Snow Writes To Tax Relief Reconciliation Committee

by Mike Godfrey, Tax-News.com, Washington

27 February 2006

It emerged last week that US Treasury Secretary, John Snow has written to the conference committee on tax relief reconciliation.

In a letter sent to Chairman of the House Ways and Means Committee, William Thomas, in addition to Finance Committee Chairman Charles Grassley, Senators Max Baucus (D-Montana) and Jon Kyl (R-Arizona), and Congressmen Pete Stark (D-California), Charles Rangel (D-New York), Jim McCrery (R-Louisiana) and Dave Camp (R-Michigan), the Treasury Secretary announced that:

"As you work through the conference on tax relief reconciliation, I write to offer the Administration's views on major issues raised by this important legislation. In particular, I would like to reaffirm the position expressed in our Statements of Administration Policy to the House and Senate of the Administration's strong support for the extension in this legislation of dividends and capital gains tax relief included in the House-passed bill."

After praising provisions in the Senate-passed bill which seek to promote charitable giving, Mr Snow went on to state that:

"The Administration has significant concerns with a number of revenue offset provisions in the Senate-passed bill, especially those that increase the complexity of the tax code or target taxpayers in specific industries. For example, the Administration has strong concerns with the provision in the Senate-passed bill that would codify the "economic substance" doctrine and urges Congress to eliminate this provision from the final legislation. The Administration also opposes the provision in the Senate-passed bill that would disallow use of the last-in, first-out (LIFO) method of accounting for certain taxpayers."

"This provision would result in a retroactive tax increase by changing a long-accepted accounting practice. As we have stated previously, the President's senior advisors would recommend that the President veto the legislation if this provision remains in the final legislation."

He continued:

"The Administration supports the extension of a number of important expired or expiring tax provisions, as provided for in both the House and Senate-passed bills. The Administration strongly supports extension of the Research and Experimentation tax credit for as long a period of time as possible. We will work with the conferees to ensure that any extension of this important provision is properly crafted and improves the effectiveness of the credit."

"The Administration also strongly supports extension of increased expensing for small businesses, which would provide a number of benefits to small business taxpayers and the economy."

"Both the House and Senate have passed measures that would provide relief from the alternative minimum tax (AMT) for 2006. As outlined in the FY 2007 Budget, the Administration supports a one-year "patch" for the AMT. We urge Congress to enact an AMT patch this year."

"Finally, the Administration has serious concerns with non-tax-related items in the Senate-passed tax relief bill that are unrelated to the purposes of the bill and strongly urges that such items not be included in the final legislation," he concluded.

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