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Online Home | Site Search | Tax News & Views |Senate Looking at New Revenue Offsets for IRS BillWednesday, March 11, 1998 OnLine A number of possible new tax increases could be added to the Internal Revenue Service restructuring bill now being drafted in private meetings by members of the Senate Finance Committee, congressional sources said. Among the offsets under consideration is the proposal to preclude certain taxpayers from prematurely claiming losses from receivables or from creating reserves for bad debts, according to staff members. The panel also is looking at freezing the grandfathered status of paired-share real estate investment trusts, restricting impermissible business indirectly conducted by them, and modifying the tax treatment of closely held REITs, congressional sources said. The REIT proposals were included in President Clinton’s fiscal 1999 budget. It now appears the Finance Committee may not meet to approve an IRS restructuring bill until the week of March 23, aides said. This suggests the Senate will not meet Senate Majority Leader Trent Lott's, R-Miss., pledge to complete Senate action on the bill prior to the spring recess. The initial plan was for Congress to complete the bill in time to send it to President Clinton to sign by April 15, when most taxpayers file their tax returns. |
Archer becoming receptive House Ways and Means Committee Chairman Bill Archer, R-Texas, in recent remarks opened the door to accepting at least a few of Clinton’s tax proposals without indicating which he might accept. Several existing paired share REITs have been lobbying intensely over the proposal, but Archer privately has expressed ambivalence about defending paired-share REITs, congressional sources said. The Finance Committee wants to expand the scope of the bill approved by the House by providing innocent spouse relief and by helping individuals harmed by excessive IRS penalties, so it will need extra revenue to offset the loss from the proposals. The House’s reversal of part of the Tax Court’s Schmidt Baking decision is expected to remain as the revenue offset in the Senate. The decision allowed an accrual-basis taxpayer to take an immediate deduction for employee vacation pay expenses. Privilege parity A move also is underway to expand the restructuring bill’s House-passed provision giving accountants, when dealing with the IRS, the same client confidentiality privileges that lawyers have. Sen. Connie Mack, R-Fla., introduced a bill (S.1737) that would extend the confidentiality privilege for accountants to proceedings before the Tax Court, as well as to those before the IRS. The measure has the support of nine members of the Senate Finance Committee, including Majority Leader Trent Lott. The confidentiality bill "provides taxpayers with the confidence of knowing that their tax advice communications with any federally-authorized tax practitioners are afforded equal confidentiality protections in dealings with the IRS," Mack said on the Senate floor March 10. The plan is to add Mack’s language to the IRS restructuring bill. The American Bar
Association has been pressuring Congress to oppose the parity language. |
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