President Signs Comprehensive Housing Legislation
Reacting to the continuing slumps in housing sales, rising unemployment numbers, and weakening credit markets, Congress passed the Housing and Economic Recovery Act of 2008 (H.R. 3221). The House passed the measure on July 23, 2008, by a vote of 272 to 152. After a procedural delay, the Senate followed suit and passed the legislation on July 26, 2008, by a vote of 72 to 13. The legislation includes a $15.1 billion tax title, the Housing Assistance Tax Act of 2008, which will:
(1) provide first-time home buyers (as defined in the legislation) with a refundable credit of 10% of the purchase price of a home, up to $7500 (recipients would be required to repay any credit amount received over a 15 year period and the credit is phased out for individuals with an adjusted gross income in excess of $75,000 (or $150,000 for joint filers));
(2) provide taxpayers who claim the standard deduction an additional standard deduction of up to $500 (or $1000 for joint filers) for state and local property taxes;
(3) provide an increase the state-by-state allocation of low-income housing tax credits;
(4) simplify the rules applicable to tax-exempt housing bonds; and
(5) allow taxpayers in affected GO Zone areas to amend prior returns to take into account receipt of hurricane-related recovery grants.
The legislation also includes several revenue raising provisions, one of which would require certain institutions to file information returns with respect to reimbursements made to merchants that accept various forms of "payment cards" (including credit and debit cards). The bill would also delay the phase-in of the world-wide interest allocation election enacted as part of the American Jobs Creation Act of 2004 for two years (i.e., for taxable years beginning after 2010).
President Bush originally opposed the legislation in part because it creates $3.9 billion in new community development block grants to help rebuild communities significantly impacted by foreclosures. On July 23, 2008, President Bush withdrew his veto threat on the measure in an effort to hasten passage and provide relief to the troubled housing and financial markets. President Bush signed the measure into law on Wednesday, July 30, 2008.
CCH Tax Briefing: Housing Assistance Tax Act of 2008
Housing Assistance Tax Act of 2008: Law, Explanation & Analysis
Housing Assistance Tax Act of 2008 (HR 3221)
Joint Committee on Taxation Technical Explanation of Division C of HR 3221, the Housing Assistance Tax Act of 2008 (JCX-63-08)
JCT Estimated Budget Effects of the Tax Provisions Contained in HR 3221, the Housing and Economic Recovery Act of 2008 (JCX-64-08)
House Ways and Means Committee Release: Summary of HR 3221, Housing Assistance Tax Act of 2008
Senate Finance Committee Release: Summary of HR 3221, Housing Assistance Tax Act of 2008
Statement of administration policy: Bush administration: HR 3221, Housing and Economic Recovery Act of 2008
ClientRelate Bulletin -- 2008 Housing Act: Accelerating Minimum Tax and Research Credits
Client Letter -- 2008 Housing Act: Accelerating Minimum Tax and Research Credits
ClientRelate Bulletin -- 2008 Housing Act: Property Tax Deduction for Nonitemizers
Client Letter -- 2008 Housing Act: Property Tax Deduction for Nonitemizers
ClientRelate Bulletin -- 2008 Housing Act: Reforms Related to REITs
Client Letter -- 2008 Housing Act: Reforms Related to REITs
President Signs Tax Relief for Military Personnel and Veterans
On May 20, 2008, the House unanimously approved the Heroes Earnings Assistance and Relief Tax Act of 2008 (HR 6081). The Senate followed suit and passed the measure on May 22, 2008. President Bush signed the measure into law on June 17, 2008. The legislation will:
(1) Allow military personnel to qualify for economic stimulus payments even though a spouse does not have a Social Security number;
(2) Make permanent the ability to include combat pay as earned income under the Earned Income Tax Credit;
(3) Make permanent and modify the availability of qualified mortgage bonds used to finance veterans' residences;
(4) Allow the day prior to the date of death to be treated as the date an employee in the military returned to work for purposes of qualified plan benefit distributions;
(5) Permit an employer to make contributions to a qualified plan on behalf of an employee killed or disabled in combat;
(6) Treat differential wages paid to an employee called to the military as wages for withholding and retirement plan purposes and create a small employer tax credit for differential wages;
(7) Extend the limitations period for tax refund credit claims with respect to veterans' disability determinations;
(8) Make permanent the ability of reservists to make penalty-free withdrawals from retirement plans and permit reservists to make penalty-free withdrawals from flexible spending accounts;
(9) Make permanent the ability of the Social Security Administration to disclose information to the Veterans' Administration for purposes of determining veterans' program eligibility;
(10) Clarify that state payments to service members are treated as qualified military benefits; and
(11) Permit recipients of military death benefit gratuities to roll the sums over tax-free to a Roth IRA or Coverdell Education Savings Account.
To pay for these provisions, the legislation revises the expatriation tax rules, treat domestically controlled foreign persons performing services under contract to the United States as U.S. employers, increases the failure to file penalty, and extends the excise tax for failure to comply with mental health parity requirements.
CCH Tax Briefing: Congress Enacts Farm Bill Overriding Bush Veto And Passes Military Tax Relief
CCH Law, Explanation and Analysis
Heroes Earnings Assistance and Relief Tax Act of 2008
JCT Technical Explanation of HR 6081, the Heroes Earnings Assistance and Relief Tax Act of 2008
JCT Estimated Budget Effects of HR 6081, the Heroes Earnings Assistance and Relief Tax Act of 2008
ClientRelate Bulletin --2008 Military Tax Relief
President Vetoes Farm Legislation for a Second Time; Congressional Override Expected
The Senate, on June 5, 2008, passed HR 6124, the Food, Conservation, and Energy Act of 2008, by a vote of 77 to 15. The House previously passed HR 6124 on May 22, 2008. The measure will now go to the White House. President Bush is expected to veto the measure, setting the stage for an override vote in Congress. HR 6124 would repeal previously passed farm legislation, HR 2419, also titled the Food, Conservation, and Energy Act of 2008, then re-enact the provisions of HR 2419 plus approximately 34 pages of trade provisions inadvertently omitted from the enrolled version of HR 2419.
The House, on May 21, 2008, voted 318 to 108 to override President Bush's veto of the Food, Conservation, and Energy Act of 2008 (HR 2419). The Senate followed suit and, on May 22, 2008, voted to override the veto 82 to 13. The override votes in the House and Senate took place amid a procedural mix-up, calling into question the validity of both votes. The enrolled bill text received by the White House and vetoed by President Bush on May 21, 2008, was missing Title III, which contained approximately 34 pages of trade provisions. Likewise, the House and Senate votes to override the President's veto were of the legislation without Title III. In effort to immediately resolve the mix-up, the House passed HR 6124, also titled the Food, Conservation, and Energy Act of 2008, which contains the same provisions as the enrolled version of HR 2419 plus Title III. Prior to the Memorial Day recess, however, the Senate successfully voted to override the version of HR 2419 vetoed by the President, thus enacting everything except Title III, rather than passing the measure as a whole for a second time.
In an unprecedented move, the Senate subsequently passed HR 6124 on June 5, 2008, sending farm legislation to the White House for a second time. President Bush vetoed HR 6124 on June 17, 2008. Both the House and Senate are expected to override the President’s veto for a second time.
The tax title of HR 6124, titled the Heartland, Habitat, Harvest, and Horticultural Act of 2008, provides $1.67 billion in tax relief and incentives. Retired farmers and farmers on disability who participate in land conservation reserve programs will be permitted to count payouts under the program as investment income, preventing reductions in Social Security or disability benefits. New deductions and credits include a deduction for endangered species recovery expenditures and a credit for agricultural chemicals security measures. Deduction and credit enhancements include an increase in the cellulosic biofuels credit and an extension of the conservation easement deduction. Another provision creates uniform three-year depreciation for horses and allows horse sales to qualify for the 15 percent capital gain rate. Also included are a couple of provisions related to timber REITs. Bond provisions include authorization of forest conservation bonds and increased loan limits on Aggie Bonds.
The measure also contains several revenue offset provisions, including a reduction in the ethanol credit, a limitation on the ability to offset farm losses against nonfarm income, and creation of an optional self-employment tax for Social Security. In addition, the legislation excludes denaturant from the alcohol fuels credit.
