Yesterday, Representative Rangel of New York introduced the "Tax Extenders Act of 2009" (the "Bill") in the House. The Bill would extend through the end of 2010 more than forty tax relief provisions that are scheduled to expire at the end of 2009. Of greater note, these provisions would be paid for by (i) imposing compliance provisions substantially similar to those in the "Foreign Account Tax Compliance Act of 2009" directed at curbing offshore tax evasion, (ii) subjecting certain "dividend equivalent payments" to US withholding taxes, and (iii) taxing carried interest as ordinary income under provisions substantially similar to those included in Representative Levin's carried interest bill introduced earlier this year.
With regard to the provisions adopted from the Foreign Account Tax Compliance Act of 2009, some are proposed to have effect beginning in the first taxable year after the date of enactment, but the significant withholding tax penalties imposed by the Bill on failure to comply with its reporting requirements will only apply to payments made after December 31, 2012. With regard to the provisions adopted from Representative Levin's carried interest bill, they are proposed to apply to taxable years ending after December 31, 2009.
As you are likely aware, there are significant uncertainties with respect to the application of these revenue raisers, so we urge you to closely monitor these developments.
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