Federal Headlines

Estate Tax Action Uncertain in Senate

The likelihood that the Senate will act on extending the estate tax before it expires at the end of 2009 remains uncertain as health care reform dominates lawmakers' attention. Senate Democratic leaders are racing to complete work on health care reform by the end of 2009 as they plan to work on weekends and possibly through the Christmas recess to reach that goal.

Senate Majority Leader Harry Reid, D-Nev., huddled with House leaders on December 3 to discuss the estate tax bill, but following the meeting, Reid as much as admitted that there was no time to pass the legislation this year. One option reportedly under consideration, however, is a one-year extension of the estate tax at current 2009 levels that could be attached to an anticipated omnibus appropriations bill.

The Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Bill of 2009 (HR 4154) approved by the House on December 3 (TAXDAY, 2009/12/04, C.1) is an unlikely candidate for Senate approval even if the chamber found the time to take it up. One problem with the House bill is that the $3.5-million exemption limit is not indexed for inflation. Both Senate Finance Committee Chairman Max Baucus, D-Mont., and Senate Budget Committee Chairman Kent Conrad, D-N.D., have said that the exemption should be indexed for inflation.

Senate Minority Whip Jon Kyl, R-Ariz., and Sen. Blanche Lincoln, D-Ark., have proposed an estate tax bill with a 35-percent tax rate and a $5-million exemption that is indexed for inflation. The Kyl/Lincoln estate tax language was included in the Senate's nonbinding budget blueprint approved earlier in 2009.

The $233-billion price tag and the statutory pay-as-you-go (PAYGO) rules of HR 4154 also make it a difficult sell, especially as the Senate has not adopted PAYGO rules and several prominent Senators remain opposed to the idea.

By Jeff Carlson, CCH News Staff

Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009, as Passed by the House on December 3, 2009, HR 4154

State Headlines

Connecticut --Corporate, Personal Income Taxes: 14-Day Withholding Rule for Nonresident Employees Announced

Effective December 2, 2009, employers are not required to withhold Connecticut personal income tax from wages/compensation paid to a nonresident employee for services performed in Connecticut if the employee is assigned to a primary work location outside of Connecticut and works in Connecticut 14 or fewer days during the calendar year. This "14-day rule" does not, however, exclude the wages/compensation earned by nonresident employees from Connecticut income tax. For purposes of the rule, any part of a day spent performing services in Connecticut will be considered a full day. If an employer expects that a nonresident employee will work more than 14 days in Connecticut during a calendar year, the employer must withhold on all wages/compensation paid to the employee. If a nonresident employee who was reasonably expected to work 14 or fewer days in Connecticut during a calendar year actually works more than 14 days in Connecticut during the calendar year, then the employer must withhold on all wages/compensation paid to such employee after the 14th day. The rule does not apply to payments made to nonresident athletes and entertainers for services performed in Connecticut.

Other References:

Explanations at ¶16-615