --- --- --- -27 W k i di 12/31/11) ifib 8/[ 11] 16 72 27. Work opportunity tax credit ( sunset 11)........... wpoifibwa 31/11 --- --- -131 --8 -5 -2 --- --- --- --- -162 23 pp y ) p ] 28. Qualified zone academy bonds ($400 million allocation) (sunset 12/31/11)...................................... oia 12/31/10 --- --- [11] -3 -8 -16 -21 -22 -22 -21 -19 -19 -151 29. Premiums for mortgage insurance deductible as interest that is qualified residence interest (sunset 12/31/11)..................................................................... apoaa 12/31/10 --- --- -261 -87 --- --- --- --- --- --- --- --- -348 30. Special rules applicable to qualified small business stock (sunset 12/31/11)................................ saa 12/31/10 --- --- 15 6 --- --- -62 -768 -420 -97 -74 -47 -1,445 D. Temporary Disaster Relief Provisions 1. New York Liberty Zone - tax-exempt bond financing (sunset 12/31/11)........................................................ bia 12/31/09 --- --- -8 -12 -12 -12 -12 -12 -12 -12 -12 -12 -116 2. GO Zone: a. Increase in rehabilitation credit (sunset 12/31/11)................................................................ apoia 12/31/09 --- --- -39 -21 [11] 1 1 1 2 2 2 1 -50 b. Extend the placed-in-service deadline for GO Zone low-income housing credits (sunset 12/31/11)................................................................ ppisa 12/31/10 --- --- -8 -34 -34 -34 -34 -34 -34 -34 -34 -34 -314 c. Tax-exempt bond financing (sunset 12/31/11)....... DOE --- --- -5 -18 -26 -26 -26 -26 -25 -25 -25 -25 -226 d. Bonus depreciation for specified GO Zone extension property (sunset 12/31/11).................... ppisa 12/31/09 --- --- -171 -61 -4 -1 2 4 6 7 7 7 -202 TOTAL OF PART SIXTEEN……………………………………………………… --- --- -374,154 -422,910 -119,751 6,551 17,410 13,461 10,070 6,282 3,371 1,859 -857,806 PART SEVENTEEN: THE REGULATED INVESTMENT COMPANY MODERNIZATION ACT OF 2010 (P.L. 111-325, signed into law by the President on December 22, 2010) I. Capital Loss Carryovers of Regulated Investment Companies ("RICs")……………..………………………… [59] --- --- 3 22 34 39 43 48 53 59 65 -262 104 Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 II. Modification of Gross Income and Asset Tests of RICs - savings provisions for failures of regulated investment companies to satisfy gross income and asset tests………… [60] --- --- [4] [4] [4] [4] [4] [4] [4] [4] [4] [4] [4] III. Modification of Rules Related to Dividends and Other Distributions A. Modification of Dividend Designation Requirements and Allocation Rules for RICs.................................... di tyba DOE --- --- [11] [11] [11] [11] [11] [11] [11] [11] [11] [11] [11] B. Earnings and Profits of RICs...................................... tyba DOE --- --- [11] [11] [11] [11] [11] [11] [11] [11] [11] [11] [11] C. Pass-Thru of Exempt-Interest Dividends and Foreign Tax Credits in Fund of Funds Structure..................... tyba DOE --- --- -2 -4 -4 -4 -4 -4 -4 -5 -5 -5 -41 D. Modification of Rules for Spillover Dividends of RICs............................................................................ di tyba DOE --- --- [11] [11] [11] [11] [11] [11] [11] [11] [11] [11] [11] E. Return of Capital Distributions of RICs..................... di tyba DOE --- --- [4] [4] [4] [4] [4] [4] [4] [4] [4] [4] [4] F. Distributions in Redemption of Stock of a RIC......... da DOE --- --- -5 -9 -9 -10 -10 -10 -11 -11 -12 -12 -99 G. Repeal Preferential Dividend Rule for Publicly Offered RICs............................................................... di tyba DOE --- --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Negligible Revenue Effect - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - H. Elective Deferral of Certain Late-Year Losses of RICs............................................................................ tyba DOE --- --- [11] [11] [11] [11] [11] [11] [11] [11] [11] [11] [11] I. Exception to Holding Period Requirement for Certain Regularly Declared Exempt-Interest Dividends......... [61] --- --- [11] [11] [11] [11] [11] [11] [11] [11] [11] [11] [11] IV. Modifications Related to Excise Tax Applicable to RICs A Excise Tax Exemption RICs Owned by 7 A. for Certain T E E ii b 72 Tax Exempt Entities................................................... cyba DOE --- --- N li ibl R Eff 24 p y - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Negligible Revenue Effect - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - B Deferral g g ff B. of Certain Gains and Losses of RICs for Excise Tax Purposes............................................. cyba DOE --- --- [11] [11] [11] [11] [11] [11] [11] [11] [11] [11] [11] C. Distributed Amount for Excise Tax Purposes Determined on Basis of Taxes Paid by RICs............. cyba DOE --- --- [11] [11] [11] [11] [11] [11] [11] [11] [11] [11] [11] D. Increase from 98% to 98.2% the Required Distribution Rate on Capital Gain Income by RICs... cyba DOE --- --- 29 23 10 4 4 4 4 4 4 5 92 V. Other Provisions A. Repeal of Assessable Penalty with Respect to Liability for Tax of RICs............................................ tyba DOE --- --- [11] [11] [11] [11] [11] [11] [11] [11] [11] [11] [11] B. Modification of Sale Load Basis Deferral Rule for RICs............................................................................ cii tyba DOE --- --- -6 -8 -5 -2 -1 -1 -1 -1 -1 -1 -26 TOTAL OF PART SEVENTEEN………………………………………………… --- --- 19 24 26 27 32 37 41 46 51 -275 30 PART EIGHTEEN: THE OMNIBUS TRADE ACT OF 2010 (P.L. 111-344, signed into law by the President on December 29, 2010) A. Extension of Health Coverage Tax Credit Improvements (sunset 2/13/11) [25]........................... [62] --- --- -19 -11 --- --- --- --- --- --- --- --- -31 B. Increase by 4.5 Percentage Points the Required Corporate Estimated Tax Payments Factor for Corporations With Assets of at Least $1 Billion for Payments Due in July, August, and September 2015 [63]..................................................................... DOE --- --- --- --- --- --- 2,475 -2,475 --- --- --- --- --- TOTAL OF PART EIGHTEEN…………………………………………………… --- --- -19 -11 --- --- 2,475 -2,475 --- --- --- --- -31 Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 PART NINTEEN: THE JAMES ZADROGA 9/11 HEALTH AND COMPENSATION ACT OF 2010 - EXCISE TAX ON FOREIGN PROCUREMENT (P.L. 111-347, signed into law by the President on January 2, 2011)………………………………………………pruceio/a DOE --- --- 305 495 490 485 480 475 471 466 461 457 4,585 PART TWENTY: AUTHORITY OF TAX COURT TO APPOINT EMPLOYEES (P.L. 111-366, signed into law by the President on January 4, 2011)……………………………………………… [64] --- --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - No Revenue Effect - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - PART TWENTY-ONE: CUSTOMS USER FEES, CORPORATE ESTIMATED TAXES, AND EXTENSION OF ASSISTANCE FOR COBRA CONTINUATION COVERAGE [65] A. Extension of Customs User Fees [66]........................ various - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Estimated by the Congressional Budget Office - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - B. Modifications to Corporate Estimated Tax Payments 1. Repeal 2010, 2011, and 2013 corporate estimated tax adjustments and add new 0.25 percentage point adjustment for payments due in July, August, and September 2014; applies to corporations with assets of at least $1 billion (P L 111 42 7 P.L. 111-42, signed i l b h P id J l 28 2009 DOE 6 864 3 024 9 888 11 850 11 994 72 into law by the President on July 28, 2009................. --- 6,864 3,024 -9,888 -11,850 11,994 -144 --- --- --- --- --- --- 25 y y , , , , , , 2. Increase by 1.50 percentage points the required corporate estimated tax payments factor for corporations with assets of at least $1 billion for payments due in July, August, and September 2014 (P.L. 111-124, signed into law by the President on December 28, 2009..................................................... DOE --- --- --- --- --- 806 -806 --- --- --- --- --- --- 3. Increase the required corporate estimated tax payments otherwise due in July, August, or September 2014 by 0.75 percentage points and July, August, or September 2015 by 0.75 percentage points (P.L. 111-171, signed into law by the President on May 24, 2010)............................. DOE --- --- --- --- --- 356 107 -463 --- --- --- --- --- 4. Increase by 0.75 percentage points the required corporate estimated tax payments factor for corporations with assets of at least $1 billion for payments due in July, August, and September 2015 (P.L. 111-171, signed into law by the President on May 24, 2010)........................................ DOE --- --- --- --- --- --- 463 -463 --- --- --- --- --- 5. Increase by 0.25 percentage points the required corporate estimated tax payments factor for corporations with assets of at least $1 billion for payments due in July, August, and September 2015 (P.L. 111-210, signed into law by the President on August 11, 2010)................................... DOE --- --- --- --- --- --- 153 -153 --- --- --- --- --- Provision Effective 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 6. Increase by 0.50 percentage points the required corporate estimated tax payments factor for corporations with assets of at least $1 billion for payments due in July, August, and September 2015 (P.L. 111-227, signed into law by the President on August 11, 2010)................................... DOE --- --- --- --- --- --- 305 -305 --- --- --- --- --- 7. Increase by 4.5 percentage points the required corporate estimated tax payments factor for corporations with assets of at least $1 billion for payments due in July, August, and September 2015 (P.L. 111-344, signed into law by the President on December 29, 2010).............................................. DOE --- --- --- --- --- --- 2,475 -2,475 --- --- --- --- --- C. Extension of Assistance for COBRA Continuation Coverage 1. COBRA credit in Department of Defense Appropriations Act, 2010 (P.L. 111-118, signed into law by the President on December 19, 2009) [25].............................................................................. [67] --- -4,473 -1,673 -330 -15 --- --- --- --- --- --- --- -6,490 2. COBRA credit in the Temporary Extension Act of 2010 (P.L. 111-144, signed into law by the President on March 2, 2010) [25]............................... [68] --- -735 -339 -11 --- --- --- --- --- --- --- --- -1,085 3. COBRA credit in the Continuing Extension Act of 2010 (P L 111 157 7 P.L. 111-157, signed into law by the P id A il 15 25] [ 67] 1 391 21 2 054 72 President on April 15, 2010) [25]............................... --- -1,391 -642 ---- --- --- --- --- --- --- --- -2,054 26 p , )[ ] ] , , TOTAL OF PART TWENTY-ONE ……………………………………………… --- 265 370 -10,250 -11,865 13,156 2,553 -3,859 --- --- --- --- -9,629 Joint Committee on Taxation -------------------------------------- NOTE: Details may not add to totals due to rounding. [Legand and Footnotes for the Appendix appear on the following pages] Legend and Footnotes for the Appendix: Legend for "Effective" column: aa = acquisitions after Dma = disclosures made after pma = payments made after abiUSa = articles brought into the United States after dmi = distributions made in po/a = purchases on or after aiiUSa = articles imported into the United States after DOE = date of enactment ppisa = property placed in service after apa = appliances produced after eia = expenses incurred after proaa = payments received or accrued after apoaa = amounts paid or accrued after epoia = expenses paid or incurred after pruceio/a = payments received under contracts apoia = amounts paid or incurred after epoid = expenses paid or incurred during entered into on or after apoii = amounts paid or incurred in fitpoaa = foreign income taxes paid or accrued after qfatpca = qualified film and television ara = articles removed after fsoua = fuel sold or used after productions commencing after Ara = amounts received after fsouo/a = fuels sold or used on or after qhpa = qualified homes purchased after bia = bonds issued after gma = gifts made after ra = repurchases after caaa = covered asset acquisitions after gia = guarantees issued after rfa = returns filed after cba = courses beginning after haa = homes acquired after rpa = residences purchased after cii = charges incurred in ipa = interest paid after rtbfo/a = returns to be filed on or after cma = contributions made after ita = instruments tendered after sa = sales after cmd = contributions made during iwbwa = individuals who begin work after saa = stock acquired after cmi = contributions made in lia = levies issued after saua = sales and uses after cyba = calendar years beginning after ma = months after teia = transactions entered into after da = distributions after mba = months beginning after tspo/a = tanning services performed on or after Da = dispositions after mbo/a = months beginning on or after tyba = taxable years beginning after dda = decedents dying after = after = 7 oca ownership changes tybi taxable years beginning in = decedents dying generation oia = obligations issued after = 727 dda/gsta after and generation- tyea taxable years ending after 7 skipping transfers after pa = periods after wpa = wages paid after di = distributions in paa = penalties assessed after wpoifibwa = wages paid or incurred for individuals dma = distributions made after pba = periods beginning after beginning work after [1] Estimate includes the following off-budget effects: 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 Requirements for Group Health Plans…………………………………… --- -50 -100 -125 -125 -125 -125 -150 -150 -150 --- --- -1,100 Limitations on aggregate amount recovered on reconciliation of the health insurance tax credit and the advance of that credit……………… --- --- --- --- --- -14 -24 -40 -44 -49 -51 -52 -275 Parity for exclusion for employer-provided mass transit and parking benefits………………………………………………………………… --- --- -34 -11 --- --- --- --- --- --- --- --- -45 [2] Estimate does not include the following effects on Medicaid 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 outlays………………………………………………………………………… --- 30 60 70 70 80 90 90 100 110 --- --- 700 [3] The excise tax rates on tobacco products and cigarette papers and tubes would be as follows: Cigars weighing not more than three pounds per thousand ("small cigars")………………$50.33 per thousand ($1.0066 per pack) Cigars weighing more than three pounds per thousand ("large cigars")……………………52.75% of the manufacture's or importer's sales price but not more than $0.4026 per cigar Cigarettes weighing not more than three pounds per thousand ("small cigarettes")………$50.33 per thousand ($1.0066 per pack) Cigarettes weighing more than three pounds per thousand ("large cigarettes")……………$105.69 per thousand Cigarette papers……………………………………………………………………………$0.0315 for each 50 papers Cigarette tubes………………………………………………………………………………$0.0630 for each 50 tubes Snuff…………………………………………………………………………………………$1.51 per pound Chewing tobacco……………………………………………………………………………$0.5033 per pound Pipe tobacco…………………………………………………………………………………$2.8311 per pound Roll-your-own tobacco…………………………………………………………………… $24.78 per pound [4] Gain of less than $500,000. [5] Estimate provided by the Congressional Budget Office. [6] The study will be completed no later than one year after the date of enactment. [7] Increase by 0.5 percentage points the required corporate estimated tax payments factor for corporations with assets of at least $1 billion for payments due in July, August, and September 2013. [8] Estimated outlay effects as a result of U.S. possessions provision provided by the Joint Committee on Taxation in consultation with the Congressional Budget Office. [Footnotes for the Appendix are continued on the following pages] Footnotes for the Appendix continued: [9] Estimate includes interaction with Making Work Pay Credit and Additional Tax Relief for Families With Children. [10] This item does not have a separate description in the text of the document. [11] Loss of less than $500,000. [12] Estimate includes outlay effects provided by the Congressional Budget Office. [13] Effective for net operating losses generated in either a taxable year beginning in 2008 or a taxable year ending in 2008. [14] Effective for any unemployed veteran hired in 2009 and 2010 within five years (but not less than two months) of the date of discharge. [15] The temporary suspension of section 163(e)(5) applies to obligations issued after August 31, 2008, in taxable years ending after such date. The additional authority granted to the Secretary to use a rate higher than the applicable Federal rate for purposes of applying section 163(e)(5) applies to obligations issued after December 31, 2009, in taxable years ending after such date. [16] Modifications to the definitions of qualified energy property are effective for property placed in service after the date of enactment. [17] The neighborhood electric vehicle and motorcycle rule is effective for vehicles acquired after date of enactment. The elimination of neighborhood vehicles and heavy plug-ins from section 30D and the 200,000 vehicle/manufacturer cap is effective for vehicles acquired after December 31, 2009. [18] Estimate includes indirect effects of COBRA subsidy on Unemployment Insurance program. [19] We estimate that approximately 7 million people, including COBRA policyholders and their dependents, would benefit from this credit for some portion of 2009. [20] Effective for premiums for months of coverage beginning after the date of enactment. [21] Estimate includes indirect revenue effects of Trade Adjustment Assistance Reauthorization; estimate does not include outlay effects of TAA. [22] In general, the modifications apply to residences purchased after November 30, 2009. The waiver of recapture for individuals on qualified official extended duty applies to dispositions and cessations after December 31, 2008. The mathematical error authority applies to returns for taxable years ending on or after April 9, 2008. Provisions relating to long-time residents of the same principal residence, and income, purchase price, age, related party, dependent, and documentation limitations apply for purchases after the date of enactment. [23] Generally effective for net operating losses arising in taxable years ending after December 31, 2007. [24] The proposal also appropriates a transfer from the General Fund to the Social Security Trust Fund to keep the trust fund whole. Thus, the reported estimate is all on-budget. [25] 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 7 Estimate includes the following outlay effects: Qualified Bonds 98 694 1 091 1 314 1 441 1 441 1 441 1 441 1 441 1 441 1 441 13 284 728 Tax Credit Bonds……………………………………………… --- 1,091 1,314 1,441 1,441 1,441 1,441 1,441 1,441 1,441 13,284 8 Limitations on aggregate amount recovered on reconciliation of the health insurance tax credit and the advance of that credit……………… --- --- --- --- --- -610 -1,297 -2,167 -2,639 -2,893 -3,081 -3,283 -15,969 Authority to disclose return information concerning outstanding tax debts for purposes of enhancing Medicare Program Integrity [5]……… --- --- --- -38 -38 -50 -50 -50 -50 -50 -50 -50 -425 Collection of past-due, legally enforceable State debts [51]……………… --- --- --- -1,308 -1,076 -455 -337 -291 -270 -276 -416 -433 -4,863 Retain 10% bracket……………………………………………………… --- --- --- 1,198 1,239 --- --- --- --- --- --- --- 2,437 Retain the child tax credit at $1,000; refundable; AMT rules…………… --- --- --- 16,457 16,530 --- --- --- --- --- --- --- 32,987 Marriage penalty - standard deduction and 15% rate……………………… --- --- --- 2,000 2,030 --- --- --- --- --- --- --- 4,030 EIC modification and simplification ($3,000)…………………………… --- --- --- 3,724 3,781 --- --- --- --- --- --- --- 7,505 Dependent care tax credit………………………………………………… --- --- --- 49 146 --- --- --- --- --- --- --- 195 Adoption credit…………………………………………………………… --- --- --- --- 53 --- --- --- --- --- --- --- 53 American opportunity tax credit ………………………………………… --- --- --- 2,086 2,172 --- --- --- --- --- --- --- 4,258 Reduce the earnings threshold for the refundable portion of the child tax credit to $3,000…………………………………………………..… --- --- --- 9,826 9,917 --- --- --- --- --- --- --- 19,743 Increase in earned income tax credit percentage………………………… --- --- --- 1,694 1,688 --- --- --- --- --- --- --- 3,382 EIC modification and simplification ($5,000)…………………………… --- --- --- 1,270 1,250 --- --- --- --- --- --- --- 2,520 Temporary extension of unemployment insurance and related matters [5]……………………………………………………………… --- --- 34,515 21,565 --- --- --- --- --- --- --- --- 56,080 Grants for specified energy property in lieu of tax credits………………… --- --- 1,941 1,045 --- --- --- --- --- --- --- --- 2,987 Refunds disregarded in the administration of Federal programs and Federally assisted programs [5]………………………………………… --- --- 4 4 --- --- --- --- --- --- --- --- 8 Extension of health coverage tax credit improvements…………………… --- --- 15 9 --- --- --- --- --- --- --- --- 24 COBRA credit in DOD Act……………………………………………… --- --- --- 313 157 27 8 --- --- --- --- --- 504 COBRA credit in TEA…………………………………………………… --- --- --- 51 34 8 --- --- --- --- --- --- 94 COBRA credit in CEA…………………………………………………… --- --- --- 97 64 16 --- --- --- --- --- --- 177 [26] Estimates for the rest of this title were provided by the Congressional Budget Office. [27] Present law provides for a corporate estimated payments factor of 134.75 percent. [Footnotes for the Appendix are continued on the following page] Footnotes for the Appendix continued: [28] Estimate included with estimate of associated effects of coverage provisions on revenues and other revenue provisions as reported by the Congressional Budget Office, Congressional Budget Office, cost estimate for the amendment in the nature of a substitute for H.R. 4782, the "Reconciliation Act of 2010," incorporating a proposed manager’s amendment made public on March 20, 2010, available at http://www.cbo.gov/ftpdocs/113xx/doc11379/AmendReconProp.pdf. [29] The fee on health insurance and self-insurance plans is effective with respect to policies and plans for portions of policy or plan years beginning on or after October 1, 2012. [30] The description and revenue estimate of the provision reflects the modifications made by the "Health Care and Education Reconciliation Act of 2010." [31] Gain of less than $50 million. [32] Estimate includes interaction with the high premium excise tax. [33] Effective for calendar years beginning after December 31, 2013; fee is allocated based on market share of net premiums written for any United States health risk for calendar years beginning after December 31, 2012. [34] Effective for remuneration paid in taxable years beginning after 2012 with respect to services performed after 2009. [35] Effective for health benefits and coverage provided after the date of enactment. [36] Loss of less than $50 million. [37] Effective for expenditures paid or incurred after December 31, 