Daily Tax Update - March 14, 2012: Senate Passes Surface Transportation Bill

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SENATE PASSES SURFACE TRANSPORTATION BILL:  The House is not in session this week.  Today, the Senate passed the surface transportation legislation (S. 1813) by a vote of 74 to 22.  Several tax-related amendments were defeated yesterday.

  • Only one tax-related amendment was approved, an amendment by Sen. Carl Levin (D-MI).  Levin’s amendment adds a provision prohibiting or imposing conditions on certain transactions of jurisdictions or financial institutions determining to be "of primary money laundering concern” or “significantly impeding United States tax enforcement."  The provision is similar to one proposed in Sen. Carl Levin’s "Stop Tax Havens Abuse Act" bill, but revised to provide that whether a jurisdiction or financial institution is cooperating with the United States on implementing FATCA is a factor that may be used in evaluating whether it is significantly impeding tax enforcement.
  • In a statement today, Levin said, "I am also pleased the bill includes an amendment I authored with Senator Conrad which was adopted by voice vote.  It would give Treasury a discretionary power to fight against tax evasions.  Under the Patriot Act, Congress gave the Treasury the power to take a range of measures against foreign financial institutions or jurisdictions that it finds to be of 'primary money laundering concern.'  The Levin-Conrad amendment would authorize Treasury to impose the same types of measures on the same types of entities if Treasury finds them to be 'significantly impeding US tax enforcement.'  Treasury could, for example, prohibit US banks from accepting wire transfers or honoring credit cards from those foreign banks.  This amendment, which is similar to a provision that I introduced as part of a broad offshore tax bill for several Congresses, has been scored as raising over $1 billion over ten years."
  • The Senate Finance report on the tax provisions in the bill can be accessed here.

BILL INTRODUCED TO EXTEND BONUS DEPRECIATION, LIFT CERTAIN AMT RESTRICTIONS FOR BUSINESSES:  Today, Rep. Pat Tiberi (R-OH) introduced H.R. 4196, which would extend 100-percent bonus depreciation through 2012.

  • The bill would:
    •  "Extend 100 percent Bonus Depreciation Through 2012.  From September 2010 through the end of 2011, businesses could elect to immediately deduct the cost of qualifying purchased property.  For 2012, businesses can only elect to deduct 50 percent.  This measure would extend businesses’ ability to deduct the full cost of the property through the end of 2012.
    • Lifts Restrictions To Allow For More Corporate Alternative Minimum Tax Credits To Be Used for Capital Reinvestment.  The current economic situation has caused many companies to operate at a loss, hampering their ability to take advantage of bonus depreciation. Through 2012 businesses may forego bonus depreciation and instead claim some of their unused Corporate Alternative Minimum Tax credits.  The bill would allow for more of these credits – which are essentially overpaid taxes – to be used for capital investment.
    • Ensure That Companies Using The 'Percentage Of Completion' Method of Accounting Can Take Advantage of Bonus Depreciation.  Many companies that enter into long-term contracts use the 'percentage of completion' accounting method.  The bill would ensure that these companies can take advantage of bonus depreciation."
  • Tiberi said, "I’ve heard time again from small business owners in Ohio, that extending bonus depreciation is the single, biggest factor in allowing their businesses to grow this year.  Allowing job creators to use these tools for capital reinvestment is a common-sense way to encourage job creation."

TAX BILL INTRODUCED MARCH 13TH:

H.R.4196: To amend the Internal Revenue Code of 1986 to extend the allowance for bonus depreciation for certain business assets.
Sponsor: Rep Tiberi, Patrick J. [OH-12] (introduced 3/13/2012)      Cosponsors (5)
Latest Major Action: 3/13/2012 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

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