Tax News

CCH (cch.taxgroup.com) reports:

  With time running out before Congress's month long August recess begins, the House on July 23 approved the Housing and Economic Recovery Bill of 2008 HR 3221 by a vote of 272 to 152. The House action cleared the way for an expected swift approval by Senate lawmakers, who are acting in tandem with the Bush administration to stave off a deepening housing crisis in the U.S. Despite repeated veto threats, President Bush will sign the legislation, confirmed White House Press Secretary Dana Perino on July 23.

  In addition to billions of dollars in tax relief targeted to the nation's troubled housing market, the bill would also provide financial stability to Fannie Mae and Freddie Mac, the nation's two government-sponsored housing enterprises that control the market. In remarks to reporters, House Majority Leader Steny H. Hoyer, D-Md., said the bill would stabilize neighborhoods and provide homeowners and lenders with the resources to prevent home foreclosures.

  According to a Democratic summary of the legislation, the bill would provide tax relief to homebuyers and homeowners, increase state allocations of low-income housing tax credits and tax-exempt bond financing. It would also increase funding for the Community Development Block Grant program. The cost of these and other provisions would be offset by requiring credit card information return reporting by merchants, delaying the worldwide allocation of interest rules and modifying the exclusion of gains on the sale of a principal residence.

 
HR 3221 previously faced a presidential veto for including the $4 billion community block grant provision allowing states to purchase foreclosed homes. Perino said that the White House still regards the provision as "a bailout to lenders" but the president decided that this is not the time for a prolonged veto fight. The White House spokeswoman said the overall bill is needed "to increase confidence and stability in the housing and financial markets." Perino stressed that the president would not have decided to approve the measure if there had been more time for negotiations before the start of congressional recess in early August.

  Perino mostly dismissed the significance of the Congressional Budget Office estimate that the housing bill will cost $25 billion. She emphasized that the administration does not plan to employ the proposed temporary authority given to the Treasury Department to assure Fannie Mae and Freddie Mac continued access to capital and liquidity. Nonetheless, Perino maintained there are "tremendous taxpayer protections" in place if the plan were implemented.

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

Division C, Housing Assistance Tax Act of 2008, of Housing and Economic Recovery Act of 2008, Amendment to Senate Amendment to House Amendments to Senate Amendment,
HR 3221

JCT Technical Explanation of Division C of HR 3221, the Housing Assistance Tax Act of 2008, Scheduled for Consideration by the House on July 23, 2008, JCX-63-08

JCT Estimated Budget Effects of the Tax Provisions Contained in HR 3221, the Housing and Economic Recovery Act of 2008, Scheduled for Consideration by the House on July 23, 2008, JCX-64-08

House Ways and Means Committee Release: House Votes to Strengthen Housing Market, Stem Tide of Foreclosures

House Ways and Means Committee Release: Summary of HR 3221, Housing Assistance Tax Act of 2008

Statement of Administration Policy on HR 3221, Housing and Economic Recovery Act of 2008