Daily Tax Update - July 28, 2010

SMALL BUSINESS JOBS ACT UNDERGOES FURTHER MODIFICATIONS: Additional changes were made to the substitute amendment to the Senate Small Business Jobs Act yesterday. Senate Democrats are hopeful they can complete passage of the small business jobs bill today.

  • One of the main modifications was the addition of a small business lending fund. According to a Finance release, “The substitute authorizes the creation of the Small Business Lending Fund to provide Treasury with the ability to purchase preferred stock and other debt instruments from eligible financial institutions with less than $10 billion in total assets. Eligible institutions include insured depositories, bank and savings and loan holding companies, and certain community development loan funds. Eligible institutions with less than $1 billion in total assets can apply to receive investments of up to five percent of their risk-weighted assets. Eligible institutions between $1 billion and $10 billion in total assets can receive investments of up to three percent of risk-weighted assets. Participating institutions will pay a five percent dividend rate on the preferred stock, but this rate can be reduced to as low as one percent if a bank demonstrates a 10 percent increase in small business lending relative to a baseline set using the four quarters prior to enactment. The dividend rate is increased to seven percent after two years, if the bank does not increase its small business lending. To encourage timely repayment, the rate increases to nine percent after four and a half years. Treasury’s authority to make capital investments under the program is terminated one year after the date of enactment. This provision is estimated to raise $1.1 billion over ten years.”
  • A summary of the modifications can be accessed here.

SENATE ENERGY TAX BILL FUNDED BY INCREASE TO OIL SPILL LIABILITY TRUST FUND: The “Clean Energy Jobs and Oil Company Accountability Act” will be funded by raising the Oil Spill Liability Trust Fund excise tax for oil companies and refiners to 45 cents per barrel.

  • The text of the bill can be accessed here.

TAX BILLS INTRODUCED JULY 27TH:
H.R.5878 : To amend the American Recovery and Reinvestment Act of 2009 and the Internal Revenue Code of 1986 to make funds and tax benefit available to assist job creation and workforce diversification in the golf industry, and for other purposes.
Sponsor: Rep Clyburn, James E. [SC-6] (introduced 7/27/2010)      Cosponsors (None)

H.R.5885 : To amend the Internal Revenue Code of 1986 to terminate the advance payment of the earned income tax credit.
Sponsor: Rep Linder, John [GA-7] (introduced 7/27/2010)       Cosponsors (None)

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE:
As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

STEPTOE & JOHNSON LLP - TAX PRACTICE
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