Wipfli+Insights+-+Accounting+and+Business+Issues+-+Industry-Specific+Topics+%7c+Wipfli+CPAs+%26+Consultants

Senate Holds the Upper Hand - Comparison of Provisions

February 11, 2009
by Rick Taylor, CPA
Tax Services
>
Bookmark and Share

The Stimulus Bill (American Recovery and Reinvestment Act of 2009) continues to make its way through Congress; here is a brief summary of the differences between the two bills. Right now, it looks like the Senate version is going to prevail. 

My view continues to be there is very little here to stimulate business. Extension of bonus depreciation and small business expensing is merely maintaing the status quo. The grab bag of energy credits makes for great "cocktail party talk," but it isn't going to generate any meaningful benefit to middle market business. See my January 19, 2009 posting on this topic. 

Tax Provision Senate Bill House Bill
Tax Relief For Individual and Families (Subtitle A)    
$300 one-time payment for Social Security beneficiaries, veterans Payment distributed to distributed to social security beneficiaries, disabled veterans, SSI beneficiaries, and retired rail-road workers SSI beneficiaries only
Alternative minimum tax patch AMT patch for 2009 Not included
Temporary suspension of taxation of unemployment benefits Temporarily suspends federal income tax on the first $2,400 of unemployment benefits Not included
Making work pay credit Phased out at $70,000 ($140,000 for couples) Phased out at $75,000 ($150,000 for couples)
Refundable child tax credit Increase eligibility for the refundable tax credit by lowering the income threshold from $8,500 to $8,100 Increase eligibility for the refundable tax credit by lowering the income threshold from $8,500 to $0
Homeownership Tax Credit Expands credit to $15,000 and allows the credit for all home purchases (not just first-time home purchases); effective on the date of enactment for one year Eliminates the repayment requirement
American Opportunity Tax Credit $2,500 higher education credit is 30% refundable up to $750 $2,500 higher education credit is 40% refundable up to $1,000
Expand the definition of expenses for 529 education savings plans Expands the definition of qualified expenses to include computer technology and equipment Not included
Transit parity Equalizes tax-free transit and parking benefits Not included
Above-the-line deduction for automobiles Above-the-line deduction for interest expenses and State and local sales taxes paid on the purchases of a new automobile Not included
     
Energy Incentives (Subtitle B)    
Advanced energy investment credit Establishes a new 30% investment tax credit for manufacturing of advanced energy property Not included
Department of energy grant program for renewable electricity projects Not included Renewable electricity projects eligible for production tax credit may instead elect to participate in Department of Energy grant program
Consumer vehicle incentives Creates new tax credit for 2 and 3 - wheeled vehicles and low speed vehicles; increases plug-in electric vehicle cap
to 500,000 vehicles; provides new credit for converting hybrids to plug-in hybrids
Not included
Plug-in manufacturing and retooling incentive Provides temporary expensing for domestic plug-in vehicle and component manufacturing Not included
Depreciation for smart meters Temporarily modifies the depreciation schedule for smart meters, reducing the recovery period for this property from ten years to five years Not included
Energy-efficient existing homes Extends and expands credit; modifies standards Extends and expands credit
     
Tax Incentives For Business (Subtitle C)    
Extension of monetization of accumulated AMT and R&D credits in lieu of bonus depreciation Allows some AMT and loss taxpayers in 2009 to receive 20% of the value of their old AMT or research and development credits Not included
Delayed recognition of certain cancellation of debt income Allows certain businesses to recognize cancellation of indebtedness income over eight years Not included
Incentives to hire unemployed veterans, disconnected youth Expands Work Opportunity Tax Credit to veterans released from active duty between 2001 and 2010, and disconnected youth Expands Work Opportunity Tax Credit to veterans discharged from active duty between 2008 and 2010, and disconnected youth
Small business capital gains Increases the exclusion for individuals on gain from the sale of certain small business stock  Not included
S-Corp holding period modification Temporarily shorten the holding period of assets subject to built-in gain from 10 to 7 years  Not included
 Low-income housing tax credits Accelerated to permit investors to claim 20% of the allowable credits in each of the first three years and the remaining 40% of the next seven years  Not included
Low-income housing grant option Not included HUD grant option for low-income housing investment
Repayment of bonuses under the Troubled Asset Relief Program (TARP) Institutions participating in TARP that awarded bonuses greater than $100,000 to directors and officers for services rendered during 2008 must buy back stock from the government in an amount equal to excess bonuses; failure to timely repurchase stock will result in a 35% excise tax on excess bonus amounts Not included
     
