Posts Tagged ‘Congress’

Obama, Republicans Plan Last-Minute Talks on Sequestration

Thursday, February 28th, 2013

Originally posted to reuters.com – February 28, 2013

Positions hardened on Wednesday between U.S. President Barack Obama and Republican congressional leaders over the budget crisis even as they arranged to hold last-ditch talks to prevent harsh automatic spending cuts beginning this week.

Looking resigned to the $85 billion in “sequestration” cuts starting on Friday, government agencies began reducing costs and spelling out to employees how furloughs will work.

Expectations were low that a White House meeting on Friday between Obama and congressional leaders, including Republican foes, would produce any deal to avoid the cuts.

Speaking to a business group, Obama said the cuts could shave 0.6 percentage points or more from already anemic growth and urged executives to pressure Congress into compromising on a broad deficit reduction package.

“Whether that can be done in the next two days – I haven’t seen things done in two days in Washington in quite some time,” Obama told the Business Council, which is composed of chief executives of major U.S. corporations. “The good news is that the public is beginning to pay attention to this.”

Public services across the country – from air traffic control to food safety inspections and education – might be disrupted if the cuts go ahead.

Put into law in 2011 as part of an earlier fiscal crisis, sequestration is unloved by both parties because of the economic pain it will cause, but the politicians cannot agree how to stop it.

A deal in Congress on less drastic spending cuts, perhaps with tax increases too, is needed by Friday to halt the sequestration reductions, which are split between social programs cherished by Democrats and defense spending championed by Republicans.

Obama stuck by his demand that Republicans accept tax increases in the form of eliminating tax loopholes enjoyed mostly by the wealthy as part of a balanced approach to avoiding sequestration.

“There is no alternative in the president’s mind to balance,” White House spokesman Jay Carney told reporters.

Obama wants to end tax breaks for oil and gas companies and the lower “carried interest” tax rate enjoyed by hedge funds.

But Republicans who reluctantly agreed to raise income tax rates on the rich to avert the “fiscal cliff” crisis in December are in no mood for that.

“One thing Americans simply will not accept is another tax increase to replace spending reductions we already agreed to,” said Senate Republican leader Mitch McConnell.

In one of the first concrete effects of the cuts, the administration took the unusual step of freeing several hundred detained illegal immigrants because of the cost of holding them.

Republicans described that move by Immigration and Customs Enforcement (ICE) as a political stunt aimed at scaring them into agreeing to end the sequestration on Obama’s terms.

The issue looked like it might become more controversial on Wednesday when the Associated Press reported that the Homeland Security Department official in charge of immigration enforcement and removal had announced his resignation on Tuesday just after news of the immigrants’ releases came out.

But ICE said the report was “misleading.” The official, Gary Mead, told ICE weeks ago of his retirement in April after 40 years of federal service, a spokeswoman said. Earlier, Carney denied the White House had ordered the immigrants’ release.

Friday’s White House meeting will include McConnell and the other key congressional leaders: Senate Democratic leader Harry Reid, House of Representatives Democratic leader Nancy Pelosi, and House Speaker John Boehner, the top U.S. Republican.

‘BELATED FARCE’?

The chances of success were not high.

One congressional Republican aide criticized the White House for calling the meeting for the day the cuts were coming into effect. “Either someone needs to buy the White House a calendar, or this is just a – belated – farce. They ought to at least pretend to try.”

Unlike during other fiscal fights in Congress, the stock market is taking the sequestration impasse calmly.

U.S. stocks rose, with major indexes posting their best daily gains since early January, as Federal Reserve Chairman Ben Bernanke remained steadfast in supporting the Fed’s stimulus policy and data pointed to economic improvement.

On Thursday, the Senate is expected to vote on competing Democratic and Republican ideas for replacing the sequestration. Both measures are expected to be defeated.

The Republican plan unveiled late on Wednesday would let the sequestration go into effect on Friday, but require Obama to submit an alternative $85 billion spending reduction plan to Congress by March 15, thus allowing more flexibility on how the cuts would be carried out.

Congress would have until March 22 to reject the proposal, in which case the original sequestration would remain in place. Democrats were still studying it. But on Tuesday, Senate Majority Leader Harry Reid said new revenues needed to be part of any substitute plan.

The Democratic proposal would replace the across-the-board cuts mainly with tax increases on the rich coupled with spending cuts. Some of those would be achieved by eliminating crop subsidies for large agricultural companies. More savings would be through minor defense cuts in later years.

Republicans have vowed to block any tax increases for deficit reduction.

Bernanke said sequestration was too drastic an approach for reducing the budget deficit.

“What I am advising is a more gradual approach. I’m not saying we should ignore the deficit. I am not saying we shouldn’t deal with long-term fiscal issues, but I think that from the perspective of our recovery, a more gradual approach would be constructive,” he told a House Financial Services Committee hearing.

