Tax News

CCH (cch.taxgroup.com) reports:

  House lawmakers hoped to finish work on a comprehensive housing bill late on May 7, but repeated procedural votes called by GOP members to protest an unrelated Iraq war funding bill delayed action. The Neighborhood Stabilization Bill of 2008 (HR 5818) also contained a tax amendment from the House Ways and Means Committee that includes the provisions of the Housing Assistance Tax Bill of 2008 (HR 5720) that passed the committee on April 24.

  The measure includes tax provision targeted to help homeowners affected by the subprime mortgage crisis as well as an effort to boost the construction of affordable, multifamily housing through changes to the low income housing tax credit and tax exempt bond programs. The tax provisions would also provide middle-class taxpayers with tax credits and deductions for home purchases. The White House has threatened to veto the legislation.

  In addition to the tax provisions that passed the committee, Democrats included a provision to provide better coordination between housing tax credits, multifamily housing bond programs and other housing programs under the Department of Housing and Urban Development and the Rural Housing Service. It also includes a minor provision affecting foreclosure protection for members of the military who leave active duty.

  In other action, House Ways and Means Committee Chairman Charles B. Rangel, D-N.Y., said his committee will begin work on a tax extenders bill during the week of May 12. Rangel's spoke at a press conference with House Speaker Nancy Pelosi, D-Calif., who said that the extenders bill would also include energy tax provisions geared towards increasing alternative energy sources and reducing Americans' dependence on foreign oil.

  The tax extenders bill, which will not include provisions addressing the alternative minimum tax (AMT), will likely reach the House floor before lawmakers leave Washington for the Memorial Day recess, Rangel predicted. He did not provide details of the tax extenders that would be included in the legislation, but promised that the package would be fully offset.

Veto Threat

  President Bush on May 7 threatened to veto the housing bill in its current form. Meeting with members of the House Republican Conference, the president said the measure will "reward speculators and lenders."

  Of the housing assistance tax provisions, the administration strongly opposes a proposal to expand the types of tax-exempt bonds guaranteed by the Federal Home Loan Banks (FHLBs). "It would be ill-conceived to empower the FHLBs to venture far afield of their current mission by underwriting the credit risks of non-housing, public infrastructure projects," according to an administration policy statement.

  The administration also opposes a recapture provision in the proposed $7,500 refundable tax credit for first-time homebuyers and contends the credit would go largely to those who could afford to purchase homes regardless of the tax break. In addition, it objects to a revenue offset that would delay the use of worldwide interest allocation by U.S. corporations.

  According to White House Press Secretary Dana Perino, the overall bill goes "too far, too fast" and places an unnecessary risk on taxpayers. Following the White House meeting, House Minority Leader John A. Boehner, R-Ohio, complained that the housing package would bail out lenders and "scam artists" at the expense of those homebuyers who are truly victims.

  By Stephen K. Cooper and Paula Cruickshank, CCH News Staff

SAP on House Amendments to Senate Amendment to HR 3221, Foreclosure Prevention Act of 2008