Manufacturing Recovery Provisions (Subtitle D)    
Industrial development bonds Amends the definition of manufacturing facility, clarifies which physical components of a manufacturing facility qualify Not included
Advanced energy investment credit Clarifies criteria and qualifications for advanced energy investment credit Not included
     
Economic Recovery Tools (Subtitle E)    
Recovery zone bonds $10 billion in private activity bonds and $5 billion in refundable credit bonds $15 billion in private activity bonds and $10 billion in cash-out tax credit bond for distressed economic areas
New markets tax credit $3 billion dollars in additional funding for the credit Not included
     
Infrastructure Financing Tools (Subtitle F)    
Three percent withholding on government contracts Delay implementation of the lawy by one year Full repeal
School construction bonds $5 billion for new school construction $11 billion for new school construction
New tax credit bonds for government infastructure projects (Build America Bonds) Provided for two years; increased credit for small issuers Permanent
     
Health Policies    
COBRA - premium subsidies 50% subsidy for 12 months; gives employers more time to administer subsidy; allows COBRA-eligible individuals to change coverage options 65% subsidy for 12 months
COBRA - health benefits extension for older and long-term workers Not included Benefits available to workers age 55+ and long-term workers until they are eligible for Medicare
Medicaid - temporary option for the unemployed Not included Medicaid option for unemployed who are not eligible for COBRA with 100% Federal match
Medicaid - extension of reg. delays Not included 6 month extension
FMAP bonuses Distributes $87 billion with more for states up front, less in bonuses (80% in across-the-board payments and 20% in bonuses) Distributes $87 billion with less for states up front, more in bonuses (50% in across-the-board payments and 50% in bonuses)
Limit on application of increased FMAP match States that expand income eligibility levels in Medicaid will not receive increased federal match created in this bill for those newly eligible beneficiaries. Instead, state would receive standard matching rate Not included
Extend disproportionate share hospital (DSH) payments Extend payments to hospitals with disproportionate number of low-income, Medicaid, and uninsured patients through December 31, 2010 Not included
State reimbursement for special disability workload Provides $3 billion in compensation to states for Medicaid coverage that was legal responsibility of Medicare Not included
Health information technology (HIT) Payment incentives beginning in 2011 and penalties beginning in 2015; includes Critical Access Hospitals (up to $1.5 million per hospital) Payment incentives beginning in 2011 and penalties beginning in 2016; Critical Access Hospitals not eligible
     
Unemployment & Assistance Policies    
UI benefits - temporary assistance for states with advances Waive interest payments, accrual of interest on loans to state unemployment trust funds Not included
UI Income disregard for Medicaid and CHIP eligibility Income disregard of the $25 increase in weekly UI benefit Not included
UI Modernization Completion in two years (three years for biennial states) Completion in three years
TANF - supplemental grant extensions Increased funds for high pop. growth, increased poverty states Not included
Funding for child support enforcement Through December 31, 2010 Through September 30, 2010
     
Trade Policies    
Customs duty collection Prevents Customs Border Protection from collecting certain duties from U.S. companies Not included
Trade Adjustment Assistance Extend current programs for two years Not included
Buy American Prevents stimulus funds from being used for public buildings or public works unless all of the iron, steel, and manufactured goods used in the project are produced in the United States; must be applied consistent with U.S. international trade obligations Prevents stimulus funds from being used for public buildings or public works unless all of the iron and steel used in the project are produced in the United States; no exception for international trade obligations
     
Debt Limit    
Debt limit increase Increase by $825 billion Not included


 

Comments