November 2005
File: F/Tax Relief Bill of 2005
Thomas B. Cooke[1]
Issue Senate House
Cost $60 B $56.6 B
Name Tax Relief Bill of 2005 Tax Relief Extension Act of 2005
AMT
(2006) Extend 1 Year of Relief NA
Charitable
Deductions Contributions in excess of NA
(2006 & 2007) $210/$420 can be taken as a
deduction for AGI
If taxpayer/s itemize, deduction
can be taken for cash and non-cash
in excess of $210/$420
Estimated Tax NA
Safe Harbor AGI of at least $150,000
(2006 +) 119% of prior year (2006)
110% of prior year (2007)
Interest Paid same information NA
On Tax-Exempt reporting as taxable
Bonds bonds
(2006 +)
Offer in Compromise 20% down payment on NA
(60 days after a lump-sum offer. If IRS
enactment) rejects the offer, the down
payment is forfeited and will
not be applied to tax due.
Tax Preparer Replaces the realistic possibility NA
Penalties standard with a requirement that
(after date of there be a reasonable belief that
enactment) the tax treatment of the position
taken is more likely than not the
proper treatment.
$250 penalty for signing a return
that understates taxes because a
position is taken for which there
was not a realistic possibility is
increased to $1,000 with the new
standard noted above.
$1,000 penalty for specified willful
or reckless conduct in preparing
a return is increased to $5,000.
State and Local Sales Extended until 1-1-07 Agree
Tax Deduction
Deduction for Extended until 1-1-11 Agree
Tuition and Fees
Savers Credit Through 2009, low-income Agree
taxpayers can receive a
credit on up to $2,000 to
qualified retirement savings
plans
Extend lower tax rates NA Until 1/1/2011
on Capital Gains and
Dividends
End
3
[1] Executive Director, The National Society of Tax Professionals; Editor, The Federal Tax Alert;
Editor, The Tax Client Newsletter. @ 2005