Tax News

CCH (cch.taxgroup.com) reports:

  The Kentucky Legislature has reached consensus on Gov. Steve Beshear's special session economic development package that contains a broad range of corporation and personal income tax credits, sales and use tax incentives, and a pari-mutuel tax exemption for certain horse racing events, according to a Legislative Research Commission (LRC) news release. Both the House of Representatives (TAXDAY, 2009/06/19, S.5) and the Senate (TAXDAY, 2009/06/23, S.12) passed different versions of a bill (H.B. 3) amending the original provisions proposed by the governor (TAXDAY, 2009/06/12, S.17). The LRC said changes to the bill that were agreed upon by House and Senate conferees, include:

  -- a personal income tax exemption for Kentucky's active-duty military personnel;

  -- a motor vehicle use tax incentive that would only tax car buyers on the difference between a new car purchase and the owner's trade-in; and

  -- an extension of tourism development incentives.

  The tax exemption for military personnel was part of special session legislation proposed by the governor that would have authorized the use of Video Lottery Terminals (VLTs) at certain Kentucky horse racing tracks (TAXDAY, 2009/06/10, S.11). The VLT bill (H.B. 2) was passed by the House, but later died in Senate committee.

  Subscribers can view the LRC news releases.

News Release , Kentucky LRC, June 24, 2009; Capitol Notes , Kentucky LRC, June 22, 2009
 

CCH (cch.taxgroup.com) reports:

  The House Education and Labor Committee on June 24 approved legislation aimed at giving investors more information about fees that are charged to their 401(k) retirement plans. By a vote of 29-to-17, lawmakers approved the 401(k) Fair Disclosure and Pension Security Bill (HR 2989). The legislation is designed to provide employees with more information about fees taken from their retirement plans, and more options when they choose their investment plans. Rep. George Miller, D-Calif., chairman of the Education and Labor Committee, said the bill is a response to employee worries about the value of their retirement plans during the current economic recession.

  The legislation would require retirement plans to give investors a quarterly statement that includes a dollar figure representing all fees taken from their 401(k) plan. Service providers and plan administrators would be required to categorize fees as administrative fees, investment management fees, transaction fees and other fees. The measure would also require service providers to disclose any financial relationships so that companies that sponsor 401(k) plans can make sure there are no conflicts of interest.

  A spokesman for the Education and Labor Committee said Miller will determine the next step for the legislation after consulting with the House Ways and Means Committee, which also has jurisdiction over
401(k) plans. Meanwhile, a similar bill, introduced by Senate Special Committee on Aging Chairman Herb Kohl, D-Wis., and Sen. Tom Harkin, D-Iowa, is pending in the Senate. Their bill, the Defined Contribution Fee Disclosure Bill (Sen 401), would require a 401(k) plan to provide a written statement of services provided, as well as the expected total annual service charge.

  By Stephen K. Cooper, CCH News Staff

401(k) Fair Disclosure and Pension Security Act of 2009, HR 2989

Defined Contribution Fee Disclosure Act of 2009, Sen 401
 

CCH (cch.taxgroup.com) reports:

  Lawmakers on the House Ways and Means Committee traded barbs on June 24 about the nature and effect of comprehensive health care reform legislation now under consideration by Congress. At a committee hearing on the health care draft legislation proposed by Democratic leaders, GOP lawmakers attempted to characterize the public insurance option included in the health care reform plan as a wholesale move toward socialized medicine.

  Ways and Means ranking member Dave Camp, R-Mich., said an independent analysis of the Democratic plan shows that a public option would cost $3.5 trillion. Committee Chairman Charles B. Rangel, D-N.Y., remarked that Congress would use estimates from the Congressional Budget Office (CBO) when determining the cost and method of paying for health care reform. Democrats maintained that offering Americans a public option for health care would provide competition for private insurers and lower prices for patients. The health care discussion draft legislation was written by Democrats on the House Ways and Means, Energy and Commerce and Education and Labor Committees, which held a third day of hearings on the proposal on June 24.

  Randel K. Johnson, senior vice president of Labor, Immigration, & Employee Benefits for the U.S. Chamber of Commerce, told lawmakers that the only way health care reform can appear to be budget-neutral is for Congress to impose massive new taxes. He said creating a European-style value-added tax would harm the economy and hurt those with the lowest incomes. Other regressive ideas under consideration by Congress include taxing sugary drinks and alcohol, and modifying flexible spending accounts and health savings accounts.

HELP Committee Seeks Budget Score

  The Senate Health, Education, Labor, and Pensions (HELP) Committee on June 24 asked the CBO to score the budget impact of two competing proposals requiring employers to help pay for employee private health insurance coverage if they are not offered coverage in the workplace. The so-called "pay or play "mandate would exempt small businesses, according to Sen. Christopher Dodd, D-Conn., but the committee has yet to determine who would qualify as a small business. The CBO has also been asked to determine the cost of a proposal requiring businesses with large numbers of employees covered under Medicaid to pay additional taxes.

  The committee plans to wrap up work on the less-controversial portions of its health care reform bill by the end of the week of June 22 and resume consideration of more difficult sections, including public-backed insurance programs and how to pay for the overhaul, when Congress returns from its Fourth of July recess during the week beginning July 6.

  By Jeff Carlson and Stephen K. Cooper, CCH News Staff

Ways and Means Press Release: Ways and Means Focuses on Health Reform Proposals to Reduce Costs, Protect Current Coverage and Preserve Choice for Patients to Ensure Affordable Care

CCH (cch.taxgroup.com) reports:

  President Obama on June 24 signed legislation aimed at boosting the sale of vehicles at financially struggling U.S. automobile dealerships. The so-called "cash for clunkers" program provides $1 billion in tax-free vouchers to automobile dealers who participate in the new program. The program vouchers, worth $3,500 or $4,500, will be given to dealers when consumers trade in old vehicles for ones with higher fuel efficiency. The vouchers will not be considered taxable income for the car buyer.

  The new law limits the number of vouchers to one per customer, including joint registered owners of a single eligible trade-in vehicle. The car voucher measure is included in the 2009 Supplemental Appropriations Bill for Iraq, Afghanistan, Pakistan and Pandemic Flu (HR 2346).

  By Paula Cruickshank, CCH News Staff

Tax Analysts report: