Among other things, the bill would extend COBRA assistance. From the summary:
"Help with Health Insurance for Unemployed Workers (COBRA): $12.3 billion to extend from nine to 15 months the 65% COBRA health insurance subsidy for individuals who have lost their jobs. The job lost eligibility date is extended in the provision to June 30, 2010. Approximately seven million people benefited from the premium subsidy provided in the Recovery Act."
For the amendments made to the bill before passage, please see here. Once the full bill as passed is published, we will post it. You can find a copy of the bill before amendments here.
The Energy and Commerce Committee passed its health care bill today. You can read a copy here.
The Joint Committee on Taxation wrote a helpful description of the tax provisions in the bill which was the precursor to this bill. You can find that analysis here.
Under the proposed bill, employers will either have to provide health care insurance or pay a penalty equal to 8% of the wages paid to employees (not capped). This 8% tax would be in addition to FICA taxes.
A good place to read H.R. 3200 is at Thomas.gov; link to bill here.
Work in key Washington, D.C., agencies continues toward disbursement of the $7 billion allocated for broadband stimulus programs. As discussed in detail in this advisory, the Department of Commerce's National Telecommunications Information Administration (NTIA) and the Department of Agriculture's Rural Utilities Service (RUS) have initiated meetings and released a request for comments on the scope of these programs. However, for companies interested in seeking funding, two of the most important immediate focal points are outside of Washington, D.C. Continue reading...
Buried in the new stimulus law is a “Buy American” requirement that threatens to delay or even prevent the use of stimulus funds for the construction, maintenance, and repair of highways, bridges, electric transmission lines, energy efficiency projects, port infrastructure, high-speed rail facilities, schools, and hospitals, among others. Unless the Obama Administration acts quickly to remedy the situation through the use of waivers, it could also encourage protectionism among our trading partners just as the world economy is struggling to avoid a replay of the 1930s. Continue reading...
Persons who would be required to receive mandatory payments from a retirement plan or IRA in 2009 may opt not to receive the minimum required distribution for 2009. The Worker, Retiree and Employer Recovery Act of 2008, passed into law on Dec. 23, 2008, included this relief, which means that the previously required 2009 distribution does not have to be made, thereby deferring taxes on such amount. Importantly, this relief also means that no investments have to be sold in order to make the distribution.
This advisory provides an overview of the tax relief the Act provides for both employers and retirees, and includes steps they can take to ensure they make the best use of this opportunity. Continue reading...
The new economic stimulus package provides over $19 billion to support and promote the adoption of electronic health records (EHRs) for all Americans by 2014. With this added momentum comes concerns about the privacy and security of EHRs, particularly in the hands of health record exchanges, which are not directly regulated under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The new legislation is loaded with requirements, new enforcement provisions and penalties for covered entities, business associates, vendors and others.
Congress passed the American Recovery and Reinvestment Act of 2009 (the Act) on Friday, Feb. 13, 2009, with almost unprecedented speed, and the President signed it into law on Feb. 17. The Act has grabbed the attention of the country - from inside the beltway to Main Street America. Title XIII of the Act is artfully entitled the Health Information Technology for Economic and Clinical Health (also referred to as HITECH) Act.
Most of the Act's provisions will take effect one year after enactment of the law (Feb. 17, 2010) although increased penalty provisions go into effect immediately. Other provisions require implementing regulations and will take two years or longer to take effect. Continue reading...
On Friday, Feb. 13, the U.S. Senate and House of Representatives passed the final version of a $787 billion economic stimulus package, the “American Recovery and Reinvestment Act of 2009.” The president signed the Act into law today, Feb. 17.
"On Friday, Feburary 13, 2009, the House of Representatives and Senate approved the conference report for the American Recovery and Reinvestment Act of 2009.
The U.S. Government Printing Office has now published the final text of the legislation. Read it by clicking on the links below -- then use the form on the right to leave your comments, thoughts, and ideas.
Conference Report on H.R. 1 (1 of 5): PDF, ASCII
Conference Report on H.R. 1 (2 of 5): PDF, ASCII
Conference Report on H.R. 1 (3 of 5): PDF, ASCII
Conference Report on H.R. 1 (4 of 5): PDF, ASCII
Conference Report on H.R. 1 (5 of 5): PDF, ASCII "
In response to a mandate from the President’s Identity Theft Task Force, the Federal Trade Commission (FTC) issued its report, “Security in Numbers: SSNs and Identity Theft,” on Dec. 17, 2008. The report examines the role that Social Security numbers (SSNs) play in the problem of identity theft and contains five recommendations for Congress, the FTC, and private sector organizations that collect and use SSNs. Continue reading...
The Consumer Product Safety Improvement Act, which was recently signed into law, sets restrictions on the manufacture and distribution of consumer products, places a strong focus on children's products, and creates or enhances existing requirements for record-keeping. It is important to be familiar with this new law as the sale of products that do not comply can result in significant civil and criminal liability.
This advisory does not cover all requirements of the Act. The Consumer Product Safety Commission (CPSC) will be issuing further regulations and interpretations of the Act's requirements. We will strive to keep our clients informed of significant developments when they happen.
A key provision of the Act is that it prohibits manufacturing or importing a consumer product in advance of the effective date of a new product safety rule—either under the Act or other legislation—at a rate greater than the rate at which that product was produced or imported prior to the promulgation of that rule.
Manufacturers, distributors, importers, sellers and advertisers must be aware of the Act's requirements. Some requirements were effective as of Nov.12, 2008; others become effective at later dates. Unless otherwise noted, the requirements discussed in this advisory were effective Nov. 12, 2008. Continue reading...
"Under current law, the interest on a car loan is not tax deductible. Senator Mikulski’s plan will change this, making interest payments on car loans and state sales/excise car tax-deductible for new cars purchased between November 12, 2008 and December 31, 2009. This deduction is “above-the-line” meaning it can be taken by both itemizing and non-itemizing tax payers. The plan is targeted so that only families making less than $250,000 a year, or individuals making less than $125,000 annually, qualify for the full deduction. Under this plan, a family would save about $1,553 on a $25,000 car, and about $2,500 on a $35,000 car. For more information on Senator Mikulski’s proposed legislation, go to: http://mikulski.senate.gov/_pdfs/Press/autoownershiptaxamendment.pdf."
You can read the Senator's press release here. I just wish her plan didn't end after 1 year and didn't phase out for higher income taxpayers...but these are just my personal opinions...
The Wall Street Journal reported yesterday that the Bailout Bill had in it provisions which "saved" taxpayers who had been stung by the alternative minimum tax on incentive stock options from their unpaid taxes and penalties and interest arising from their incentive stock option exercises prior to January 1, 2008.
The provision provides that any "underpayment of tax outstanding on the date of the enactment of this subsection which is attributable to the application of section 56(b)(3) for any taxable year ending before January 1, 2008, and any interest or penalty with respect to such underpayment which is outstanding on such date of enactment, is hereby abated."
Section 56(b)(3) is the provision which provides that the gain on the exercise of incentive stock options is an alternative minimum tax adjustment. So, the Bailout Bill says, quite literally, if you owe taxes attributable to the exercise of incentive stock options for a tax year ending before January 1, 2008, and interest and penalties on such taxes, you don't have to worry about it!
Taxpayers who paid the AMT in ISO exercises prior to January 1, 2008, might want to consider their refund alternatives.
Taxpayers should also be aware that the provision is only effective for ISO exercises prior to January 1, 2008, and does not extend into the future.
House Democrats are apparently pushing for a corporate level tax cut that would reduce the corporate level tax rate from 35% to 30.5%, or even lower. See here. Last year, House Ways & Means Chair Charles Rangel proposed cuts in corporate tax rates in a simplification effort that would have taken away tax breaks available to corporations.
It remains to be seen how this will be received or interact with Obama administration tax proposals.
From the New York Times: "some people think that a carried-interest tax increase could be put back on the table." See also this article in PEHUB.
What I haven't seen written about in the various tax articles that have been written recently is how state and local tax increases will affect contemplated federal tax hikes. Both California and New York City are considering income tax hikes. Since state and local income taxes are deductible for federal income tax purposes, if state and local governments across the country raise income taxes this could reduce the federal revenues expected to be derived from federal income tax hikes, which might necessitate higher federal income tax hikes than previously contemplated.
The Wall Street Journal published an editorial on Saturday, October 25, 2008, which made some predictions about what we could expect in terms of federal income and employment taxes for high income earners if Senator Obama was elected President. Of course, it is impossible to say what will happen, especially with the economy slumping, but the predictions were as follows:
a roll back of the 2001 and 2003 tax rate reductions for taxpayers in the top two income tax brackets, raising the top two income tax brackets to 36% and 39.6% from 33% and 35%. The 33% rate currently kicks in at incomes of $164,550 for individuals and $200,300 for joint filers. This would seem to be very likely.
reinstatement of the phaseout of the personal exemptions and itemized deductions for married couples making more than $250,000 a year. Again, this seems likely.
an increase in capital gains tax rates to 20% from 15% for those making more than $250,000 per year; although an exemption on capital gains taxes on start up companies is contemplated, it is unclear how this will work with high income taxpayers, who in general are the only persons entitled under the securities law to make these types of investments.
an increase in social security taxes on wages and self employment income. If you make more than $250,000 in wages or self employment income, President-elect Obama has indicated that he wants to increase the social security tax by 2 to 4 percentage points. It is unclear whether this increase would apply to both employer and employee, or to both sides of the SECA equation.
It would appear that everyone is expecting that this tax "break" or "loophole" will be closed.
There were a number of articles to this effect written today, including one in CNNMoney, and another at GlobeSt.com.
It will be crucial to the venture capital industry and the real estate industry that any modification to the tax law to take away the carried interest tax "break" for larger institutions (where there is perceived executive compensation excesses) does not inadvertently or intentionally capture venture capital and real estate partnerships as well.
The Committee for a Responsible Federal Budget has released a helpful guide to current tax policy and how it might change depending on who is elected. You can find the guide here. Regardless of who is elected, taxes are going to be a top legislative priority next year. The guide is helpful to understanding current law, including which tax rates are currently set to expire and when.
On Oct. 14, 2008, the FDIC announced the Temporary Liquidity Guaranty Program, or the Program, which is one of several recent government initiatives designed to improve the strength of financial institutions and enhance market liquidity. While the long term impact of the Program remains unknown, all “eligible institutions” (as described in this advisory) are already subject to the Program on an interim basis and each eligible institution must determine whether to opt out of the Program on or before Nov. 12, 2008. This advisory will briefly summarize the major aspects of the Program. Continue reading...
On Oct. 14, 2008, the U.S. Department of Treasury announced the Troubled Asset Relief Program, or TARP Program, which is one of several recent government initiatives to improve the strength of financial institutions and enhance market liquidity. Under the TARP Program, the Treasury will purchase up to $250 billion in Senior Preferred stock on standardized terms more fully described in the TARP Program's term sheet. This bulletin will briefly summarize the major aspects of the TARP Program. Continue reading...
Senator Kerry introduced this bill today. It would repeal the performance-based compensation exception to the $1 million limit on deductibility of executive compensation, which would be a dramatic departure from current law. The proposed legislation is quoted in full below.
Once the election is over, and Congress re-convenes, this will be one bill to watch, as passions are high. An easy place to track its progress is here.
You can find the text of the proposed legislation from Thomas here.
On Oct. 3, 2008, President Bush signed into law the “Emergency Economic Stabilization Act of 2008” or the Bailout Bill; the governmental response to the recent troubles in the financial markets. Given the hastiness with which the Bailout Bill was put together by Congress, many of the bill's finer points are yet to be determined and its eventual impact on the financial crisis is unknown. However, several aspects of the bill are expected to have an immediate impact on financial services companies and public reporting companies—particularly those who hold mortgage-backed securities in their portfolios. This advisory bulletin highlights certain major aspects of the Bailout Bill likely to impact financial services and public reporting companies. Continue reading...
Section 201 of the Emergency Economic Stabilization Act of 2008 extends the life the state and local tax deduction for two years, until January 1, 2010.
Section 201, in all its glory, reads as follows: "(a) IN GENERAL.—Subparagraph (I) of section 164(b)(5) is amended by striking ‘‘January 1, 2008’’ and inserting ‘‘January 1, 2010’’. (b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable years beginning after December 31, 2007."
Washington, D.C. – Speaker Nancy Pelosi and Senate Majority Leader Harry Reid sent the following letter this afternoon to President Bush on the urgent need to pass bipartisan legislation to address the crisis in the financial markets.
Section 111, titled Executive Compensation and Corporate Governance, reads as follows:
"SEC. 111. EXECUTIVE COMPENSATION AND CORPORATE
GOVERNANCE.
(a) APPLICABILITY.—Any financial institution that sells troubled assets to the Secretary under this Act shall be subject to the executive compensation requirements of subsections (b) and (c) and the provisions under the Internal Revenue Code of 1986, as provided under the amendment by section 302, as applicable.