Among many warnings from the Obama administration of possible damage to public services, the Air Force said its Thunderbirds exhibition flying team is expected to be grounded if sequestration happens.

The Pentagon will put most of its 800,000 civilian employees on unpaid leave for 22 days, slash ship and aircraft maintenance and curtail training.

But the full weight of sequestration will take place over seven months, allowing Obama and the Republicans time to work out a deal after the cuts begin this week.

White House spokesman Carney said sequestration would officially start just before midnight on Friday night if no deal were reached.

Government agencies began to tell employees how sequestration will force them to take furloughs. The Environmental Protection Agency acting head, Bob Perciasepe, told employees in an email that the agency did not know how much of its budget will be cut but it was working on an estimate of 5 percent.

“What might that mean for our employees? If the sequester order requires a 5.0% cut, the impact could be up to 13 furlough days,” he said. That would likely mean four furlough days by June 1, he said.

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,
Posted in IRS, Jobs, Taxes, law | No Comments »

‘Fiscal cliff’ Talks at a Stalemate Over Tax Hikes

Thursday, December 13th, 2012

originally published in the Washington Post

As the White House and Republican leaders enter the final month of negotiations to avoid a year-end “fiscal cliff,” both sides struck an uncompromising tone Sunday, as warnings mounted that they will be unable to forge an agreement to stop an automatic series of deep spending cuts and large tax hikes that could push the economy into recession.

Following private meetings last week, the senior negotiators for the White House and the Republicans took to the airwaves Sunday to accuse the other side of intransigence and to demand that the opposition concede on the central question of how much to raise taxes on the wealthy.

“Right now, I would say we’re nowhere, period. We’re nowhere,” House Speaker John A. Boehner (R-Ohio) said on “Fox News Sunday.” Boehner added that the Republicans have offered a way to break the stalemate — by compromising on an overhaul of the tax code that would limit deductions that disproportionately benefit the rich.

But Treasury Secretary Timothy F. Geithner rejected that proposal Sunday, insisting that the wealthy pay higher tax rates and that Republicans come forward with a plan that meets that requirement. “There’s no path to an agreement that does not involve Republicans acknowledging that rates have to go up on the wealthiest Americans,” he said on NBC’s “Meet the Press.”

While it had always seemed likely that the two sides would reach a stalemate before finally coming to agreement — as has been the pattern over the past two years — lawmakers and congressional aides tracking the back-and-forth said there’s a growing probability that no deal will be reached in time to avoid the fiscal cliff.

“I think we’re going over the cliff,” Sen. Lindsey O. Graham (R-S.C.) said on CBS’s “Face the Nation.”

Geithner appeared on five Sunday morning news shows — and Boehner on one — amid an intensifying public-relations blitz related to the fiscal cliff. President Obama took his first domestic trip since winning reelection to the Philadelphia suburbs on Friday to press Republicans, which was followed by a Boehner news conference.

This week, Obama will gather with governors and make a speech to the Business Roundtable, a lobby group representing big business, to urge lawmakers to embrace his tax proposals. Boehner will meet with governors and rally with small-business owners against tax increases.

The debate over how to raise taxes on the wealthy is part of the broader discussion over how to reduce federal borrowing over the next decade. At the end of the year, tax rates are scheduled to increase on nearly all Americans, raising hundreds of billions of dollars of new tax revenue but costing the average family about $2,000 a year in take-home pay.

Obama wants to freeze tax rates for most Americans while allowing them to rise as high as 39.6 percent for the wealthiest people — defined as earning over $250,000 per year. That will reduce federal borrowing by about $1 trillion over a decade.

“There’s just no reason why 98 percent of Americans have to see their taxes go up because some members of Congress on the Republican side want to block tax rate increases for 2 percent of the wealthiest Americans,” Geithner said Sunday.

Then next year, Obama wants to overhaul the tax code to clean out deductions and loopholes that benefit the rich and some sectors such as the financial industry. That, the administration estimates, would generate about $600 billion in savings over a decade.Republicans, meanwhile, do not want to raise taxes on anyone. But in the wake of their electoral defeat last month, they have acknowledged that the wealthy will have to pay more. They want to raise about $800 billion in new revenue over the decade through an overhaul of the tax code that limits deductions. Higher rates, they say, will dissuade work and investment and hurt small businesses, and thus be a drag on economic growth.

Both sides agree that as a principle, keeping tax rates low while eliminating deductions is better than increasing tax rates. But Democrats say it’s not possible to preserve enough spending on government programs without raising well over $1 trillion in new tax revenues during the next decade — and they don’t believe it’s possible to do that without raising rates on the wealthy, raising taxes on the middle class, or dramatically scaling back worthwhile deductions such as the one for charitable giving.

Last week, in a private meeting with Boehner, Geithner made the Obama administration’s opening bid in the fiscal cliff talks — largely a reprisal of policies the administration has already advocated. In addition to $1.6 trillion in new tax revenue, the proposal called for $600 billion in spending cuts, a majority of it from Medicare and Medicaid, as well as a new policy to allow the president to raise the statutory limit on federal borrowing without a majority of Congress approving.

That would come on top of $1 trillion in spending cuts that were agreed to in 2011 and $800 billion in savings from the end of the wars in Afghanistan and Iraq.

Republicans dismissed the proposal as laughable. “I was flabbergasted. I looked at him and said, ‘You can’t be serious,’ ” Boehner said Sunday. “I’ve just never seen anything like it. You know, we’ve got seven weeks between Election Day and the end of the year, and three of those weeks have been wasted with this nonsense.”

The White House also has opened the door to a compromise that would increase rates on upper-income earners by less than the full amount they are scheduled to rise next year, when the top brackets rise from 33 to 35 percent and 35 to 39.6 percent. But Republicans have not agreed.

“It’s welcome that they’re recognizing that revenues are going to have to go up, but they haven’t told us anything about how far rates should go up, how far revenues should go up,” Geithner said.

Beyond openness to new revenues through an overhaul of the tax code, Republicans insist on significant savings from the nation’s health-care entitlements, as well as Social Security.

In talks with Boehner in the summer of 2011 over a deal to slow borrowing, Obama was willing to adopt a stingier formula for making cost-of-living adjustments to Social Security. But in this round of talks, the White House says it won’t make any changes to the program.

“We are prepared to, in a separate process, look at how to strengthen Social Security, but not as part of a process to reduce the other deficits the country faces,” Geithner said.

Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,
Posted in IRS, Taxes, law | No Comments »

House Democrats Introduce Tax Cut Extension Bill

Tuesday, July 31st, 2012

-originally posted on Accounting.com on July 30th

Democrats on the House Ways and Means Committee introduced on Monday a version of the middle-class tax cut extension legislation that passed the Senate last week.

The legislation, H.R. 15, would extend the Bush tax cuts for households with incomes up to $250,000. It is identical to the version approved last week in the Senate in a 51-48 vote (see Senate Approves Tax Cuts Extension for Middle Class). House Republicans have also introduced their own Bush tax cuts extension bill, which would extend the tax cuts for all income levels. A vote on both bill is expected later this week (see House to Vote Next Week on Dueling Bush Tax Cut Extension Bills).

Separately, Ways and Means Democrats also introduced legislation, H.R. 16, to reinstate the 2009 estate tax provisions, in which there was a top rate of 45 percent and a $3.5 million exemption, to ensure that 99.7 percent of decedents will face no estate tax liability.  The Republican bill spends approximately $9 billion more to provide a complete exemption from the estate tax for 3,600 additional decedents.

Despite the movement in Congress in recent weeks over the tax cuts extension, the two parties are not likely to agree on a deal before the November elections and the lame-duck session afterward.

“The problem we’re having is the deadlock over the middle-class tax cut and whether millionaires need to get the biggest cut out of the tax cut,” said Ways and Means ranking Democrat Sander Levin, D-Mich., during a conference call with reporters Monday. “Until we resolve that, it’s hard. … As long as there is this strangelehold over action, it’s difficult to know how to resolve that.” He expressed similar skepticism over passing a tax extenders bill to deal with dozens of other expiring and expired tax breaks.

Tags: , , , , , , , , , , , , , ,
Posted in Accounting, Taxes, Uncategorized | No Comments »

Obama Signs JOBS Act for Small Businesses into Law

Monday, April 9th, 2012

originally posted on AccountingToday.com on April 5, 2012 – by Michael Cohn

President Obama signed into law on Thursday the Jumpstart Our Business Startups Act, also known as the JOBS Act, which lowers the regulatory and auditing barriers for companies to seek funding and enter the capital markets.

Congress passed the bill late last month with strong bipartisan support, despite opposition from several investor groups and accounting organizations warning that the bill would weaken auditing safeguards and investor protections (see Congress Passes JOBS Act for Small Business).

“I’ve always said that the true engine of job creation in this country is the private sector, not the government,” Obama said in a speech in the White House Rose Garden to mark the signing of the bill. “Our job is to help our companies grow and hire. That’s why I’ve cut taxes for small businesses over 17 times. That’s why every day I’m fighting to make sure America is the best place on Earth to do business.”

The bill packaged together several bills that had made progress in several congressional committees in the past year, but not been enacted into law until now. It was introduced by House Majority Leader Eric Cantor, R-Va., who praised the bill when it was signed into law.

“Today, I was proud to join my colleagues and members of the business community as the President signed the bipartisan JOBS Act into law,” he said in a statement. “This bipartisan package will spur job creation by removing outdated regulations and increasing access to capital so that small businesses and startups can grow and create jobs. The bipartisan JOBS Act is the culmination of hard work by both parties in Congress, the White House and the business community, especially Steve Case. And, it shows we can set aside our differences and work together on areas of common ground to grow the economy and get people back to work.”

The bill aims to reduce the costs of going public by giving companies a temporary reprieve from certain Securities and Exchange Commission regulations, phasing in the regulations over five years to allow smaller companies to go public sooner. The bill would also create a new category of issuers called emerging growth companies, which would retain that status for five years or until they exceed $1 billion in annual gross revenue or become large accelerated filers.

Another provision would remove an SEC regulatory ban preventing small businesses from using advertisements to solicit investors. The bill also removes SEC restrictions on “crowdfunding” so entrepreneurs can raise equity capital from a large pool of small investors who may or may not be considered “accredited” by the SEC. Companies would be able to pool up to $1 million from investors without registering with the SEC, or up to $2 million if the company provides the SEC with audited financial statements.

Another provision makes it easier for small businesses to go public by increasing the offering threshold for companies exempted from SEC registration from $5 million to $50 million. Another provision removes barriers to capital formation for small companies by raising the shareholder registration requirement threshold from 500 to 1,000 shareholders.

Despite the bipartisan support, the bill provoked warnings from SEC chair Mary Schapiro that it would weaken key investor protections and make it easier for fraudsters to dupe investors. The Consumer Federation of America and the AFL-CIO have also warned about the weakening of investor protections. Some Democratic senators tried to amend the bill to raise the exemption levels. Critics have pointed out that the $1 billion revenue threshold for emerging growth companies would encompass the vast majority of companies that have gone public, not just small businesses.

The Center for Audit Quality, the American Institute of CPAs and the Council of Institutional Investors have also warned about the weakening of Sarbanes-Oxley rules for audits of internal controls by exempting the new category of emerging growth companies from the audits for five years (see Small Business Bill Would Weaken Audit Protections). Under the Dodd-Frank Act of 2010, only companies with a public float of less than $75 million were exempted from Sarbanes-Oxley audits of their internal controls. In the JOBS Act, the market capitalization level would rise to $700 million. Emerging growth companies would be exempt from the internal control audits for five years, or until they reached that $700 million market cap. Instead of three years of audited financial information, emerging growth companies could go public with only two.

Under the bill, there also would be no requirement to comply with new or revised financial accounting standards for public companies from the Financial Accounting Standards Board until the standards were also applicable to private companies.

Other provisions of the bill would make it easier for financial analysts for the financial firms that underwrite initial public offerings to issue reports on the companies.

Brokers and dealers would be able to arrange for communications between securities analysts and potential investors in an emerging growth company that was planning to go public and securities analysts would be able to participate in communications with the management of an emerging growth company alongside people associated with the brokers or dealers working for the company.

Another provision would allow companies to work out disagreements with regulators such as the Securities and Exchange Commission outside public view before they go public. That provision might have allowed companies like Groupon to hide their accounting issues before going public.

The bill would also weaken Dodd-Frank Act provisions giving shareholders a say on executive compensation. There would be no requirement for a shareholder “say on pay” for emerging growth companies.

Despite these drawbacks, there was praise for the bill being signed into law from some quarters. Slava Rubin, the CEO of the global crowdfunding site Indiegogo.com, represented the crowdfunding industry at the White House for the signing of the bill and was invited to participate in a private roundtable discussion before the bill signing as well.  He called the signing of the bill “an incredible day for America.”

“This country was built on entrepreneurship and now every American will have an equal opportunity to stimulate tomorrow’s new companies and job growth,” he added.

Tags: , , , , , , , , , , , , , ,
Posted in Jobs, Small Business, Taxes, Uncategorized, law | No Comments »

Jobless rate at 3-year low as payrolls surge

Friday, February 3rd, 2012

From – Reuters

The United States created jobs at the fastest pace in nine months in January and the unemployment rate unexpectedly dropped to a near three-year low, giving a boost to President Barack Obama.

Nonfarm payrolls jumped 243,000, the Labor Department said on Friday, as factory jobs grew by the most in a year. The jobless rate fell to 8.3 percent – the lowest since February 2009 – from 8.5 percent in December.

The gain in employment was the largest since April and it far outstripped the 150,000 predicted in a Reuters poll of economists. It hinted at underlying economic strength and lessened chances of further stimulus from the Federal Reserve.

“More pistons in the economic engine have begun to fire, pointing to accelerating economic growth. One of the happiest persons reading this job report is President Obama,” said Sung Won Sohn, an economics professor at California State University Channel Islands.

The payroll gains were widespread – from retail to temporary help, and from construction to manufacturing – an indication the recovery was becoming more durable.

A survey of households showed the unemployment rate declined even as new job seekers flooded into the labor force. Economists had expected the jobless rate, which has now fallen 0.8 percentage point since August, to hold steady.

“I think this is a sign that maybe the economy is reaching that holy grail of a self-sustaining economic expansion,” Stuart Hoffman, chief economist at PNC Financial Services in Pittsburgh, told Reuters Insider.

The outlook was further brightened by a separate report showing service sector activity quickened last month to a near one-year high. A gauge of service sector employment touched a six-year high.

The fairly upbeat data buoyed stocks on Wall Street, with the tech-heavy Nasdaq Composite index hitting an 11-year high. The Dow Jones industrial average rose to a near four year high, while the Standard & Poor’s index extended its 2012 advance to about 7 percent.

U.S. Treasury debt prices tumbled as investors dialed back expectations on Fed easing. The dollar was little changed against a basket of currencies after rising earlier in the session.

The employment report contrasted with a fairly glum assessment of the economy offered by the Fed last week.

Officials at the central bank have been debating whether to buy more bonds – a program dubbed QE3 – to drive interest rates lower. It also raised doubts about the Fed’s expectation that it could hold interest rates near zero at least through late 2014.

“At the very least this scales back QE3 (quantitative easing) odds. The surprisingly persistent decline in the unemployment rate also calls into question how firmly wedded the Fed is to the late-2014 rate guidance,” said Michael Feroli, an economist at JPMorgan in New York.

Interest rate futures indicated that at least some traders were beginning to lay bets the Fed could move interest rates up in early 2014.

Fed fund futures were pricing in a 38 percent chance of a January 2014 rate hike, up from 29 percent before the report, and the first better than even chance of a rate hike was in April 2014, according to CME Group, where the contracts are traded.

However, economists at most leading Wall Street firms still believe the Fed will undertake another bond-buying program, according to a Reuters poll.

DON’T MUCK IT UP

Obama welcomed the strong jobs report and urged Congress to extend a payroll tax cut and benefits for long-term unemployed, which expire at the end of this month.

“Now is not is not the time for self-inflicted wounds to our economy. I want to send a clear message for Congress. Do not slow down the recovery that we are on, don’t muck it up,” he said at a firehouse in Arlington, Virginia.

Republicans acknowledged the improvement in the labor market, but said the jobless rate was still too high.

“Our economy still isn’t creating jobs the way it should be and that’s why we need a new approach,” said House Speaker John Boehner.

While employment growth has quickened there are no jobs for three out of every four unemployed people and 23.8 million Americans are either out of work or underemployed. The level of employment is still 5.57 million from its pre-recession level.

But steady progress is being made. The economy added 60,000 more jobs in November and December than previously reported.

In addition, average hourly earnings rose four cents, which should help to support spending. The report suggested that expectations of a slowdown in U.S. economic growth in the first quarter were not yet impacting on companies’ hiring decisions.

Employment in the private sector surged 257,000 – the largest gain since April. Government payrolls fell 14,000, the least since September.

U.S. economic growth accelerated to a 2.8 percent annual rate in the final three months of 2011, but it was widely expected to slow as businesses ease back on efforts to rebuild inventories and exports slip amid a likely recession in Europe.

Some economists cautioned that January’s jobs figures could overstate the pulse of the recovery, citing still lackluster consumer confidence, income and spending growth.

While some said the jobless rate could drop below 8 percent by year end, others warned it would likely move up in the near-term as people who had given up the search for a job re-enter the workforce.

“For this to mark an upturn in the labor market, then businesses will have to continue to hire on this scale throughout the winter,” said Kathy Bostjancic, director of macroeconomic analysis at the Conference Board in New York.

CAUTIOUS OPTIMISM

The unemployment rate has now declined for five straight months, although part of the drop reflects discouraged Americans giving up the hunt for work.

A broad measure of unemployment, which includes people who want to work but have stopped looking and those working only part time but who want more work, slipped to a near three-year low of 15.1 percent in January from 15.2 percent in December.

Revisions to the payrolls figures showed 180,000 more jobs were created last year than previously believed.

Mild winter weather boosted employment last month in construction, which added 21,000 jobs after a 31,000 increase in December. Manufacturing payrolls surged 50,000, the largest gain in a year, after rising 32,000 the prior month.

Overall, the goods-producing sector added 81,000 jobs last month, the most since January 2006.

Transportation and warehousing employment increased 13,100 and courier jobs only fell 1,500. Last month, the Labor Department reported a large increase in courier jobs in December, but revisions showed they actually declined.

Retail employment rose 10,500 after gaining 6,200 in December. Temporary help services jumped 20,100 after rising 8,300, a potentially good sign for future permanent hiring. For more information please see Jobless rate at 3-year as payrolls surge on Reuters.

Tags: , , , , , , , , ,
Posted in Jobs, Small Business, Taxes | No Comments »

Senators Introduce Online Sales Tax Bill

Tuesday, November 15th, 2011

From www.accountingtoday.com

A bipartisan group of 10 senators introduced legislation Wednesday that would give states the option to collect the sales taxes they are owed under current law from out-of-state businesses, rather than rely on consumers to pay those taxes to the states.

