Tax News

CCH (cch.taxgroup.com) reports:

  The Wisconsin Senate has passed its version of the 2009-11 budget bill, which would make numerous sales and use, personal income, and corporation franchise and income tax changes. Differences between the Senate's version and the previously reported Assembly's version of the bill (TAXDAY, 2009/06/17, S.36) include those described below. Both the Assembly and the Senate worked off the version offered by the Joint Committee on Finance on May 28, 2009.

CCH (cch.taxgroup.com) reports:

  The Kentucky House of Representatives has overwhelmingly passed Gov. Steve Beshear's special session economic development package containing income tax credits, sales and use tax incentives, and a pari-mutuel tax exemption for certain horse racing events. The House added several new provisions to the Governor's original package (TAXDAY, 2009/06/12, S.17), including:

  -- a nonrefundable corporation income tax and personal income tax credit for railroad companies that invest in Kentucky track infrastructure maintenance and improvements;

  -- a nonrefundable income tax credit for railroad companies that invest in Kentucky track infrastructure for the purpose of transporting coal, oil shale, natural gas, and biomass resources, such as biodiesel or ethanol;

  -- a sales tax refund on sales generated at a "tourism development project," meaning a tourism attraction project, theme restaurant destination attraction project, entertainment destination center project, or lodging facility project; and

  -- a sales tax refund for governmental entities of sales tax generated by the sale of admissions to multipurpose public facilities of 500 to 8,000 seats.

  Subscribers can view the bill passed by the House.
 
H.B. 3, as passed by the Kentucky House of Representatives on June 17, 2009
 

CCH (cch.taxgroup.com) reports:

  Treasury Secretary Timothy F. Geithner defended the administration's proposal to grant new regulatory authority to the Federal Reserve, arguing that countries that had chosen to limit their central bank's authority over financial stability found themselves with less capacity to act as the financial crisis unfolded. "I think they found themselves in a substantially worse position than we did as a country," Geithner told the Senate Banking, Housing and Urban Affairs Committee on June 18.

  Geithner described the administration's proposals for giving the Fed additional authority as "quite modest," noting that they build on existing authority, while at the same time take some authority away. He told members that the Fed is best positioned to be the first responder in a financial emergency because it already supervises and regulates bank holding companies, including all major U.S. commercial and investment banks.

  While the proposed Financial Services Oversight Council would fill gaps in the regulatory structure where they currently exist, it would not be in a position to respond like the Fed. "You don't convene a committee to put out a fire," Geithner said.

  Ranking committee member Richard C. Shelby, R-Ala., told the hearing that claims that the Fed has the most experience to regulate the financial system, including insurance companies, hedge funds and mutual funds, gave a "grossly exaggerated" view of the Fed's expertise. Geithner responded by saying the administration does not envision such a sweeping scope of authority for the Fed. At this stage, he said, the proposed authority would largely cover the major banks and investment firms.

  Meanwhile, Sen. Charles E. Schumer, D-N.Y., questioned Geithner on why the administration had not done more to consolidate bank supervision, noting that the new proposals would still result in four bodies responsible for bank oversight. He also wondered why, with the Fed gaining new powers, it should have responsibility over state banks.

  "We thought a lot about that," Geithner said, adding that the basic principle guiding the administration's proposals was to focus on those problems that were central to the crisis. He noted that the administration decided "it was not essential to take on the more complicated challenge of fundamentally transforming the rest of the system where there's a balance now between state and federal supervision of state chartered banks."

  By Sarah Borchersen-Keto, CCH News Staff

Treasury Department News Release, TDNR TG-176
 

CCH (cch.taxgroup.com) reports:

  Two House subcommittees looked into the issue of whether minority firms are fully participating in the New Market Tax Credit (NMTC) program, which is set to expire at the end of 2009. Donna J. Gambrell, director of the Treasury Department's Community Development Financial Institutions Fund, explained the program on June 18 before a joint hearing of the House Ways and Means Select Revenue Measures Subcommittee and the House Financial Services Subcommittee on Domestic Monetary Policy and Technology. "I believe the new markets tax credit is an efficient way to target investment into the neediest communities around the country," said Select Revenue Measures Subcommittee Chairman Richard E. Neal, D. Mass., who noted that lawmakers want to ensure that community organizations, many of which are smaller or minority-owned, have a fair shot at competing for these tax credits. The hearing concluded early without questioning by lawmakers, who had to return to the House floor for pending votes.

  Under the NMTC program, taxpayers receive a credit against federal income taxes for making qualified equity investments (QEIs) in designated community development entities (CDEs), Gambrell explained. Substantially all of these QEI dollars must be used by the CDE to provide investments in businesses and real estate developments in low-income communities. "To date, investors have invested $13.7 billion into CDEs, or over 70 percent of the NMTC allocation authority that was awarded to CDEs through 2008," Gambrell said in her written testimony. "In fact, since September of 2008, investors have invested close to $2 billion into CDEs, demonstrating the resiliency of this program in even the most difficult of economic times." She noted that in 2007, more than $4.1 billion was invested in census tracts where non-white populations exceeded 50 percent of the total population.

  The hearing was called as a result of a Government Accountability Office (GAO) study which concluded that minority-owned CDEs have not received allocation awards in proportion to their representation in the application pool (TAXDAY, 2009/06/02, M.3). Gambrell said the discrepancy is not attributable to biases in the application review or selection process. Instead, the capacity of each applicant, based on its merit, rather than ownership structure, is what determines whether NMTCs will be awarded. In addition, Gambrell suggested that many non-profit organizations that have significant minority executive control fall within the CDFI Fund's definition of a minority-owned entity, but failed to check the appropriate box on their applications.

  By Stephen K. Cooper, CCH News Staff

Ways and Means Select Revenue Measures Subcommittee Press Release: Chairman Neal on the New Markets Tax Credit Program

GAO Testimony: New Markets Tax Credit --Minority Entities Are Less Successful in Obtaining Awards Than Non-Minority Entities
 

Tax Analysts report: