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JCX-48-09 dated November 6, 2009, the Joint Committee on Taxation Staff's Estimated Revenue Effects of The Revenue Provisions Contained in H.R. 3962, the Affordable Health Care For America Act, As Amended can be found on Checkpoint.

11/5/09 — Congress passes Worker, Homeownership, and Business Assistance Act of 2009.
On November 5, the House of Representatives by a vote of 403-12 approved H.R. 3548, the "Worker, Homeownership, and Business Assistance Act of 2009." The Senate had passed the measure late on November 4 by a unanimous vote, so the bill is on its way to the President for his expected signature.

The new law includes an important new net operating loss provision, plus a number of other changes, such as an extension of the FUTA surtax, a delay in the application of worldwide allocation of interest, expansion of electronic filing by return preparers, modified failure to file penalties for passthroughs, and modified estimated tax payments in 2014 for large corporations. For a Special Study highlighting these tax changes, see Weekly Alert - 11/12/2009.

The new law also gives a new lease on life to the first-time homebuyer tax credit and makes many modifications to the credit, including a change allowing the credit to be claimed by existing homeowners who are "long time residents." It also liberalizes the homebuyer tax credit rules for service members and makes clarifying changes for certain allowances paid to military members. For a Special Study highlighting these tax changes, see Weekly Alert - 11/12/2009.

The following material can also be found on Checkpoint:

• the legislative text of H.R. 3548, the "Worker, Homeownership, and Business Assistance Act of 2009." This is text of the bill that was passed by the Senate on November 4 and by the House of Representatives on November 5; and
• JCX-44-09 dated November 3, 2009, the Joint Committee on Taxation Staff's Technical Explanation Of Certain Revenue Provisions Of The Worker, Homeownership, And Business Assistance Act Of 2009 (the Baucus-Reid substitute amendment to H.R. 3548, namely the version of the bill passed by the Senate on November 4 and the House of Representatives on November 5).

11/5/09 — Joint Committee on Taxation releases study of the revenue provisions in House health care bill.
On November 5, the Joint Committee on Taxation Staff issued JCX-47-09, its "Technical Explanation of the Revenue Provisions Contained in H.R. 3962, The Affordable Health Care For America Act, As Amended." The document reflects the Manager's Amendment to the bill that was released on November 3, by House Majority Leader Steny Hoyer (D-MD) (it is available at http://www.house.gov/rules). The House of Representatives is scheduled to vote on its healthcare reform bill on Saturday, Nov. 7 at 6:00 p.m.

For a summary of the tax changes in the House health reform bill see Article #1636; for a summary of the changes made by the Manager's amendment, see Article #1640. Click here for JCX-47-09 dated November 5, 2009, the Joint Committee on Taxation Staff's "Technical Explanation of the Revenue Provisions Contained in H.R. 3962, The Affordable Health Care For America Act, As Amended."

11/4/09 — Manager's amendment to House health care bill released; House vote on bill scheduled for November 7.
Late in the evening of November 3, House Majority Leader Steny Hoyer (D-MD) released the Manager's Amendment to the Affordable Health Care for America Act (it is available at http://www.house.gov/rules). And on November 4, House Rules Committee Chair Louise Slaughter (D-NY) announced that the House of Representatives will vote on its healthcare reform bill on Saturday, Nov. 7 at 6:00 p.m. The House also will vote on the Republican substitute amendment.

The main change in the Manager's Amendment would close a biofuel tax credit loophole. The change, which is expected to raise $24 billion, would bar companies from using a $1.01 a gallon tax credit for producing cellulosic biofuel from so-called black liquor, a wood byproduct from pulp-making. Another change would repeal the worldwide interest allocation rule entirely (raising $6.1 billion). Finally, another change would delay by two years a change in H.R. 3962 that would deny a deduction for federal subsidies for prescription drug plans which have been excluded from gross income.

For a summary of the tax changes in the House health reform bill see Article #1636.

The following material can also be found on Checkpoint:

• JCX-46-09 dated November 4, 2009, the Joint Committee on Taxation Staff's Estimated Revenue Effects of The Revenue Provisions Contained in H.R. 3962, the Affordable Health Care For America Act, As Amended; and
• a House Ways & Means memo describing the changes in the Manager's Amendment to the Affordable Health Care for America Act.

11/4/09 — Last hurdle cleared; Senate vote imminent on bill with homebuyer credit extension, NOL relief.
On November 4, the Senate by unanimous consent approved the Baucus-Reid substitute amendment to H.R. 3548, Unemployment Insurance Extension Act of 2009. Following that vote the Senate by a vote of 97-1 agreed to the cloture motion on the underlying bill. A vote on final passage of the bill is expected to take place late in the evening of November 4; the Senate is expected to approve the measure. House Majority Leader Steny Hoyer (D-MD) has said that the House of Representatives would be favorably inclined to go along with the Senate's bill.

For a summary of tax provisions in H.R. 3548, including a new NOL carryback provision, and extension and liberalization of the first time homebuyer tax credit, see Article #1638.

The legislative text of the Baucus-Reid amendment to H.R. 3548 can be found on Checkpoint.

11/3/09 — Senate one step closer to passing bill with homebuyer credit extension, NOL relief.
Late on November 2, the Senate by a vote of 85-2 voted to invoke cloture on the motion to proceed to debate on the substitute amendment offered by Senate Majority Leader Harry Reid (D-NV) and Senate Finance Committee Chair Max Baucus (D-MT) to H.R. 3548, the Unemployment Compensation Extension Act of 2009. The Senate is expected to vote on cloture of the substitute bill either on November 3 or 4. If cloture is invoked, debate of the bill would begin, with a vote on final passage of the measure before the weekend. Republicans have said they do not oppose the underlying bill, but object to Reid's blocking them from offering amendments to the bill.

Here's a summary of the tax changes in the Baucus-Reid substitute amendment to H.R. 3548:

