DESCRIPTION OF THE CHAIRMAN’S MODIFICATION 

TO H.R. 1562, THE 

“KATRINA HOUSING TAX RELIEF ACT OF 2007” 

Scheduled for Markup 

by the 

HOUSE COMMITTEE ON WAYS AND MEANS 

on March 21, 2007 

Prepared by the Staff 

of the 

JOINT COMMITTEE ON TAXATION 

 

March 20, 2007 

JCX-14-07 
i 

CONTENTS 

Page

INTRODUCTION .......................................................................................................................... 1 

I. MODIFICATION OF COLLECTION DUE PROCESS PROCEDURES FOR 

EMPLOYMENT TAX LIABILITIES.................................................................................... 2 

II. MODIFICATION TO CORPORATE ESTIMATED TAX PAYMENTS............................. 4 
1 

INTRODUCTION 

This document,1

 prepared by the staff of the Joint Committee on Taxation, provides a 

description of the Chairman’s modification to H.R. 1562, the “Katrina Housing Tax Relief Act 

of 2007,” which is scheduled for mark up by the House Committee on Ways and Means on 

March 21, 2007.2

 

 1

 This document may be cited as follows: Joint Committee on Taxation, Description of the 

Chairman’s Modification to H.R. 1562, the “Katrina Housing Tax Relief Act of 2007” (JCX-14-07) 

March 20, 2007. 

2

 The provisions of the Chairman’s Mark are described in the Joint Committee on Taxation, 

Description of the “Katrina Housing Tax Relief Act of 2007” (JCX-12-07), March 19, 2007. 
2 

I. MODIFICATION OF COLLECTION DUE PROCESS PROCEDURES 

FOR EMPLOYMENT TAX LIABILITIES 

Present Law

Levy is the IRS’s administrative authority to seize a taxpayer’s property to pay the 

taxpayer’s tax liability. The IRS is entitled to seize a taxpayer’s property by levy if a Federal tax 

lien has attached to such property. A Federal tax lien arises automatically when (1) a tax 

assessment has been made, (2) the taxpayer has been given notice of the assessment stating the 

amount and demanding payment, and (3) the taxpayer has failed to pay the amount assessed 

within 10 days after the notice and demand. 

In general, the IRS is required to notify taxpayers that they have a right to a fair and 

impartial collection due process (“CDP”) hearing before levy may be made on any property or 

right to property.3

 Similar rules apply with respect to notices of tax liens, although the right to a 

hearing arises only on the filing of a notice.4 The CDP hearing is held by an impartial officer 

from the IRS Office of Appeals, who is required to issue a determination with respect to the 

issues raised by the taxpayer at the hearing. The taxpayer is entitled to appeal that determination 

to a court. Under present law, taxpayers are not entitled to a pre-levy CDP hearing if a levy is 

issued to collect a Federal tax liability from a State tax refund or if collection of the Federal tax 

is in jeopardy. However, levies related to State tax refunds or jeopardy determinations are 

subject to post-levy review through the CDP hearing process. 

Employment taxes generally consist of the taxes under the Federal Insurance 

Contributions Act (“FICA”), the tax under the Federal Unemployment Tax Act (“FUTA”), and 

the requirement that employers withhold income taxes from wages paid to employees (“income 

tax withholding”).5 Income tax withholding rates vary depending on the amount of wages paid, 

the length of the payroll period, and the number of withholding allowances claimed by the 

employee. 

Description of Proposal

Under the provision, levies issued to collect Federal employment taxes are excepted from 

the pre-levy CDP hearing requirement. Thus, under the provision, taxpayers have no right to a 

CDP hearing before a levy is issued to collect employment taxes. However, the taxpayer is 

provided an opportunity for a hearing within a reasonable period of time after the levy. 

Collection by levy is permitted to continue during the CDP proceedings. 

 3

 Sec. 6330(a). 

4

 Sec. 6320. 

5

 Secs. 3101-3128 (FICA), 3301-3311 (FUTA), and 3401-3404 (income tax withholding). FICA 

taxes consist of an employer share and an employee share, which the employer withholds from 

employees' wages. 
3 

Effective Date

The provision is effective for levies issued on or after the date that is 120 days after the 

date of enactment and before September 30, 2015. 
4 

II. MODIFICATION TO CORPORATE ESTIMATED TAX PAYMENTS 

Present Law

In general, corporations are required to make quarterly estimated tax payments of their 

income tax liability. For a corporation whose taxable year is a calendar year, these estimated tax 

payments must be made by April 15, June 15, September 15, and December 15. Fiscal year 

taxpayers make quarterly payments on corresponding dates. 

The Tax Increase Prevention and Reconciliation Act of 2005 (“TIPRA”) provided that in 

the case of a corporation with assets of at least $1 billion, the payments due in July, August, and 

September, 2012, (for fiscal and calendar year taxpayers, respectively) shall be increased to 

106.25 percent of the payment otherwise due and the next required payment shall be reduced 

accordingly. 

Description of Proposal

The provision increases the 106.25 percent enacted in TIPRA to 106.45 percent. 

Effective Date

The provision is effective on the date of enactment.