Tax Hike Proposals Likely

"But, if Obama wins, the Republicans in Congress will try to make some sort of deal. Obama has always said that you shouldn't allow the Bush tax cuts to go away for those making less than $250,000, so, I think all we will see a lot of discussions, and political rhetoric about what you do with taxes for upper income people," Sweetnam said.

Sweetnam said that this year, the so-called "Buffett rule," and reducing tax benefits from the IRS code will likely be introduced by Senate Democrats.

"Congress won't implement these, but they will be political issues during the fall campaign," Sweetnam said.

The Buffet rule, proposed by Obama last year, is designed to reduce income inequality in the U.S. between the top 1 percent and the rest of the population.

The tax plan would apply to individuals earning more than $1 million per year; this comprised the top 450,000 of Americans by income when the rule was proposed.

AALU officials agree. They said consideration of fundamental tax reform will be the subject of a number of hearings, study and preparation this year in advance "of what we expect to be a legitimate effort to reform the individual and/or corporate tax codes in 2013."

Sweetnam acknowledged that it is "very difficult for a tax lawyer to know what to advise his clients to do right now." 

Christopher Bergin, president and publisher of the non-profit Tax Analysts, which, among other things produces Tax Notes, a highly-regarded online publication that analyzes complex tax issues, has a similar view.

"The fate of the Bush tax cuts is the question I get all the time from people who represent high wealth clients," Bergin said.

However,  "It is just not high on the Washington radar screen as we argue about bad tax policy ideas, like extending the payroll tax cut, which if we keep extending will likely have an important negative impact on Social Security."

The fate of the Bush tax cuts, as well as all other components of tax policy, he said, is, however, the "canary in the mine. The tax system, including the estate taxes, are the poster child for a broken political process."

He said tax practitioners, including those that advise small businesses, are at the end of the line in the Washington political process.

"How are they going to advise clients about an unfair, immensely complex, and economically inefficient tax?" Bergin asks.

"Given the lack of incentive for Congress to deal promptly with the expiring tax cuts, the alternative minimum tax and the tax extenders, you can now add a fourth problem with our current tax-writing policy—it's temporary," Bergin said.

"How do you plan for that?" he asks. "It's madness."

He said readers of insurance publications sit in the center of the storm, along with small businesses.

"No one has an answer for them, and it is a horrible situation," Bergin said.