• Any business could elect an up to 5-year carryback for net operating losses (NOLs) incurred either in 2008 or 2009, but not both (at the election of the taxpayer). Businesses would be able to offset 50% of the available income from the fifth year and 100% of all income in the remaining four carryback years. Small businesses that already elected to carry 2008 NOLs back 3, 4, or 5 years under the American Recovery and Reinvestment Act could elect to carry back losses from 2009. Additionally, the 90% limitation on the use of any alternative tax NOL deduction attributable to carrybacks of the applicable NOL for which an extended carryback period is elected would be suspended. The NOL provision would not be available to Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or to a taxpayer if the federal government acquired an equity interest (or right to acquire such an interest) in the taxpayer under the Emergency Economic Stabilization Act of 2008.
• The first-time homebuyer credit, set to expire on November 30 under current law, would be expanded and liberalized as follows (the changes generally would apply for residences bought after the enactment date):
  1. The credit would sunset on Apr. 30, 2010, but for those who enter into a written binding contract before May 1, 2010 (to close on the purchase of a principal residence before July 1, 2010), the credit would sunset on June 30, 2010.
  2. The credit would only be available for homes with a purchase price of $800,000 or less (currently there's no price ceiling).
  3. A taxpayer could elect to treat the purchase as made on December 31 of the calendar year preceding the purchase for purposes of claiming the credit on the prior year's tax return.
  4. No District of Columbia first-time homebuyer credit would be allowed to any taxpayer with respect to the purchase of a residence if the national first-time homebuyer credit is allowable to that taxpayer (or the taxpayer's spouse) with respect to the purchase.
  5. The credit would not be restricted to first-time homebuyers. It could be claimed by taxpayers who have owned and used the same residence as their principal residences for any 5 consecutive-year period during the 8-year period ending on the date of the purchase of the subsequent principal residence (i.e., the one that would qualify them for a credit). However, the homebuyer credit for these "long-time residents" could not exceed $6,500.
  6. The modified AGI-based phaseout would be liberalized. The credit would begin to phase out for individuals with modified AGI above $125,000 ($225,000 for joint filers); currently the phaseout begins at $75,000 and $150,000 respectively.
• To help combat abuse of the homebuyer credit (see Article #1631 and Weekly Alert - 10/29/2009), the amendment would include in IRS's mathematical error authority any omission of the homebuyer credit recapture (this would apply for homes bought on or after the enactment date). This authority allows IRS to summarily assess mathematical or clerical errors without conducting an audit. Additionally, the credit would not be available to taxpayers who can be claimed as a dependent, or to those under age 18. New documentation requirements also would apply along with prohibitions against certain intrafamily purchases.
• The homebuyer-credit recapture requirement would be waived for military personnel, including members of the Foreign Service and intelligence community, forced to sell as a result of an official extended duty of service. Additionally, military personnel serving outside the U.S. for at least 90 days in 2009 or 2010 would have one additional year to qualify for the homebuyer credit.
• Code Sec. 132(n) would be amended to ensure that certain payments to military members under the Defense Department's Homeowner's Assistance Program (HAP) are exempt from tax.
• The application of the Code Sec. 864 worldwide allocation of interest would be delayed until tax years beginning after 2017.
• For tax years beginning after 2010, the base penalty for failure to file a partnership or S corporation return would be increased by $106 (from $89 to $195).
• For returns filed after 2010, there would be a new electronic return filing requirement for specified tax return preparers (all return preparers except those who neither prepare nor reasonably expect to prepare 10 or more individual income tax returns in a calendar year).
• Large corporations (those with assets of at least $1 billion) would be required to increase by 33 percentage points the required payment of estimated tax otherwise due in July, August, or September of 2014.

Prospects for amended bill in the House. The version of H.R. 3548 as passed by the House of Representatives on September 22, does not include tax changes other than extension from 2009 through 2010 of the 6.2% tax on employers under the Federal Unemployment Tax Act (FUTA).

Should the Senate pass H.R. 3548 with the Baucus-Reid substitute amendment, House Majority Leader Steny Hoyer (D-MD) has said that the House of Representatives would be favorably inclined to go along with the Senate's bill. He said the unemployment insurance extension was critically important and that the NOL language and homebuyer credit changes in the Baucus-Reid amendment would be acceptable to the House.

The following material can also be found on Checkpoint:

• JCX-44-09 dated November 3, 2009, the Joint Committee on Taxation Staff's Technical Explanation Of Certain Revenue Provisions Of The Worker, Homeownership, And Business Assistance Act Of 2009 (i.e., the Baucus-Reid substitute amendment to H.R. 3548); and
• JCX-45-09 dated November 3, 2009, the Joint Committee on Taxation's Estimated Revenue Effects Of Certain Revenue Provisions Contained In The Worker, Homeownership, And Business Assistance Act Of 2009 (i.e., the Baucus-Reid substitute amendment to H.R. 3548).

10/30/09 — Battle still on to include homebuyer credit extension, NOL relief, in Senate unemployment insurance bill.
Senate Majority Leader Harry Reid (D-NV), along with other Senators, are still fighting to include an extension (and liberalization) of the first time homebuyer credit, new NOL relief, and other tax changes in H.R. 3548, the Unemployment Compensation Extension Act of 2009. Late on October 29, Reid, Senate Finance Committee Chair Max Baucus (D-MT), and a bipartisan group of senators made their latest effort—a substitute amendment to H.R. 3548 that would make important tax changes for businesses and individuals (see Article #1633 for an earlier effort to make homebuyer credit and NOL changes). A vote on cloture on H.R. 3548 has been scheduled for November 2.

Here's a summary of the tax changes in the Baucus-Reid substitute amendment to H.R. 3548:

• To pay for extending unemployment insurance benefits, the bill would extend from 2009 through June 30, 2011, the 6.2% tax on employers under the Federal Unemployment Tax Act (FUTA)—namely, the 6% permanent tax rate, plus the temporary 0.2% surtax. In other words, the repeal of the temporary 0.2% surtax, and the scheduled reduction in the FUTA tax to 6%, would be delayed 1.5 years.
• Any business could elect an up to 5-year carryback for net operating losses (NOLs) incurred either in 2008 or 2009, but not both (at the election of the taxpayer). Businesses would be able to offset 50% of the available income from the fifth year and 100% of all income in the remaining four carryback years. Small businesses that already elected to carry 2008 NOLs back 3, 4, or 5 years under the American Recovery and Reinvestment Act could elect to carry back losses from 2009.
• The first-time homebuyer credit, set to expire on November 30 under current law, would be expanded and liberalized as follows (changes 2 through 4 would apply for residences bought after the enactment date):
  1. The credit would sunset on Apr. 30, 2010, but for those who enter into a written binding contract before May 1, 2010 (to close on the purchase of a principal residence before July 1, 2010), the credit would sunset on June 30, 2010.
  2. The credit would only be available for homes with a purchase price of $800,000 or less (currently there's no price ceiling).
  3. The credit would not be restricted to first-time homebuyers. It could be claimed by taxpayers who have owned and used the same residence as their principal residences for any 5 consecutive-year period during the 8-year period ending on the date of the purchase of the subsequent principal residence (i.e., the one that would qualify them for a credit). However, the homebuyer credit for these "long-time residents" could not exceed $6,500.
  4. The modified AGI-based phaseout would be liberalized. The credit would begin to phase out for individuals with modified AGI above $125,000 ($225,000 for joint filers); currently the phaseout begins at $75,000 and $150,000 respectively.
• To help combat abuse of the homebuyer credit (see Article #1631 and Weekly Alert - 10/29/2009), the amendment would include in IRS's mathematical error authority any omission of the homebuyer credit recapture (this would apply for homes bought on or after the enactment date). This authority allows IRS to summarily assess mathematical or clerical errors without conducting an audit. Additionally, the credit would not be available to taxpayers who can be claimed as a dependent, or to those under age 18. New documentation requirements also would apply along with prohibitions against certain intrafamily purchases.
• The homebuyer-credit recapture requirement would be waived for military personnel, including members of the Foreign Service and intelligence community, forced to sell as a result of an official extended duty of service. Additionally, military personnel serving outside the U.S. for at least 90 days in 2009 or 2010 would have one additional year to qualify for the homebuyer credit.
• Code Sec. 132(n) would be amended to ensure that certain payments to military members under the Defense Department's Homeowner's Assistance Program (HAP) are exempt from tax.
• The application of the Code Sec. 864 worldwide allocation of interest would be delayed until 2017.
• For tax years beginning after 2010, the base penalty for failure to file a partnership or S corporation return would be increased by $106 (from $89 to $195).

Note that the version of H.R. 3548 passed by the House of Representatives on September 22, would provide for an additional 13 weeks of extended unemployment benefits and extend from 2009 through 2010 the 6.2% tax on employers under the Federal Unemployment Tax Act (FUTA). The House bill doesn't include other tax changes.

The following material can also be found on Checkpoint:

• the legislative text of the Baucus-Reid amendment to H.R. 3548; and
• a summary of the Baucus-Reid amendment to H.R. 3548.

10/29/09 — House leaders release massive health reform bill; timetable for House action uncertain.
On October 30, House leaders unveiled the "Affordable Health Care for America Act." It's a massive 1,900-page health reform bill that revises and combines the tri-committee (Ways and Means, Energy and Commerce, and Education and Labor) bills issued earlier this year. The timetable for the House of Representatives to take up the measure is uncertain at this point. And should the House pass the measure it would have to be reconciled with any bill that passes Senate as the two bills would likely have different approaches on many non-tax and tax provisions.

"Shared responsibility" and tax provisions in the House bill. Following are highlights of "employer and individual responsibilities" under the House bill, as well as the tax provisions in Title V (Amendments to Internal Revenue Code of 1986) of Division A (Affordable Health Choices) of the bill. The highlights are derived from documents and summaries released contemporaneously with the issuance of the bill.

• Employers would have to either provide health insurance to their employees or make a contribution to help fund affordable health insurance. Those choosing to offer coverage would contribute at least 72.5% of premiums for workers, 65% for families. Low-wage workers who find employer coverage unaffordable could choose subsidized coverage in the health insurance exchange and the employer would have to make a contribution to the exchange. Employers not offering qualified coverage would pay a payroll tax equal to 8% of their payroll to help cover expenses of employees who seek coverage through the exchange. Small businesses (annual payrolls below $500,000) would be exempt from coverage requirements, including the 8% payroll contribution for failure to provide health benefits to their workers. As a result of this exemption, it's estimated that 86% of businesses would be exempt from any requirement to provide coverage to their employees. The 8% contribution requirement would be phased in for small businesses with an annual payroll between $500,000 and $750,000.
• Tax credits would be available for businesses with 10 or fewer employees and $20,000 or less in average wages. They would phase-out if the employer has 25 or more employees or if average wages are $40,000 or more. The credits would be available on a rolling basis for the first two years that an employer offers qualified coverage.
• Individuals would be required to obtain health insurance coverage or pay an additional tax equal to the lower of 2.5% of their adjusted income above the filing threshold (e.g., for 2009, for taxpayers under age 65, it's $9,350 for singles and $18,700 for couples), or the average premium on the insurance exchange. Individuals and families below the income tax filing would be exempt. Individuals could apply for a hardship waiver if coverage is unaffordable; selected exemptions from the coverage mandate would apply. The bill would provide financial assistance for premiums and cost sharing for individuals and families with incomes up to 400% of the federal poverty level (FPL). Affordability credits would be offered on a sliding scale.
• Nontaxable reimbursements from health flexible spending accounts, health reimbursement arrangements, and health savings accounts would not include a medicine or drug unless it is prescribed or is insulin.
• Salary reduction contributions to health flexible spending arrangements would be limited to $2,500 (indexed to the consumer price index).
• The penalty on distributions from health savings accounts that are not used to pay for health related expenditures would be increased from 10% to 20%.
• The deduction for expenses allocable to Medicare Part D subsidy would be eliminated.
• Coverage purchased through the insurance exchange could not be purchased on a pre-tax salary reduction basis (i.e., in a cafeteria plan) unless the purchaser's employer is eligible to offer employer coverage through the exchange.
• Sec. 111 of the bill would establish a temporary reinsurance program to provide reimbursement to participating employment-based plans for part of the cost of providing health benefits to retirees (age 55-64) and their families. The program would reimburse participating employment-based plans for 80% of the cost of benefits provided per enrollee in excess of $15,000 and below $90,000. The plans would have to use the funds to lower costs borne directly by participants and beneficiaries. Subsidies received by an employer or health plan under Sec. 111 of the bill would not be includable in gross income.
• The bill would create a 5.4% tax on modified adjusted gross income in excess of $1 million in the case of a joint return ($500,000 in the case of other returns). It's estimated that the tax, if enacted, would affect only 0.3% of all households and only 1.2% of sole proprietors, partners, and S Corp shareholders operating a business.
• A 2.5% excise tax would apply to medical devices sold for use in the U.S.; it would not apply to exported devices or to retail sales of devices.
• The bill would require information reporting with respect to payments made in the course of a trade or business to a corporation.
• There would be a delay in application of a liberalized rule for allocating interest expenses between U.S. and foreign sourced income for purpose of a taxpayer's foreign tax credit limitation.
• The bill would prevent foreign multinational corporations incorporated in tax havens from avoiding tax on income earned in the U.S.
• The economic substance doctrine would be codified.
• Certain large or publicly traded persons would be made subject to a more-likely-than-not standard for avoiding tax penalties on underpayments.
• Certain health related benefits applicable to spouses and dependents would be extended to a person who is eligible for coverage under the employer's plan and who is not a spouse or dependent.

The following material can also be found on Checkpoint:

• the legislative text of Title V (Amendments to Internal Revenue Code of 1986) of Division A (Affordable Health Choices) of the "Affordable Health Care for America Act." Title V contains virtually of the provisions that would amend the Code;
• JCX-43–09 (October 29, 2009), the Joint Committee on Taxation's Estimated Revenue Effects of Possible Modifications to the Revenue Provisions of H.R. 3962, the "Affordable Health Care for America Act;"
• the text of a document titled "Detailed Summary of Affordable Health Care for America Act," prepared by the Committees on Ways & Means, Energy & Commerce, and Education & Labor and dated October 29, 2009; and
• the text of a document titled "Affordable Health Care For America Act: Section-by-Section Analysis," prepared by the Committees on Ways & Means, Energy & Commerce, and Education & Labor, dated October 28, 2009 (11 pm).

10/28/09 — Senate to take up bill extending unemployment insurance; tax component of bill unclear.
On October 27, the Senate by a vote of 87-13 approved a motion to invoke cloture on the motion to proceed to H.R. 3548, the Unemployment Compensation Extension Act of 2009. Under Senate rules, that means actual debate on the bill could be delayed up to 30 hours unless an agreement can be reached by both Democrats and Republicans to move forward on the bill. The bill will most likely carry a FUTA surtax extension as a revenue offset measure. Whether the bill will include other tax provisions, and if so, what shape they'll take, remains to be seen.

As introduced in the Senate, the bill would extend unemployment insurance by up to 14 additional weeks for jobless workers in all 50 states and extend benefits for 6 additional weeks in states with unemployment levels over 8.5%. The changes would be paid for by extending from 2009 through June 30, 2011, the 6.2% tax on employers under the Federal Unemployment Tax Act (FUTA)—namely, the 6% permanent tax rate, plus the temporary 0.2% surtax. In other words, the repeal of the temporary 0.2% surtax, and the scheduled reduction in the FUTA tax to 6%, would be delayed from 2010 until July 1, 2011.