CCH Tax Briefing: Congress Enacts Farm Bill Overriding Bush Veto And Passes Military Tax Relief
CCH Law, Explanation and Analysis
Title XV, the Heartland, Habitat, Harvest, and Horticultural Act of 2008
White House Press Release: Statement of the President on the Farm Bill
Senate Overwhelmingly Approves Farm Legislation with Disaster Assistance, Tax Reforms, Tax Relief
2008 Farm Bill Tax Package: Farm Tax Reforms, Farm Tax Relief
Senate Finance Committee Release: 2008 Farm Bill Tax Package --Homegrown Energy Independence
Senate Finance Committee Release: 2008 Farm Bill Tax Package --Farm Tax Reforms
Congressional Research Service Report for Congress --Farm Bill Legislative Action in the 110th Congress (Updated May 9, 2008)
Congressional Research Service Report for Congress --What Is the "Farm Bill"? (Updated April 1, 2008)
ClientRelate Bulletin --2008 Farm Act: Tax Relief and Reforms
ClientRelate Bulletin --2008 Farm Act: Tax Relief for Kansas Disaster Victims
President Signs Economic Stimulus Package Into Law
President Bush, on February 13, 2008, signed into law the Economic Stimulus Act of 2008 (HR 4140).The legislation, estimated to cost $125 billion over a ten-year period, includes a recovery rebate credit for 2008. The basic credit is calculated as the greater of:
(1) net income tax liability not to exceed $600 ($1,200 for joint filers), or
(2) $300 ($600 for joint filers) if the individual has either (a) at least $3,000 of any combination of earned income, social security benefits, and certain veterans' benefits, or (b) net income tax liability of at least one dollar and gross income greater than the sum of the applicable basic standard deduction amount and one personal exemption (two if a joint return).
Any individual qualifying for a basic amount of credit also qualifies for an additional credit of $300 per qualifying child. The 2008 recovery rebate credit would be payable in the form of advance rebate checks paid during 2008 based on 2007 tax returns or information from the Social Security Administration or Veterans Administration. The credit will require valid taxpayer identification numbers.
According to Treasury Secretary, Henry Paulson, the IRS will begin sending rebate checks to qualifying taxpayers immediately after the 2008 filing season. "The IRS will manage the current tax filing season and simultaneously prepare to issue these additional payments starting in early May."
The legislation also includes a temporary increase in the small business expensing limitations, a temporary special first-year 50 percent bonus depreciation allowance, and increases in the housing loan limits for Fannie Mae, Freddie Mac, and FHA approved mortgages.
Economic Stimulus Act of 2008
JCT Technical Explanation of the Revenue Provisions of HR 5140, the Economic Stimulus Act of 2008
Senate Finance Committee Staff Summary of the Economic Stimulus Act of 2008
Distributional Effects
CCH Tax Briefing: Economic Stimulus Package
ClientRelate Bulletin --2008 Economic Stimulus Act: Code Sec. 179 Expense and Bonus Depreciation
Guidance Released by the IRS related to the Economic Stimulus Act of 2008:
President Signs AMT Relief Into Law
On December 26, 2007, President Bush signed the Tax Increase Prevention Act of 2007 (HR 3996), which extends AMT relief for nonrefundable personal credits and increases the AMT exemption amount to $66,250 for joint filers and $44,350 for individuals, for tax years beginning after December 31, 2006. The measure does not include revenue offsets, which were initially insisted upon by House democrats.
Tax Relief Acts of 2007: Law, Explanation & Analysis
CCH Tax Briefing: 2007 Year-End Tax Legislation
Tax Increase Prevention Act of 2007
Congressional Research Service Report for Congress --Alternative Minimum Taxpayers By State: 2003, 2004, and Projections for 2007
Technical Corrections Signed by President; Military Headed to Conference in 2008
Both the House and Senate passed the Tax Technical Corrections Act of 2007 (HR 4839), which contains language that was originally included in the Heroes Earnings Assistance and Relief Tax Act of 2007 (HRes 884, HR 3997) (also known as the Military bill). The House and Senate, however, failed to agree on and pass one version of the Military bill. As a result, the technical corrections were split off into a separate measure. President Bush signed the Technical Correction Act of 2007 into law on December 29, 2007.