2008, in taxable years beginning after December 31, 2008. [38] Effective as if included in section 1501(b) of the Patient Protection and Affordable Care Act. [39] Estimate does not include Congressional Budget Office outlay effects. These effects were provided by the Congressional Budget Office separately. [40] The provision amends Internal Revenue Code section 6103(k)(10), which sunsets December 31, 2011. Revenue effects after the sunset date are due to a decrease in the growth rate of prisoner fraud prior to the sunset. Although the present-law growth rate resumes after the sunset, the level of fraud remains lower due to preventive measures assumed to take place prior to the sunset. [41] Effective for acquisitions of U.S. property determined under section 956(c) after December 31, 2010. [42] Effective as if included in section 513 of the "Hiring Incentives to Restore Employment Act." [43] Estimate includes effects on outlays from the Pittman-Robertson Aid to Wildlife Trust Fund (provided by the Congressional Budget Office). [44] Effective for articles sold by the manufacturer, producer, or importer after the date of enactment. [45] Effective for 7 restitution ordered after the date of enactment. [46] Effective for first 31 2009 729 credits determined in the taxpayer’s taxable year beginning after December 31, 2009. 9 [47] Estimate includes effects on the Social Security trust fund. [48] Negligible revenue effect. [49] First report shall be submitted not later than December 31, 2010. [50] Estimate is based on a 36 percentage point increase to the 2015 corporate estimated tax shift under paragraph (2) of section 561 of the "Hiring Incentives to Restore Employment Act," in effect on September 16, 2010. [51] Estimate provided by the Joint Committee on Taxation in collaboration with the Congressional Budget Office. [52] Effective with respect to refunds under section 6402 payable on or after the date of enactment. [53] Estimate includes the following effects: 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 Total Revenue Effects…………………………………………………… --- --- -707 -964 -243 --- --- --- --- --- --- --- -1,914 On-budget effects……………………………………………………… --- --- -460 -653 -164 --- --- --- --- --- --- --- -1,277 Off-budget effects……………………………………………………… --- --- -246 -311 -79 --- --- --- --- --- --- --- -636 [54] Effective for property placed in service after December 31, 2010, in taxable years ending after such date. [55] Estimate includes the following effects: 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009-20 Total Revenue Effects…………………………………………………… --- --- -67,239 -44,414 --- --- --- --- --- --- --- --- -111,653 On-budget effects……………………………………………………… --- --- 1,293 1,274 --- --- --- --- --- --- --- --- 2,567 Off-budget effects……………………………………………………… --- --- -68,532 -45,688 --- --- --- --- --- --- --- --- -114,220 [56] Estimate includes interaction with the extension of the American opportunity tax credit. [57] Effective for dividends with respect to taxable years of regulated investment companies beginning after December 31, 2009. [58] Estimate provided by the Congressional Budget Office and is preliminary and subject to change. [59] The provision generally applies to net capital losses for taxable years beginning after the date of enactment. The provision relating to the treatment of present-law carryovers applies to taxable years beginning after the date of enactment. [60] The provision applies to taxable years with respect to which the due date (determined with regard to extensions) of the return of tax is after the date of enactment. [61] Effective for stock for which the taxpayer's holding period begins after the date of enactment. [62] Effective for months beginning (or, for certain provisions, plan years beginning or events occurring) after December 31, 2010. [63] Estimate is based on a 4.5 percentage point increase to the 2015 corporate estimated tax shift under paragraph (2) of section 561 of the "Hiring Incentives to Restore Employment Act," in effect on December 21, 2010. [64] Effective on the date the United States Tax Court adopts a personnel management system after the date of enactment. [65] Not elsewhere included. [66] For the details relating to Custom User Fees, see Part Twenty-One of the General Explanation. For the estimates relating to the Custom User Fees, see the Congressional Budget Office website, www.CBO.gov. [67] Effective as if included in the American Recovery and Reinvestment Act of 2009. [68] Generally effective as if included in the American Recovery and Reinvestment Act www.irstaxattorney.com 888-712-7690