Earlier this week, it was expected that Senate Majority Leader Harry Reid (D-NV) would offer an amendment to the bill that would significantly expand its scope to include net operating loss (NOL) carryback relief, an extension of the first-time homebuyer's credit, and other tax changes (see Article #1633). However, it appears as if Senate leaders are still negotiating on the shape of the NOL and homebuyer credit relief, and it is possible that the Senate will vote on the unemployment measure (and the FUTA surtax offset) without any add-ons.

The version of H.R. 3548 passed by the House of Representatives on September 22, would provide for an additional 13 weeks of extended unemployment benefits and extend from 2009 through 2010 the 6.2% tax on employers under the Federal Unemployment Tax Act (FUTA)—namely, the 6% permanent tax rate, plus the temporary 0.2% surtax. The repeal of the temporary 0.2% surtax, and the scheduled reduction in the FUTA tax to 6%, would be delayed from 2010 until 2011.

10/27/09 — House–Senate Democrats introduce bill to combat offshore tax abuse.
On October 27, key House and Senate Democrats (House Ways & Means Chair Charles Rangel (D-NY), Senate Finance Committee Chair Max Baucus (D-MT), Ways & Means Select Revenue Subcommittee Chair Richard Neal (D-MA), and Senate Finance Committee member John Kerry (D-MA)) introduced a bill in the House and Senate to combat tax evasion and improve taxpayer compliance by giving IRS new administrative tools to detect, deter and discourage offshore tax abuses. The "Foreign Account Tax Compliance Act of 2009" would force foreign financial institutions, foreign trusts, and foreign corporations to provide information about their U.S. account-holders, grantors, and owners, respectively. The bill's introduction was quickly supported by the President, Treasury Secretary Tim Geithner, and IRS Commissioner Doug Shulman.

The bill, which would raise over $8 billion, has five major segments:

• Increased disclosure of beneficial owners;
• Underreporting with respect to foreign assets;
• Other disclosure provisions;
• Provisions related to foreign trusts; and
• Dividend equivalent payments received by foreign persons treated as dividends.

Increased disclosure of beneficial owners. Foreign financial institutions would be subject to a 30% withholding tax on income from U.S. financial assets unless they agree to disclose: (1) the identity (i.e. the name, address and TIN) of any U.S. person, including the U.S. owner of any account holder that is a U.S.-owned foreign entity with an account at the foreign institution (or affiliate); (2) the account number; (3) the account balance; and (4) the gross receipts and gross withdrawals or payments from the account.

Alternatively, the foreign financial institution could make an election to report as if it were a U.S. person under Code Sec. 6041 (Information at source), Code Sec. 6042 (Returns regarding payments of dividends and corporate earnings and profits), Code Sec. 6045 (Returns of brokers), and Code Sec. 6049 (Returns regarding payments of interest).

With respect to the reporting obligations of foreign corporations and foreign trusts, the bill would require foreign corporations to provide withholding agents with certification that it does not have any "substantial U.S. shareholder" (defined as a person that owns, directly or indirectly, more than 10% of the stock of a corporation, by vote or value) or the name, address and TIN of each substantial U.S. shareholder .

Foreign financial asset reporting. The bill would create new information reporting requirements for any individual that holds more than $50,000 in: (1) any financial account maintained by a foreign financial institution; or (2) any foreign stock, interest in foreign entity, or financial instrument with a foreign counterparty that is not held in a custodial account of a financial institution. The penalty for nondisclosure would be $10,000 (and that would increase to up to $50,000 if the failure continues after notification).

For penalties for underpayments attributable to undisclosed foreign financial assets, the bill would modify Code Sec. 6662 by imposing a penalty of 40% of the amount of any understatement that is attributable to an "undisclosed" foreign financial asset. An undisclosed foreign financial asset would mean any asset with respect to which information is required to be provided under Code Sec. 6038 (Information reporting with respect to certain foreign corporations and partnerships), Code Sec. 6038B (Notice of certain transfers to foreign persons), Code Sec. 6038D (Information with respect to foreign financial assets, which would be introduced by the bill), Code Sec. 6046A (Returns as to interests in foreign partnerships), or Code Sec. 6048 (Information with respect to certain foreign trusts).

The bill also would modify the general three-year statute of limitations prescribed under Code Sec. 6501(e) and extend it to six years for significant underreporting of income in connection with foreign assets. The six-year limitations period would apply for omissions that (1) exceed $5,000 and (2) are attributable to one or more reportable foreign assets. The bill would also clarify that the limitations period does not begin to run until the taxpayer files the information return disclosing its reportable foreign assets.

Other disclosure provisions. Tax advisors who derive gross income in excess of $100,000 for providing assistance to taxpayers in acquiring a direct or indirect interest in a foreign entity would have to file an information return. Noncompliance would subject the advisor to a penalty equal to the greater of $10,000 or 50% of the gross income derived by the advisor for aiding, assisting, or advising on the transaction.

Foreign trusts. The bill would crack down on foreign trusts in three ways. It would:

1. Codify IRS regs that treat a foreign trust as having a U.S. beneficiary if any current, future or contingent beneficiary of the trust is a U.S. person. The bill would also clarify that a foreign trust is treated as having a U.S. beneficiary if (a) any person has discretion to determine the beneficiaries of the trust unless the terms of the trust specifically identify the class of beneficiaries and none of those beneficiaries are U.S. persons or (b) any written, oral or other agreement could result in a beneficiary of the trust being a U.S. person. Finally, the bill would clarify that the use of any trust property is treated as a payment from the trust in the amount of the fair market value of such use.
2. Provide that any U.S. person who directly or indirectly transfers property to a foreign trust (other than a trust established for deferred compensation or a charitable trust) is presumed to have a U.S. beneficiary unless that person can demonstrate to IRS's satisfaction that the trust has complied with all reporting requirements and has submitted any additional information as IRS may require with respect to such transfer.
3. Provide that the penalty for failure to report on transactions relating to foreign trusts (e.g., the creation of a foreign trust, the transfer of money or property to a foreign trust, or the death of a U.S. owner of a foreign trust) would be 35% of the amount required to be disclosed on such return, with a minimum penalty of $10,000.

Dividend equivalent payments. Under current law, dividend payments made to foreign investors are subject to withholding tax at a 30% rate unless otherwise reduced by an applicable tax treaty. To avoid this withholding tax, foreign investors have entered into derivative transactions that provide them with dividend equivalent payments that are not subject to withholding. The bill would require withholding on any dividend equivalent payments that are included in notional principal contracts (e.g., total return swap agreements) and would authorize IRS to develop rules that would require withholding on dividend equivalent payments that are included in other financial arrangements.

The following material can also be found on Checkpoint:

• the text of a press release on the "Foreign Account Tax Compliance Act of 2009." The press release includes a concise summary of the bill.
• the text of JCX-42–9 (October 27, 2009), the Joint Committee on Taxation Staff Technical Explanation of the "Foreign Account Tax Compliance Act of 2009."
• the legislative text of the "Foreign Account Tax Compliance Act of 2009."

10/23/09 — Senate unemployment insurance extension bill could carry NOL carryback relief, homebuyer credit extension & other tax changes.
On Oct. 27, the Senate is expected to vote on whether to invoke cloture on the motion to proceed to H.R. 3548, the Unemployment Compensation Extension Act of 2009. Senate Majority Leader Harry Reid (D-NV) is expected to offer an amendment to the bill that would significantly expand the scope of the bill to include net operating loss (NOL) carryback relief, an extension of the first-time homebuyer's credit, and other tax changes.