(b) DIRECT PURCHASES.—
(1) IN GENERAL.—Where the Secretary determines that the purposes of this Act are best met through direct purchases of troubled assets from an individual financial institution where no bidding process or market prices are available, and the Secretary receives a meaningful equity or debt position in the financial institution as a result of the transaction, the Secretary shall require that the financial institution meet appropriate standards for executive compensation and corporate governance. The standards required under this subsection shall be effective for the duration of the period that the Secretary holds an equity or debt position in the financial institution.
(2) CRITERIA.—The standards required under this subsection shall include—
(A) limits on compensation that exclude incentives for executive officers of a financial institution to take unnecessary and excessive risks that threaten the value of the financial institution during the period that the Secretary holds an equity or debt position in the financial institution;
(B) a provision for the recovery by the financial institution of any bonus or incentive compensation paid to a senior executive officer based on statements of earnings, gains, or other criteria that are later proven to be materially inaccurate; and
(C) a prohibition on the financial institution making any golden parachute payment to its senior executive officer during the period that the Secretary holds an equity or debt position in the financial institution.
(3) DEFINITION.—For purposes of this section, the term ‘‘senior executive officer’’ means an individual who is one of the top 5 executives of a public company, whose compensated is required to be disclosed pursuant to the Securities Exchange Act of 1934, and any regulations issued thereunder, and non-public company counterparts.
(c) AUCTION PURCHASES.—Where the Secretary determines that the purposes of this Act are best met through auction purchases of troubled assets, and only where such purchases per financial institution, in the aggregate exceed $300,000,000 (including direct purchases), the Secretary shall prohibit, for such financial institution, any new employment contract with a senior executive officer that provides a golden parachute in the event of an involuntary termination, bankruptcy filing, insolvency, or receivership. The Secretary shall issue guidance to carry out this paragraph not later than 2 months after the date of enactment of this Act, and such guidance shall be effective upon issuance.
(d) SUNSET.—The provisions of subsection (c) shall apply only to arrangements entered into during the period during which the authorities under section 101(a) are in effect, as determined under section 120."
From the U. S. House Ways and Means Committee Web Site:
"WASHINGTON – The House of Representatives today passed critical, bipartisan legislation to provide tax relief for millions of families and businesses and to encourage the production and use of renewable energy. The legislation, H.R. 7060, the Renewable Energy and Job Creation Tax Act of 2008 would extend tax credits and deductions that expired last year or would expire at the end of this year without adding to the national debt. The tax benefits in this bill are virtually identical to provisions included in legislation passed by the Senate earlier this week, including offsets, which have also been approved by the Senate."
"At the same time, intervention on a massive scale is not without risks to taxpayers and to the economy.Almost by definition, the intervention cannot solve insolvency problems without shifting costs to the taxpayers. Ironically, the intervention could even trigger additional failures of large institutions, because some institutions may be carrying troubled assets on their books at inflated values. Establishing clearer prices might reveal those institutions to be insolvent. (To the extent such insolvencies were revealed, the net effect might not be deleterious. Providing more transparency about the lack of solvency at specific institutions may be necessary to restore trust in the financial system.)"
"Washington, DC – In response to recent action by the U.S. Senate, Ways and Means Committee Chairman Charles B. Rangel today introduced H.R. 6049, the Renewable Energy and Job Creation Act of 2008. This bill would amend Senate-passed legislation to ensure that tax incentives provided to encourage renewable energy and energy conservation fit within the scope of the offsets approved by the Senate."
"Washington – The Treasury Department has submitted legislation to the Congress requesting authority to purchase troubled assets from financial institutions in order to promote market stability, and help protect American families and the US economy. This program is intended to fundamentally and comprehensively address the root cause of our financial system's stresses by removing distressed assets from the financial system. When the financial system works as it should, money and capital flow to and from households and businesses to pay for home loans, school loans and investments that create jobs. As illiquid mortgage assets block the system, the clogging of our financial markets has the potential to significantly damage our financial system and our economy, undermining job creation and income growth. The following description reflects Treasury's proposal as of Saturday afternoon."
"On September 16th, the House passed the Comprehensive American Energy Security and Consumer Protection Act, H.R. 6899. The legislation is a bold step forward, helping end our dependence on foreign oil and increase our national security. It launches a clean renewable energy future that creates new American jobs, expands domestic energy supply--including new offshore drilling, and invents and builds more efficient vehicles, buildings, homes, and infrastructure. It will lower costs to consumers and protect the interests of taxpayers. It is a comprehensive strategy, and the product of bipartisan compromise. It offers Republicans who want a comprehensive approach the choice to make sure Big Oil pays its fair share."
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