Apr 1, 2007 12:00 PM, Rorie M. Sherman Editor in Chief

By: Rorie M. Sherman Editor in Chief

From David A. Handler, partner in the Chicago office of Kirkland & Ellis, LLP, we have this update:

• Never say “die.” On March 13, Catherine V. Hughes, an attorney in the Treasury Department's Office of Tax Policy, said that permanent repeal of the estate tax is not on the congressional radar screen. Specifically, she said: “I suspect that any change in estate tax legislation is at the bottom of the barrel in terms of priority, so I have heard nothing about what may or may not happen with the estate tax in the near future.” But just one week later, on March 21, Sen. Jon Kyl (R-Ariz.) proposed an amendment to the 2008 budget resolution raising the estate tax exemption to $5 million and reducing the maximum rate to 35 percent. It was defeated by a vote of 51 to 47. Sen. Max Baucus (D-Mont.) then proposed an amendment, which passed 97 to 1, that would allow surplus budget funds to pay for extension of estate tax cuts, among other tax cuts. (Problem is, of course, there is no budget surplus at this time.) The House Budget Committee also began its markup of the 2008 budget resolution. Rep. John Spratt (D-S.C.) advanced a proposal that would create a reserve fund allowing certain tax cuts to be extended if paid for, including elimination of the estate tax “on all but a minute fraction of estates.”

• IRS tax exemption letters are suspended for Type III supporting organizations. On Feb. 22, Robert Choi, the Internal Revenue Service acting director for Exempt Organizations Rulings and Agreements, published a memo suspending immediately the issuance of determination letters for exempt organizations seeking to become “functionally integrated” Type III supporting organizations (SOs.) The suspension is to remain in effect until new guidance is issued.

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