Unemployment insurance extension and FUTA offset. The Senate bill would extend unemployment insurance benefits for up to an additional 14 weeks for unemployed workers in all 50 states. It would also extend benefits for six additional weeks in states with unemployment levels over 8.5%. The extension would be paid for by extending from 2009 through June 30, 2011 the 6.2% tax on employers under the Federal Unemployment Tax Act (FUTA)—namely, the 6% permanent tax rate, plus the temporary 0.2% surtax. In other words, the repeal of the temporary 0.2% surtax, and the scheduled reduction in the FUTA tax to 6%, would be delayed from 2010 until July 1, 2011.

RIA observation: Note that the House–passed version of H.R. 3548 would provide an additional 13 weeks of extended unemployment benefits in states with high unemployment, and extend from 2009 through 2010 the 6.2% tax on employers under the Federal Unemployment Tax Act (FUTA)—namely, the 6% permanent tax rate, plus the temporary 0.2% surtax (see Article 1620).

Add-ons to the unemployment insurance bill. The Reid amendment would significantly expanded the scope of the Senate's version of H.R. 3548 by adding these measures:

• Amend Code Sec. 172 to provide new carryback relief for 2008 or 2009 NOLs. The NOL for either year could, after a 20% "haircut" or reduction, be carried back 3 or 4 years. The NOL would be available to all taxpayers except Troubled Asset Relief Program (TARP) recipients.
• The application of the Code Sec. 864 worldwide allocation of interest would be delayed until 2017.
• An extension of the refundable Code Sec. 36 first time homebuyer tax credit (FTHTC) through Dec. 31, 2010 (under current law, it only applies for purchases through Nov. 30, 2009). If claimed for a home bought in 2010, a qualifying buyer could elect to treat the purchase as made on Dec. 31, 2009 (and thus claim the credit on the 2009 return). However, the FTHTC, currently up to $8,000 ($4,000 for married taxpayers filing separately) would be scaled back to $6,000 for purchases after Mar. 31, 2010 and before July 1, 2010, $4,000 for purchases after June 30, 2010 and before Oct. 1, 2010, and $2,000 for purchases after Sept. 30, 2010 and before Jan. 1, 2011 (the maximum credit for married taxpayers filing separately would be half the amount for other taxpayers). To combat abuse of the FTHTC (see Article 1631 and Weekly Alert - 10/29/2009), the amendment would include in IRS's mathematical error authority any omission of the FTHTC credit recapture (this would apply for homes bought on or after the enactment date). This authority allows IRS to summarily assess mathematical or clerical errors without conducting an audit.
• A number of FTHTC liberalizations for individuals on qualified official extended duty outside of the U.S. These liberalizations, which are similar to those in H.R. 3590, the "Service Members Home Ownership Tax Act of 2009," which was passed by the House of Representatives on October 9 (see Article 1628), would:
  • Amend Code Sec. 36(h) to provide those serving on qualified official extended duty service outside of the U.S. for at least 90 days in calendar year 2009 with an additional year past the proposed general FTHTC extension (i.e., until Dec. 31, 2011) to buy a principal residence and be eligible for the FTHTC. Additionally, those buying a home after 2010 but before 2012 under the change would be able to elect to treat the home as bought on Dec. 31, 2010, in order to claim the credit on the 2010 return.
  • Waive the FTHTC 36–month recapture period for those on qualified official extended duty.
  • Amend Code Sec. 132(n) to ensure that certain payments to military members under the Defense Department's Homeowner's Assistance Program (HAP) are exempt from tax. (This measure appears to be identical to the HAP change in the House-passed H.R. 3590.)

The text of the Reid amendment to H.R. 3548 can be found on Checkpoint.

10/23/09 — House bill would stave off estate tax repeal.
A move is underway in Congress to stave off the sunset of the estate tax in 2010 and prevent a wholesale revision of the transfer tax rules in 2011 (for a concise summary of what's in store unless Congress changes the rules, see Weekly Alert - 10/08/2009). On October 22, a bipartisan group of House Ways and Means Members (Shelly Berkley (D-NV), Kevin Brady (R-NV), Devin Nunes (R-CA), and Artur Davis (D-AL)), introduced H.R. 3905, the "Estate Tax Relief Act of 2009. " This measure would repeal both the 2010 one-year termination of the estate tax and the new basis rules, increase the estate and gift tax unified credit beginning in 2010, and coordinate a reduction in the maximum rate of tax (from 45% to 35% over a period of years) with a phaseout of the deduction for State death taxes.

Separately, on October 22, House Ways and Means Committee Chair Charlie Rangel (D-NY) said that he was in the process of drafting language that would make the estate tax permanent. Rangel said that because of the focus on the health reform bill, it was unclear when the bill would come to the House floor. He did say, however, that he didn't expect to unveil his estate tax proposal until after next week's Democratic caucus meeting, at which time he would discuss his proposal with members.

The following material can also be found on Checkpoint:

• the text of H.R. 3905, the "Estate Tax Relief Act of 2009, " as introduced in the House of Representatives on October 22; and
• the text of a House press release announcing the introduction of H.R. 3905, the "Estate Tax Relief Act of 2009, " as introduced in the House of Representatives on October 22.

10/22/09 -- Congressmen push for homebuyer credit extension; bill introduced to combat homebuyer credit abuse.
On October 21, Joe Courtney (D-CT) and Ken Calvert (R-CA) with 163 co-signers sent a letter to Speaker of the House Nancy Pelosi (D-CA) and Republican Leader John Boehner (R-IL) urging that the First Time Homebuyer Tax Credit (FTHTC), which is due to expire on November 30, be extended. Courtney said that the housing market is a critical part of our economic recovery because of its reach into many sectors that drive economic growth, and as a result "Congress cannot afford to let the widely successful tax credit expire." He also said that he would prefer a one-year extension of the credit, and that the credit needed to be extended through the winter months when home sales are at its lowest. Following a meeting on Wednesday with economists, Pelosi said the first-time home buyer tax credit should be extended into mid-next year to help support the fragile housing market, and that the credit should be expanded to include all home buyers.

RIA observation: A Treasury Inspector General for Tax Administration (TIGTA) study suggests that many taxpayers may have claimed the FTHTC even though they owned a prior home within 3 years or otherwise were nonqualified to claim the credit. This study could make it harder to push through an extension; see Weekly Alert - 10/29/2009.

Separately, on October 22 House Ways & Means Oversight Subcommittee Chairman John Lewis (D-GA) introduced the Homebuyer Tax Credit Improvement Act to improve IRS's administration of the FTHTC. The bill is in direct response to testimony presented before his subcommittee on October 22 to discuss administration of the credit and examine potential abuses uncovered by IRS and TIGTA.

The Homebuyer Tax Credit Improvement Act would improve administration of the credit and prevent abuse by:

• Requiring a minimum age of 18 to claim the credit.
• Requiring that taxpayers attach a copy of documentation to prove that they purchased a home.
• Providing IRS with authority to look at prior year returns and determine if a taxpayer is eligible for the credit.
• Improving tax administration by increasing the number of electronic returns filed by return preparers .

