On February 7, the Senate Finance Committee is scheduled to mark up the “Highway Investment, Job Creation and Economic Growth Act of 2012.” According to a press release issued by Senate Finance Chair Max Baucus (D-MT), if favorably reported by the Committee, this measure will be folded into a larger transportation bill for Senate debate.

The changes that would be made by this legislation include:

… Extension of the motor fuel taxes, all three non-fuel excise taxes, and the Leaking Underground Storage Tank (LUST) Trust Fund tax through Sept. 30, 2015.

… Under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312) black liquor (a byproduct of the paper milling process in kraft mills) is excluded from alternative fuel tax credit eligibility, effective for fuel sold or used after Dec. 31, 2009. (Code Sec. 6426(d)(2) The bill would prohibit taxpayers from claiming the alternative mixture credit (or the cellulosic biofuels credit) on any new or amended returns made on or after Feb. 3, 2012.

… Authorize the federal government to deny the application for a new passport or renewal of an existing passport to an individual with $50,000 or more (indexed for inflation) of unpaid federal taxes that IRS is collecting through enforcement action. It would also permit the federal government to revoke a passport upon reentry into the U.S. by such individuals.

… Permit IRS to impose a levy of up to 100% (up from current law’s 15%) on tax delinquent Medicare service providers.

On February 3, the House by a vote of 248 to 169, passed H.R. 658, the FAA Air Transportation Modernization and Safety Improvement Act Conference Report. The Senate is scheduled to take up the measure on Monday, February 6.

H.R. 658 includes a corporate tax change that was carried in the President’s budget proposals for FY 2011 and 2012. It concerns Code Sec. 249, which bars a deduction to the issuing corporation for any premium paid upon the repurchase of a bond, debenture, note, or other evidence of indebtedness which is convertible into the stock of (1) the issuing corporation, (2) or a corporation in control of, or controlled by, the issuing corporation. The bar applies to the extent that the repurchase price exceeds an amount equal to the adjusted issue price plus a normal call premium on bonds or other evidences of indebtedness which are not convertible. Currently, for Code Sec. 249 purchases, the term control is defined with reference to the control definition in Code Sec. 368(c).

Effective for repurchases after the enactment date, the bill would modify the definition of “control” by incorporating indirect control relationships described in Code Sec. 1563(a)(1).

Facebook’s $5 billion initial public offering stands to be the largest Internet IPO of all time, passing the Dutch company World Online’s $2.8 billion issue in 2000, according to Thomson Reuters Deals Insight.

President Barack Obama sent a small-business proposal to Congress Tuesday, calling on bipartisan support for small businesses. The Startup America Legislative Agenda — which proposes tax breaks, capital for startups and visa reforms to boost high-skilled workers and entrepreneurs — was introduced on the first anniversary of the White House Startup America Initiative.

The estimated $48 billion agenda, which Obama will include in his 2013 budget, includes:

• A 10 percent income tax credit for small businesses that create jobs or increase wages in 2012
• Permanent doubling of the amount of startup expenses entrepreneurs can deduct from their taxes, from $5,000 to $10,000
• Permanent elimination of taxes on capital gains in key small-business investments
• A one-year extension of the tax deduction on first-year business equipment and software purchases
• An “IPO on-ramp” to change how some of the SEC laws and regulations are phased in for small startups in their first years after an IPO
• Opening the door for smaller IPOs by increasing the limits on “mini offerings” from $5 million to $50 million, exempting these companies from some SEC registration requirements
• A national framework by which small businesses can raise capital through crowdfunding
• Increase of the Small Business Investment Company (SBIC) program from $3 billion to $4 billion
• Elimination of country-specific caps for certain immigrant visa categories to attract high-skilled foreign workers and entrepreneurs.

Before a Cabinet meeting — SBA Administrator Karen Mills’ first as a Cabinet member — Obama said making a difference for small businesses requires an “all-hands-on-deck” approach. “I know that the Department of Commerce, Energy, and Education, as well as the SBA, are all launching complementary initiatives to support entrepreneurship as well,” he said. “And so what we want to do is to make sure that every single agency, even as they’re tending to their energy initiatives or providing homeland security or transportation or defense, that we’re also thinking about how are we advancing the cause of giving small businesses and entrepreneurs opportunities to start creating the next Google or the next Apple or the next innovative company that’s going to create jobs and improve our economy.”

Employers in many states are likely to pay more federal unemployment tax (FUTA) in 2012 than in previous years due to a higher FUTA rate because of outstanding federal loans.

As Congress mulls an extension of the payroll tax cut reduction, the Congressional Research Service (CRS) has released a report on how such an extension would stimulate the economy and some of the ways to pay for it. The report’s discussion of the possible offsets illustrates how difficult it will be for Congress to reach a consensus on this extender issue.

The government intends to set an example for the world by enacting a financial transactions tax if the EU does not agree to do so.

IRS reopened the international voluntary disclosure program relating to disclosure of offshore assets. The Service said that it has collected $4.4 billion in assets from the previous two programs.

The White House has released a Fact Sheet on President Obama’s “Blueprint for an America Built to Last” proposals to encourage companies to create U.S. manufacturing jobs rather than shipping those jobs overseas, as laid out in his State of the Union address. The Fact Sheet also provides a framework for corporate tax reform.

The following six proposals, which it is hoped Congress will act on immediately, form a revenue-neutral reform package to support manufacturing, discourage outsourcing, and encourage insourcing:

(1) Deny moving expense deductions to companies moving operations overseas and allow a new 20% credit for the expenses of moving operations back to the U.S. (Revenue neutral)
(2) Target the Code Sec. 199 domestic production activity deduction on manufacturers who create jobs in the U.S. and doubling the deduction for advanced manufacturing technologies from 9% to 18%. (Revenue neutral)
(3) Create a new Manufacturing Communities Tax Credit ($2 billion per year in incentives for three years) for qualified investments that help finance projects in communities that have suffered a “major job loss event”—i.e., where a military base closes or a major employer closes or substantially reduces a facility or operating unit, resulting in permanent mass layoffs. (Cost $6 billion)
(4) Extend the Code Sec. 48C(d) Advanced Energy Manufacturing Tax Credit for investments in clean energy manufacturing in the U.S. (Cost $5 billion)
(5) Provide 100% expensing of investment in plants and equipment. (Cost $4 billion)
(6) Close a loophole that allows companies to shift profits overseas from intangible property created in the U.S. (Raises $23 billion)

Corporate tax reform. President Obama also proposed a framework for corporate tax reform to encourage greater U.S. investment and eliminate tax advantages for outsourcing by:

… making companies pay a minimum tax for overseas profits;
… making permanent an expanded Code Sec. 41 research and experimentation tax credit; and
… simplifying the Code and closing loopholes;