Thursday, February 16, 2012

The President’s Budget Tax Proposals

The President delivered his proposed budget for fiscal 2013 this Monday. The budget included as one of its five tax “reform” principles the following:
  • Simplify the Internal Revenue Code
Sounds good. Here are some proposed tax “simplifications”:
  • Provide a temporary 10% tax credit for new jobs and wage increases
  • Provide additional tax credits for investment in advanced energy manufacturing
  • Provide tax credit for energy-efficient commercial building property expenditures
  • Reform and extend Build America Bonds
  • Provide for automatic enrollment in IRAs, including a small-employer tax credit
  • Expand the earned income tax credit for larger families
  • Expand the child and dependent care tax credit
  • Provide tax incentives for locating jobs and business activity in the United States
  • Provide new manufacturing communities tax credit
  • Target the domestic production deduction to domestic manufacturing activities
  • Provide a tax credit for the production of advanced technology vehicles
  • Provide a tax credit for medium- and heavy-duty alternative-fuel commercial vehicles
  • Modify certain energy incentives
  • Eliminate capital gains taxation on investments in small business stock
  • Expand the tax credit provided to qualified small employers for nonelective contributions to employee health insurance
  • Extend and modify the new markets tax credit
  • Designate growth zones
  • Provide tax incentives for transportation infrastructure
  • Modify tax-exempt bonds for Indian tribal governments
  • Allow current refundings of state and local governmental bonds
  • Reform and expand the low-income housing tax credit
  • Defer deduction of interest expense related to deferred income of foreign subsidiaries
  • Determine the foreign tax credit on a pooling basis
  • Tax currently excess returns associated with transfers of intangibles offshore
  • Limit shifting of income through intangible property transfers
  • Disallow the deduction for nontaxed reinsurance premiums paid to affiliates
  • Limit earnings stripping by expatriated entities
  • Modify tax rules for dual capacity taxpayers
  • Tax gain from the sale of a partnership interest on a lookthrough basis
  • Prevent use of leveraged distributions from related foreign corporations to avoid dividend treatment
  • Extend Sec. 338(h)(16) to certain asset acquisitions
  • Remove foreign taxes from a Sec. 902 corporation’s foreign tax pool when earnings are eliminated
  • Require a certified taxpayer identification number (TIN) from contractors and allow withholding if the contractor does not provide a TIN
  • Require e-filing by any entity that must file Schedule M-3
  • Authorize Treasury to require additional information to be included in Form 5500, Annual Return/Report of Employee Benefit Plan
  • Allow the IRS to require prospective reclassification of misclassified workers
  • Extend the statute of limitation where a state adjustment affects federal tax liability
  • Require taxpayers who prepare their returns electronically but file their returns on paper to print a 2D bar code
  • Impose a penalty on failure to comply with electronic filing requirements
Don’t worry too much about this. The Senate hasn’t passed a budget in years.

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