The following material can also be found on Checkpoint:

• the House Ways & Means press release announcing introduction of the "Homebuyer Tax Credit Improvement Act;" and
• a draft of the legislative language of the "Homebuyer Tax Credit Improvement Act."

10/19/09 -- Senate Finance Committee releases legislative language and committee report for America's Healthy Future Act of 2009.
On Oct. 19, the Senate Finance Committee released the legislative language and committee report of S. 1796, the "America's Healthy Future Act." The Finance Committee approved the America's Healthy Future Act by a vote of 14 to 9 on Oct. 13, 2009.

For an overview of S. 1796, see Article #1629.

The following material can also be found on Checkpoint:

• the legislative text of the "America's Healthy Future Act of 2009, " as approved by the Senate Finance Committee; and
• the text of the committee report to the "America's Healthy Future Act of 2009, " as approved by the Senate Finance Committee.

10/13/09 -- Senate Finance Committee OKs landmark health reform bill.
On October 13, the Senate Finance Committee by a vote of 14-9 approved its landmark health reform bill, the "America's Healthy Future Act of 2009." Only one Republican Committee member, Sen. Olympia Snowe (R-ME), joined Democrats voting for the bill. The Senate Finance bill will now have to be reconciled with the "Affordable Health Choices Act," which was OK'd on July 15 by the Senate's Health, Education, Labor and Pensions (HELP) Committee (see Article #1603).

Broad parameters of the bill. As analyzed by the Congressional Budget Office (CBO), the Senate health reform bill would, starting in July 2013, establish a requirement for U.S. legal residents to obtain insurance and would in many cases impose a financial penalty on people who don't do so. The bill also would establish new insurance exchanges and would subsidize the purchase of health insurance through those exchanges for individuals and families with income between 100% and 400% of the federal poverty level (FPL). Policies purchased through the exchanges (or directly from insurers) would have to meet several requirements. In particular, insurers would have to accept all applicants, could not limit coverage for preexisting medical conditions, and could not vary premiums to reflect differences in enrollees' health. The bill also would provide start-up funds to encourage the creation of cooperative insurance plans (co-ops) that could be offered through the exchanges; existing insurers could not be approved as co-ops.

Although it would not explicitly require employers to offer health insurance, the bill would require firms with more than 50 workers that did not offer coverage to pay a penalty for full-time workers who obtained subsidized coverage through the insurance exchanges. As a rule, full-time workers who were offered coverage from their employer would not be eligible to obtain subsidies via the exchanges. However, an exception to that "firewall" would be allowed for workers who had to pay more than a specified percentage of their income for their employer's insurance--10% in 2013, indexed over time--in which case the employer could also be penalized.

Under certain circumstances, firms with relatively few employees and relatively low average wages would also be eligible for tax credits to cover up to half of their contributions toward health insurance premiums. The bill also would make numerous Medicaid-related changes.

Tax provisions. The key tax changes in the Senate Finance health reform bill are as follows:

• A 40% nondeductible excise tax would be levied on health coverage in excess of $8,000/$21,000 (indexed for inflation), effective for tax years beginning after 2012. Increased thresholds would apply for over age 55 retirees and certain high-risk professions (e.g., firefighters, construction and mining workers), and a higher threshold would apply for health insurance plans maintained in the 17 states in which health care was least affordable for the year ended Dec. 31, 2012. For employees, the employer would aggregate the coverage subject to the limit and issue an information return for insurers indicating the amount subject to the excise tax. The excise tax would be levied at the insurer level.
• Employers would be required to report the value of health benefits on employees' Form-W-2s, effective for tax years beginning after 2009. For purposes of employer provided health coverage (including health reimbursement accounts (HRAs) and health flexible savings accounts (FSAs), HSAs, and Archer medical savings accounts (MSAs)), the definition of medicine expenses deductible as a medical expense would generally be conformed to the definition for purposes of the itemized deduction for medical expenses. But this change would not apply to doctor prescribed over-the-counter medicine. Thus, the cost of over-the-counter medicine (other than doctor prescribed) could not be reimbursed through a health FSA or HRA. In addition, the cost of over-the-counter medicines (other than doctor prescribed) could not be reimbursed on a tax-free basis through an HSA or Archer MSA. These changes would be effective for tax years beginning after 2009.
• The penalty for nonqualified HSA distributions would be increased from 10% to 20%, effective for disbursements made during tax years beginning after 2010.
• Allowable contributions to health FSAs in cafeteria plans would be capped at $2,500, effective for tax years beginning after 2010.
• Effective for tax years beginning after the enactment date, Code Sec. 501(c)(3) hospitals would be subject to new requirements, e.g., a community health needs assessment, promulgation and dissemination of a written financial assistance policy, and new reporting and disclosure rules.
• Effective for payments made after 2011, the bill would modify the general information reporting requirement by eliminating the exception for payments to corporations. The class of payments with respect to which reporting is required would be clarified to include gross proceeds for both property and services.
• The floor beneath itemized medical expense deductions would be raised from 7.5% of adjusted gross income (AGI) to 10%, effective for effective for tax years beginning after 2012. The AGI floor for individuals age 65 and older (and their spouses) would remain unchanged at 7.5%.
• The deduction for expenses allocable to Medicare Part D subsidy would be eliminated, effective for tax years beginning after 2010. A $500,000 deduction limit would apply to the remuneration of officers, employees, directors, and service providers of covered health insurance providers. This limit would be effective for remuneration paid in tax years beginning after 2012 with respect to services performed after 2009.
• For tax years beginning after 2010, the bill would provide for a safe harbor from the nondiscrimination requirements for cafeteria plans for an eligible small employer. The safe harbor would also apply to the nondiscrimination requirements for specified qualified benefits offered under the cafeteria plan, including group term life insurance, coverage under a self insured group health plan, and benefits under a dependent care assistance program. The safe harbor would require that the cafeteria plan satisfy minimum eligibility and participation requirements and minimum flex-credit contribution requirements.
• The bill would create a temporary tax credit, subject to an overall cap of $1 billion, to encourage investments in new therapies to prevent, diagnose, and treat chronic diseases, effective for expenditures paid or incurred after 2008, in tax years beginning after 2008. The credit would sunset at the end of 2010.

The following material can also be found on Checkpoint:

• the text of the CBO's preliminary analysis of the amended Chairman's Mark for the "America's Healthy Future Act of 2009," i.e., the bill approved by the Senate Finance Committee, as set forth in an October 7, 2009, letter to Chairman Baucus;
• the revised Chairman's Mark to the "America's Healthy Future Act of 2009." The revised Chairman's Mark is the bill that the Senate Finance Committee approved. Note that the revenue provisions begin at page 231 of the document; and
• the text of JCX-41--09, the Joint Committee on Taxation's "Estimated Revenue Effects of the Revenue Provisions Contained in Title VI of the America's Healthy Future Act of 2009, As Amended Through October 2, 2009, and Under Consideration by the Committee on Finance."

10/8/09 -- House passes bill easing homeownership tax rules for service members.
On October 8, the House of Representatives, by a vote of 416-0, approved H.R. 3590, the "Service Members Home Ownership Tax Act of 2009." The bill heads to the Senate for its consideration.

