US Senate Rejects Effort To Repeal Estate Tax

From AutomatedTrader.net:

A Republican-led effort to permanently repeal the estate tax garnered only 39 votes in the Senate, as the motion failed during debate on extending jobless benefits.

Estate-tax votes are closely watched since they occur infrequently, and opponents of the tax and its supporters seek to gain ground among lawmakers.

The motion from Sen. Jim DeMint (R., S.C.), fell on a 39-59 vote. Senators Olympia Snowe and Susan Collins of Maine and George Voinovich of Ohio—voted to oppose repeal.

Senators Blanche Lincoln of Arkansas and Ben Nelson of Nebraska—supported the repeal effort.

Under the 2001 tax cut law, the estate tax was repealed for one year only in 2010. Heirs of those who die this year are not subject to any federal estate tax, although they must pay a capital gains tax when they sell inherited assets.

Congressional Democrats have said they want to reinstate the tax at levels in effect in 2009--a 45% tax rate on inherited wealth that exceeds $3.5 million.

Estate-Tax Repeal Means Some Spouses Are Left Out

From the WallStreetJournal.com:

Spouses of those wealthy who die this year might find themselves with nothing if the family will isn't revised—a major wrinkle that could follow Friday's repeal of the federal estate tax.

As started on Jan. 1, estate taxes will be repealed for 2010 only. That means unless Congress acts otherwise, there is no limit to the wealth that can be passed on to heirs without incurring federal estate taxes through the end of the year.

But wills have often been written on the expectation that estate taxes were a fact of life for years to come, estate planners say. As a result, wills typically direct assets not subject to the tax be passed on to children—for 2009, up to $3.5 million—with the rest directed to the spouse.

"You could be in a situation now where everything would go into a trust downstream to the kids and nothing is left to the spouse," said Greg Rosica, a tax partner at Ernst & Young. "There is a need to revisit the basic estate-planning documents to make sure that what you intend to have happen really does happen."

Most states allow a surviving spouse to claim a portion of the estate, even if the spouse is disinherited under the will. But doing so can be time-consuming and expensive.

In 2011, the estate tax is scheduled to snap back to higher rates similar to those prior to President George W. Bush's tax cuts. The roundabout series of changes—the result of a compromise to pass the tax-cut legislation—has been on the books for years, but estate planners anticipated congressional Democrats would prevent the 2010 repeal from taking effect.

Wireless Group Wants Repeal of Cell Phone Tax Law

Wireless association CTIA is the latest group to support new legislation attempting to repeal the 20 year old cell phone tax. It is supposed to be levied on the personal use of employer provided cell phones, but there is a lot of confusion about how these taxes should be calculated. As such, several groups have spoken out against the law, including the IRS Commissioner.

"The alternatives [to legislation] proposed by the IRS are either incomplete or inadequate solutions that would continue to subject employees and employers to onerous call log requirements," CTIA President Steve Largent said.

CTIA counts among its members the country's largest wireless companies – Verizon Wireless, AT&T Inc., Sprint Nextel Corp., and T-Mobile USA. Verizon Wireless is a joint venture of Verizon Communications Inc. and Vodafone PLC. T-Mobile is a unit of Deutsche Telekom.

The IRS is collecting comments on the cell phone-tax law. In June, IRS Commissioner Doug Shulman asked Congress to repeal it, calling it "obsolete."

Mr. Shulman's statement signaled a quick turnabout for the IRS, which had earlier proposed that employers assign 25% of an employee's annual phone expenses as a taxable benefit. Under that scenario, a worker in the 28% tax bracket, whose wireless device costs the company $1,500 a year, could see $105 in additional federal income tax.

Continued at the Wall Street Journal…