The bill, known as the Marketplace Fairness Act, would give states the option to collect sales and use tax revenues from out-of-state sellers through a new, simplified tax system. Among the senators sponsoring the bill are Lamar Alexander, R-Tenn., Dick Durbin, D-Ill., and Mike Enzi, R-Wyo.

The bill resembles another piece of legislation, the Main Street Fairness Act, which was introduced in July by Durbin and several other Democratic lawmakers, but now includes support from some key Republicans and conservative groups (see Congress Introduces Bill to Collect Online Sales Taxes).

Like the earlier bill, it relies on the Streamlined Sales and Use Tax Agreement that is already in use by 24 states. However, the emphasis with the new bill is on the fact that it would not impose any new taxes, but merely collect taxes that are already owed, and it gives states the option not to collect the sales taxes, preserving states’ rights.

“This legislation would give states the ability to close the online sales-tax loophole, created when out-of-state sellers don’t collect, and purchasers don’t pay, the state sales tax—even though they still owe it,” Alexander said in a statement. “The legislation addresses a states’ rights issue: preserving the right of states to collect—or to decide not to collect—taxes that are already owed under state law.”

The legislation would streamline the country’s more than 7,500 diverse sales tax jurisdictions and provide two options by which states could begin collecting sales taxes from online and catalog purchases.

States that voluntarily become member states of the Streamlined Sales and Use Tax Agreement, or SSUTA, would be able to require remote sellers to collect and remit sales and use taxes after 90 days.

The agreement would help harmonize states sales and use tax rules, bring uniformity to the definitions of items in the sales tax base, reduce the paperwork burden on retailers, and incorporate new technology to modernize administrative procedures.

States that do not wish to become members of SSUTA would be allowed to collect the taxes only if they adopt certain minimum simplification requirements and provide sellers with additional notices on the collection requirements.

“For over a decade, Congress has been debating how to best allow states to collect sales taxes from online retailers in a way that puts Main Street businesses on a level playing field with online retailers,” said Enzi. “This bill empowers states to make the decision themselves. If they choose to collect already existing sales taxes on all purchases, regardless of whether the sale was online or in store, they can. If they want to keep things the way they are, it’s a state’s choice.”

Enzi read a letter from Amazon.com supporting the bill. Amazon also released a statement conforming its support. “Amazon strongly supports enactment of the Enzi-Durbin-Alexander bill and will work with Congress, retailers, and the states to get this bi-partisan legislation passed,” said Amazon vice president of global public policy Paul Misener. “It’s a win-win resolution—and as analysts have noted, Amazon offers customers the best prices with or without sales tax.”

Alexander noted that a version of the legislation introduced in the House has also won the support of the American Conservative Union.

The legislation exempts sellers who make less than $500,000 in total remote sales in the year preceding the sale to qualify for an exemption and not be required to collect the tax.

“Most small business people don’t want a government handout,” said Durbin. “They don’t want special treatment. They just want to be able to compete fairly against other businesses. That’s why I have worked with Senators Enzi and Alexander to introduce the Marketplace Fairness Act—a bipartisan bill to level the playing field for local main street businesses.”

Senators Tim Johnson, D-S.D., John Boozman, R-Ark., Jack Reed, D-R.I., Roy Blunt, R-Mo., Sheldon Whitehouse, D-R.I., Bob Corker, R-Tenn., and Mark Pryor, D-Ark., are also co-sponsors of the legislation.

Under the Supreme Court’s 1992 Quill decision, retailers are only required to collect sales tax in the states where they also have a physical presence, also known as nexus, while consumers are required to report to state tax departments any sales taxes they owe for online purchases. As a result, local retailers are at a competitive disadvantage because they must collect sales taxes at the point of sale while out-of-state retailers, including many large online and catalog retailers, in effect give their customers a discount by collecting no state or local sales taxes.

As with the earlier bill introduced by Durbin, eBay registered its objection, however. “This is another Internet sales tax bill that fails to protect small business retailers using the Internet and will unbalance the playing field between giant retailers and small business competitors,” said eBay vice president for government relations and deputy general counsel Tod Cohen. “It does not make sense to expand Internet sales tax burdens on small businesses at a time when we want entrepreneurs to create jobs and economic activity.”

Alexander predicted on the Senate floor that the legislation ultimately would be passed. “This problem’s been there for a long time,” he said. “It’s had the opposition of conservatives worried about taxes. It’s had the opposition of Amazon and other online sellers. The Supreme Court said 20 years ago that it was too complicated for out-of-state vendors to figure out how to collect sales taxes when something is purchased and sent to the state, which is what the Main Street seller does, and maybe that was true 20 years ago. But the Supreme Court said 20 years ago, it invited us in Congress to solve this problem, and Senator Enzi and Senator Durbin with this legislation in my opinion have solved the problem, and this is going to happen. I’m not presumptuous enough to predict what the United States Congress will do and what the President will sign, but I think I’ve been around long enough, and I’ve watched Congress enough to say this is going to happen. And if I were a governor, or I were an online retailer, or I were a catalog retailer, I would make my plans to conduct my business in this way.” For more information please see Senators Introduce Online Sales Tax Bill at www.accountingtoday.com.

Tags: , , , , , , , , ,
Posted in Taxes | No Comments »

IRS Issues Proposed Regulations That Would Require Tax Preparers to File Due Diligence Checklist with All EITC Claims Submitted in 2012

Friday, October 7th, 2011

From www.irs.gov

WASHINGTON —The Internal Revenue Service announced today that it is issuing proposed regulations that would require paid tax return preparers, beginning in 2012, to file a due diligence checklist, Form 8867, with any federal return claiming the Earned Income Tax Credit (EITC). It is the same form that is currently required to be completed and retained in a preparer’s records.

The due diligence requirement, enacted by Congress over a decade ago, was designed to reduce errors on returns claiming the EITC, most of which are prepared by tax professionals.

The IRS created Form 8867, Paid Preparer’s Earned Income Credit Checklist, to help preparers meet the requirement by obtaining eligibility information from their clients. Preparers have been required to keep copies of the form, or comparable documentation, which is subject to review by the IRS. To help ensure compliance with the law and that eligible taxpayers receive the right credit amount, the proposed regulations would require preparers, effective Jan. 1, 2012, to file the Form 8867 with each return claiming the EITC.

Further details can be found in REG-140280-09. Comments on the proposed regulations are due by Nov. 10, 2011, and a public hearing on the proposed regulations is scheduled for Nov. 7, 2011.

The EITC benefits low-and moderate-income workers and working families and the tax benefit varies by income, family size and filing status. Unlike most deductions and credits, the EITC is refundable –– taxpayers can get it even if they owe no tax. For 2011 tax returns, the maximum credit will be $5,751.

Although as many as one in five eligible taxpayers fail to claim the EITC, some of those who do claim it either compute it incorrectly or are ineligible. The IRS is proposing this step as part of its efforts to ensure that the credit is afforded to taxpayers who qualify. For 2009, over 26 million people received nearly $59 billion through the EITC. Tax professionals prepare close to 66 percent of these claims. For more details please the IRS website, www.irs.gov.

Tags: , , , , , , ,
Posted in Taxes, law | No Comments »

Obama Calls for Tax Credits for Hiring in Jobs Bill

Wednesday, September 14th, 2011

From – www.accountingtoday.com

President Obama addressed a joint session of Congress on Thursday evening to present a jobs bill containing an expansion of the payroll tax cut, tax breaks for new hires and salary raises, and other tax reform measures.

The $447 billion bill, known as the American Jobs Act, contains provisions for creating new jobs to build and repair infrastructure such as highway and roads, along with school construction and an extension of unemployment benefits. In addition, Obama outlined a series of measures, including tax breaks to encourage companies to hire the long-term unemployed, along with veterans. He also called for an extension of the payroll tax cut for employees and an expansion of the tax cut to small business employers. Obama repeatedly emphasized that the bill contained many tax proposals that had originated with Republicans.

“It will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business,” he said.

Obama is battling persistent unemployment that his administration has admitted is likely to remain above 9 percent through next year. He called on lawmakers to put aside partisan politics and work to fix the economy before the next election.

“You should pass this jobs plan right away,” he repeatedly urged. “Everyone here knows that small businesses are where most new jobs begin. And you know that while corporate profits have come roaring back, smaller companies haven’t. So for everyone who speaks so passionately about making life easier for ‘job creators,’ this plan is for you. Pass this jobs bill, and starting tomorrow, small businesses will get a tax cut if they hire new workers or if they raise workers’ wages. Pass this jobs bill, and all small business owners will also see their payroll taxes cut in half next year. If you have 50 employees making an average salary, that’s an $80,000 tax cut. And all businesses will be able to continue writing off the investments they make in 2012. It’s not just Democrats who have supported this kind of proposal. Fifty House Republicans have proposed the same payroll tax cut that’s in this plan. You should pass it right away.”

Obama said the bill would provide funds to repair decaying roads and bridges across the country, and repair and modernize at least 35,000 schools. He promised to cut the red tape that has prevented some of the projects from getting started in the past. He also pledged to set up an independent fund to attract funds from the private sector and issue loans based on how badly a construction project is needed and how much good it would do for the economy.

Funds would also be used to prevent teacher layoffs and rehire teachers who had lost their jobs due to budget cuts, and provide summer jobs to disadvantaged young people.

Obama also said the bill would provide tax credits to hire veterans. “We ask these men and women to leave their careers, leave their families, risk their lives to fight for our country,” he said, drawing applause from both sides of the aisle. “The last thing they should have to do is fight for a job when they come home.”

The bill would also provide companies with a $4,000 tax credit if they hire anyone who has spent more than six months looking for a job. “We have to do more to help the long-term unemployed in their search for work,” said Obama. “This jobs plan builds on a program in Georgia that several Republican leaders have highlighted, where people who collect unemployment insurance participate in temporary work as a way to build their skills while they look for a permanent job.”

The plan would also extend unemployment insurance for another year. “If the millions of unemployed Americans stopped getting this insurance, and stopped using that money for basic necessities, it would be a devastating blow to this economy,” said Obama. “Democrats and Republicans in this chamber have supported unemployment insurance plenty of times in the past. And in this time of prolonged hardship, you should pass it again—right away.”

Obama also called for extending the payroll tax cut in last December’s tax legislation, which reduced Social Security taxes from 6.2 percent to 4.2 percent this year. In urging the extension, Obama referred to the pledge not to raise taxes that many Republican lawmakers signed at the behest of Grover Norquist’s group, Americans for Tax Reform. However, the 6.2 percent rate would be cut to 3.1 percent under the new bill, according to Vice President Joe Biden in an interview Friday on the Today Show.

“Pass this jobs bill, and the typical working family will get a $1,500 tax cut next year,” said Obama. “Fifteen hundred dollars that would have been taken out of your pocket will go into your pocket. This expands on the tax cut that Democrats and Republicans already passed for this year. If we allow that tax cut to expire—if we refuse to act—middle-class families will get hit with a tax increase at the worst possible time. We can’t let that happen. I know that some of you have sworn oaths to never raise any taxes on anyone for as long as you live. Now is not the time to carve out an exception and raise middle-class taxes, which is why you should pass this bill right away.”

Obama said the cost of the bill would be paid for with a new, more ambitious deficit reduction plan he plans to release a week from Monday. In addition to spending cuts, the deficit reduction plan would make what he called “modest adjustments” to Medicare and Medicaid, and reform the Tax Code to encourage “the wealthiest Americans and biggest corporations to pay their fair share.”

“I’m also well aware that there are many Republicans who don’t believe we should raise taxes on those who are most fortunate and can best afford it,” said Obama. “But here is what every American knows: While most people in this country struggle to make ends meet, a few of the most affluent citizens and most profitable corporations enjoy tax breaks and loopholes that nobody else gets. Right now, Warren Buffett pays a lower tax rate than his secretary—an outrage he has asked us to fix. We need a tax code where everyone gets a fair shake and where everybody pays their fair share. And by the way, I believe the vast majority of wealthy Americans and CEOs are willing to do just that if it helps the economy grow and gets our fiscal house in order.”

Obama also said he would work on corporate tax reform as well, calling the corporate tax code “a monument to special interest influence in Washington.”
“By eliminating pages of loopholes and deductions, we can lower one of the highest corporate tax rates in the world,” he added. “Our tax code should not give an advantage to companies that can afford the best-connected lobbyists. It should give an advantage to companies that invest and create jobs right here in the United States of America.”

Obama contrasted tax breaks for large oil companies with those for small businesses.
“Should we keep tax loopholes for oil companies?” he asked. “Or should we use that money to give small business owners a tax credit when they hire new workers? Because we can’t afford to do both. Should we keep tax breaks for millionaires and billionaires? Or should we put teachers back to work so our kids can graduate ready for college and good jobs? Right now, we can’t afford to do both. This isn’t political grandstanding. This isn’t class warfare. This is simple math. These are real choices that we’ve got to make. And I’m pretty sure I know what most Americans would choose. It’s not even close. And it’s time for us to do what’s right for our future.”

In response to the speech, House Speaker John Boehner, R-Ohio, indicated that he was ready to work on a jobs package with Obama, but he also asked for consideration of the Republican alternative.

“American families and small businesses are hurting, and they are looking for the White House and Congress to seek common ground and work together to help get our economy back on track,” Boehner said in a statement. “Republicans have laid out a blueprint for economic growth and job creation—our Plan for America’s Job Creators—that focuses on one thing: removing government barriers to private-sector job growth. The proposals the President outlined tonight merit consideration. We hope he gives serious consideration to our ideas as well. It’s my hope that we can work together to end the uncertainty facing families and small businesses, and create a better environment for long-term economic growth and private-sector job creation.”

Ahead of the jobs speech, Senate Minority Leader Mitch McConnell, R-Ken., struck a more confrontational tone in remarks on the Senate floor Thursday. “This isn’t a jobs plan,” he said. “It’s a re-election plan. That’s why Republicans will continue to press for policies that empower job creators, not Washington.” For details, visit Obama Calls for Tax Credits for Hiring in Jobs Bill on the Accounting Today website, www.accountingtoday.com.

Tags: , , , , , , , , , ,
Posted in Accounting, Small Business, Taxes, law | No Comments »