The bill would make the following changes to improve how the homebuyer credit and Homeowner's Assistance Program (HAP) provisions apply to service members (i.e., members of the uniformed services, members of the Foreign Service, and intelligence employees):

• The tax credit claimed on qualifying first-time home purchases in 2009 must be recaptured if the home is sold (or ceased to be used as a principal residence) within three years of the purchase. A more restrictive recapture rule applies to qualifying first-home purchases in 2008. Sec. 2(a) of the bill would amend Code Sec. 36(f)(4) to provide that the first-time homebuyer credit does not need to be paid back if after Dec. 31, 2008, the home is sold (or stops being used as a principal residence) by a member of the uniformed services, a member of the U.S. Foreign Service, or an employee of the intelligence community, in connection with a government order for qualified official extended duty.
• The first-time homebuyer credit won't be available for purchases after Nov. 30, 2009 (unless Congress extends this tax break). Sec. 3(a) of H.R. 3590 would amend Code Sec. 36(h) to provide those serving on qualified official extended duty service outside of the U.S. for at least 90 days in calendar year 2009 with an additional year (until Nov. 30, 2010) to buy a principal residence and be eligible for the first-time homebuyer credit (if otherwise qualified). Additionally, those buying a home after 2009 but before July 1, 2010 under the change would be able to elect to treat the home as bought on Dec. 31, 2009, in order to claim the credit on the 2009 return.
• Sec. 4(a) of the bill would amend Code Sec. 132(n) to ensure that certain payments under HAP are exempt from tax. This would apply to HAP payments made after Feb. 17, 2009, to (1) wounded members (and their spouses) of the Armed Forces, Department of Defense, or the United States Coast Guard and (2) members of the Armed Forces that bought a home before July 1, 2006 and are subsequently permanently reassigned between July 1, 2006 and Sept. 30, 2012.

To pay for these expanded tax breaks, Sec. 5(a) of the bill would amend Code Sec. 6698(b)(1) and Code Sec. 6699(b)(1) to increase the penalties for failure to file a partnership return or an S corporation return. Effective for returns for tax years beginning after 2010, the penalty would be increased by $21 (from $89 to $110). Additionally, for corporations with at least $1 billion of assets, Sec. 6 of the bill would provide that estimated tax payments otherwise due in July, August, or September of 2014 would be increased by 0.5 percentage points.

The following material can also be found on Checkpoint:

• the text of H.R. 3590, the "Service Members Home Ownership Tax Act of 2009;"
• JCX-39-09, the Joint Committee on Taxation Staff's Technical Explanation of H.R. 3590, the "Service Members Home Ownership Tax Act Of 2009" Scheduled For Consideration By The House Of Representatives On October 7, 2009; and
• JCX-40-09, the Joint Committee on Taxation Staff's Estimated Revenue Effects of H.R. 3590, The "Service Members Home Ownership Tax Act Of 2009," Scheduled For Consideration By The House Of Representatives On October 7, 2009.

10/8/09 -- Senate bill would extend unemployment coverage and continue FUTA surtax through June of 2011.
On October 9, Senate Majority Leader Harry Reid (D-NV), Senate Finance Committee Chair Max Baucus (D-MT), Senators Jack Reed (D-RI) and Jeanne Shaheen (D-NH) introduced a proposal to extend unemployment insurance by up to 14 additional weeks for jobless workers in all 50 states and extend benefits for 6 additional weeks in states with unemployment levels over 8.5%. The changes would be paid for by extending from 2009 through June 30, 2011 the 6.2% tax on employers under the Federal Unemployment Tax Act (FUTA)--namely, the 6% permanent tax rate, plus the temporary 0.2% surtax. In other words, the repeal of the temporary 0.2% surtax, and the scheduled reduction in the FUTA tax to 6%, would be delayed from 2010 until July 1, 2011.

Note that the House of Representatives has already passed a companion measure (H.R. 3548, the Unemployment Compensation Extension Act of 2009), which would provide an additional 13 weeks of extended unemployment benefits in states with high unemployment, and extend from 2009 through 2010 the 6.2% tax on employers under the Federal Unemployment Tax Act (FUTA)--namely, the 6% permanent tax rate, plus the temporary 0.2% surtax (see Article #1620).

The text of a Senate news release dated October 8 announcing the proposal to extend unemployment insurance and FUTA surtax can be found on Checkpoint.

10/7/09 -- CBO releases preliminary analysis of Senate Finance Chair's Mark for health care bill.
Late on October 7, the Congressional Budget Office (CBO) released its preliminary analysis of the Chairman's Mark for the "America's Healthy Future Act of 2009," incorporating the amendments that were adopted to date by the Senate Finance Committee. According to Senate Finance Chair Max Baucus (D-MT), the analysis shows that the measure would produce a net deficit reduction of $81 billion, and total spending of $829 billion. The CBO analysis says that under the bill, the share of legal non-elderly residents with insurance coverage would rise from about 83% currently to about 94%.

Release of the CBO's analysis clears the way for the full Senate Finance Committee to consider the bill. The text of the CBO's preliminary analysis of the Chairman's mark for the "America's Healthy Future Act of 2009," as set forth in an October 7, 2009, letter to Chairman Baucus can be found on Checkpoint.

10/6/09 -- House poised to consider bill easing homeownership tax rules for service members.
On Wednesday, October 7, the House of Representatives is expected to consider H.R. 3590, the "Service Members Home Ownership Tax Act of 2009." The bill will come to the House floor by way of the Suspension Calendar. The bill was introduced on September 17 by Ways and Means Chair Charles B. Rangel (D-NY). The bill would make the following changes to improve how the homebuyer credit and Homeowner's Assistance Program (HAP) provisions apply to service members (i.e., members of the uniformed services, members of the Foreign Service, and intelligence employees):

• The tax credit claimed on qualifying first-time home purchases in 2009 must be recaptured if the home is sold (or ceased to be used as a principal residence) within three years of the purchase. A more restrictive recapture rule applies to qualifying first-home purchases in 2008. The bill would provide that the first-time homebuyer credit does not need to be paid back if the home is sold (or stops being used as a principal residence) by a member of the uniformed services, a member of the U.S. Foreign Service, or an employee of the intelligence community, in connection with a government order for qualified official extended duty.
• The first-time homebuyer credit won't be available for purchases after Nov. 30, 2009 (unless Congress extends this tax break). H.R. 3590 would provide those serving on qualified official extended duty service outside of the U.S. for at least 90 days in calendar year 2009 with an additional year to qualify for the first-time homebuyer credit. Additionally, those buying a home after 2009 but before July 1, 2010 under the change would be able to elect to treat the home as bought on Dec. 31, 2009, in order to claim the credit on the 2009 return.
• The bill would ensure that certain payments under HAP are exempt from tax. This would apply to HAP payments made after Feb. 17, 2009, to (1) wounded members (and their spouses) of the Armed Forces, Department of Defense, or the United States Coast Guard and (2) members of the Armed Forces that bought a home before July 1, 2006 and are subsequently permanently reassigned between July 1, 2006 and Sept. 30, 2012.

To pay for these expanded tax breaks, the bill would increase the penalties for failure to file a partnership return or an S corporation return. For tax years beginning after 2010, the penalty would be increased by $21 (from $89 to $110). Additionally, for corporations with at least $1 billion of assets, estimated tax payments otherwise due in July, August, or September of 2014 would be increased by 0.5 percentage points.

The following material can also be found on Checkpoint:

• the text of H.R. 3590, the "Service Members Home Ownership Tax Act of 2009;"
• JCX-39-09, the Joint Committee on Taxation Staff's Technical Explanation of H.R. 3590, the "Service Members Home Ownership Tax Act Of 2009" Scheduled For Consideration By The House Of Representatives On October 7, 2009; and
• JCX-40-09, the Joint Committee on Taxation Staff's Estimated Revenue Effects of H.R. 3590, The "Service Members Home Ownership Tax Act Of 2009," Scheduled For Consideration By The House Of Representatives On October 7, 2009.

10/6/09 -- Amended Chairman's Mark of Senate Finance health reform bill released ahead of upcoming committee vote.
The Senate Finance Committee may vote on the "America's Healthy Future Act of 2009" as early as October 7, although that date may slip. Ahead of the Committee vote, the Senate Finance Committee released text of the revised Chairman's Mark to the bill, reflecting amendments that were accepted by the Committee. Senate Finance Chair Max Baucus (D-MT) requested cost estimates of the package by the Congressional Budget Office and the Joint Committee on Taxation. The Committee will vote on the legislation following its receipt of those analyses, along with "the conceptual language in plain English."

The revised Chairman's Mark to the "America's Healthy Future Act of 2009." Note that the revenue provisions begin at page 231 of the document can be found on Checkpoint.

10/1/09 -- Fiscal Year 2010 Federal Aviation Administration Extension Act signed into law.
On October 1, President Obama signed into law H.R. 3607, the "Fiscal Year 2010 Federal Aviation Administration Extension Act" (P.L. 111-69). Among other changes, H.R. 3607 amends the Code to extend through Dec. 31, 2009: (1) excise taxes on aviation fuels and air transportation of persons and property; and (2) the expenditure authority for the Airport and Airway Trust Fund.

9/30/09 -- Congress passes Fiscal Year 2010 Federal Aviation Administration Extension Act.
On September 24, the Senate, by unanimous consent, approved H.R. 3607, the "Fiscal Year 2010 Federal Aviation Administration Extension Act." The House of Representatives OK'd the measure by voice vote on September 23, so the measure is cleared for the President's expected signature. Among other changes, H.R. 3607 amends the Code to extend through December 31, 2009: (1) excise taxes on aviation fuels and air transportation of persons and property; and (2) the expenditure authority for the Airport and Airway Trust Fund.

9/30/09 -- Clean Energy Jobs and American Power Act introduced in Senate.
On September 30, Senators John Kerry (D-MA), Chairman of the Foreign Relations Committee, and Barbara Boxer (D-CA), Chairman of the Committee on Environment and Public Works, introduced the "Clean Energy Jobs and American Power Act." According to its sponsors, its goal is to create clean energy jobs, reduce pollution, and protect American security by enhancing domestic energy production and combating global climate change. The House version of clean-air legislation was passed on June 26 by the House of Representatives (see Article #1599).

The following material can also be found on Checkpoint:

• the text of the "Clean Energy Jobs and American Power Act;" and
• an overview of the "Clean Energy Jobs and American Power Act."

9/23/09 -- House passes bill extending unemployment coverage and extending FUTA surtax through 2010.
Late on September 22, the House of Representatives by a vote of 331-83 passed H.R. 3548, the Unemployment Compensation Extension Act of 2009. The measure provides for an additional 13 weeks of extended unemployment benefits in states with high unemployment. The bill also would amend the Code to extend from 2009 through 2010 the 6.2% tax on employers under the Federal Unemployment Tax Act (FUTA)--namely, the 6% permanent tax rate, plus the temporary 0.2% surtax. The repeal of the temporary 0.2% surtax, and the scheduled reduction in the FUTA tax to 6%, would be delayed from 2010 until 2011. The text H.R. 3548, the "Unemployment Compensation Extension Act of 2009" can be found on Checkpoint.

9/22/09 -- Baucus releases modified Chairman's Mark of the "America's Healthy Future Act of 2009."
On September 22, ahead of the Senate Finance Committee's scheduled markup of the "America's Healthy Future Act of 2009," Senate Finance Chair Max Baucus (D-MT) released a modified Mark of the bill he had introduced on Sept. 16 (see Article #1616). The overall goal of the modification was to tweak the bill to make it more likely to be approved by the Committee.

Many of the changes made by Baucus reflect amendments to the Chairman's Mark that had been filed with the Committee, including amendments offered by Sen. Olympia Snowe (R-ME) and an amendment offered by Mike Enzi (R-WY). In a press release. Baucus said the goal of the modifications was to improve affordability of health care under the plan while maintaining deficit reductions

Baucus's modifications would, among other changes:

• Increase the amount that low and middle income Americans would receive for health care through the proposed Health Care Affordability Tax Credit.
• Lower the affordability threshold for employer-sponsored insurance to make it easier for people who cannot afford employer provided insurance to instead receive tax credits in a health insurance exchange. Under the modified Mark, if employer-sponsored coverage would cost an individual more than 10% of income, that person would be eligible to receive a Health Care Affordability Tax Credit in an exchange.
• Raise the threshold above which insurance companies would be subject to the High Cost Insurance Excise Tax by $750 for individual plans and $2,000 for family plans for workers with high risk jobs or for non-Medicare retirees aged 55 and up. Additionally, the threshold above which insurance companies would be subject to the High Cost Insurance Excise Tax would be indexed.
• Reduce the penalty for individuals who don't carry health insurance.
• Require small employers to provide a plan with a deductible that does not exceed $2,000 for individuals and $4,000 for families, unless offering contributions which offset any increase in deductible above these limits.
• Increase the cap on contributions to Flexible Spending Accounts (FSAs) to $2,500 (original Chairman's Mark had specified a $2,000 cap).
• Allow non-profit companies to take advantage of the Small Business Health Care Affordability Tax Credit.
• Increase the tax rate for the High Cost Insurance Excise Tax from 35% in the original Chairman's Mark to 40%.
• Increase the adjusted gross income threshold for claiming the itemized deduction for medical expenses from 7.5% to 10%, effective in 2013.

The modified Chairman's Mark also would tinker with the fee that would be levied on health insurance providers, exempt retail products from the fee that would be levied on medical device companies, and eliminate the fee for clinical labs (and replace it with a temporary reduction in the Medicare clinical lab test fee schedule).

The following material can also be found on Checkpoint:

• the text of a press release announcing Sen. Baucus's modifications to the Chairman's Mark of the "America's Healthy Future Act of 2009;"
• the text of the Congressional Budget Office's analysis of the subsidies that would be offered through insurance exchanges and enrollees' payments for that coverage under the Chairman's Mark to the "America's Healthy Future Act of 2009;" and
• the text of JCX-36-09, the Joint Committee on Taxation's Estimated Revenue Effects Of The Revenue Provisions Contained In The Chairman's Mark, As Modified, Of The "America's Healthy Future Act Of 2009," Scheduled For Markup By The Committee On Finance On September 22, 2009.