Tax Relief Acts of 2007: Law, Explanation & Analysis
CCH Tax Briefing: 2007 Year-End Tax Legislation
Tax Technical Corrections Act
President Signs Mortgage Debt Relief
On December 20, 2007, President Bush signed the Mortgage Forgiveness Debt Relief Act of 2007 (HR 3648). The legislation includes a three-year mortgage debt forgiveness exclusion of up to $2 million in debt on a principal residence, retroactive to January 1, 2007. The legislation also:
(1) extends the mortgage insurance premium deduction for three years,
(2) includes an exclusion for benefits to volunteer fire-fighters and emergency medical responders,
(3) extends the joint return sale of principal residence exclusion to certain post-marriage sales by surviving spouses,
(4) clarifies student housing eligible for the low-income housing credit, and
(5) provides alternative tests for qualifying as a cooperative housing corporation.
To pay for these provisions, the legislation increases and expands the penalties on failure to file partnership and S Corporation returns and modifies the amounts due on particular dates with respect to corporate estimated taxes.
Tax Relief Acts of 2007: Law, Explanation & Analysis
CCH Tax Briefing: 2007 Year-End Tax Legislation
Mortgage Forgiveness Debt Relief Act of 2007
Joint Committee on Taxation Estimated Revenue Effects of HR 3648, the Mortgage Forgiveness Debt Relief Act of 2007, as Amended and Passed by the Senate on December 14, 2007
President Signs Energy Legislation
President Bush signed, on December 19, 2007, the Energy Independence and Security Act of 2007. The Senate passed the measure on December 13, 2007, by a vote of 86-8 after stripping out a controversial tax title. The House passed the Senate-passed version on December 18, 2007. Included in the legislation are two Tax Code provisions relating to the extension of the additional 0.2 percent FUTA surtax and seven-year amortization of geological and geophysical expenditures for certain major integrated oil companies.
Tax Relief Acts of 2007: Law, Explanation & Analysis
CCH Tax Briefing: 2007 Year-End Tax Legislation
Energy Independence and Security Act
Joint Committee on Taxation Estimated Budget Effects of Title XV of HR 6, as Amended and Passed by the Senate on December 13, 2007
President Signs Virginia Tech Victims Tax Bill
President Bush signed, on December 19, 2007, the Virginia Tech Memorial Fund to the April 2007. The Virginia Tech Victims and Family Assistance Act (HR 4118) was introduced in the House on November 8, 2007, and approved by voice vote on December 4, 2007. A companion measure (Sen 2331) was introduced in the Senate and was also approved by unanimous consent on December 6, 2007. The Act excludes from federal tax any payments made by the Virginia Tech Memorial Fund to the April 2007 shooting victims.
Tax Relief Acts of 2007: Law, Explanation & Analysis
CCH Tax Briefing: 2007 Year-End Tax Legislation
Virginia Tech Victims and Family Assistance Act (HR 4118)
Virginia Tech Victims and Family Assistance Act (Sen 2331)
President Signs FY2008 Omnibus Spending Package; Congress Clarifies Term of IRS Commissioner after Vacancy
The President, on December 26, 2007, signed the Consolidated Appropriations Act, 2008 (HR 2764), which includes the budget for Treasury Department. The Treasury's FY 2008 budget is $12 billion, of which $10.9 billion is allocated for the IRS, a $300 million increase over the FY 2007 IRS budget. The IRS budget includes $4.8 billion for enforcement activities, $2.2 billion for taxpayer services, and $3.7 billion for operations support for enforcement, taxpayer service, and other IRS functions. It also contains $267 million for business systems modernization and $177 million for the Taxpayer Advocate Service.
Sen 2436, which amends Code Sec. 7308(a) to clarify the term of the IRS Commissioner, passed the House by unanimous consent on December 19. President Bush signed the measure on January 4, 2008. Under the new law, an individual appointed and confirmed to replace an IRS Commissioner appointed for a five-year term is considered appointed to serve out the remainder of the five-year term, and not to start a new five-year term.
Tax Relief Acts of 2007: Law, Explanation & Analysis
CCH Tax Briefing: 2007 Year-End Tax Legislation
Consolidated Appropriations Act, 2008
Legislation to Clarify the Term of the Commissioner of Internal Revenue
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