Menu
Tax Notes logo
HOMETax Notes ResearchFederalLegislative Documentscongressional news releases

Ways and Means Summary of Revised Stimulus Bill

DEC. 19, 2001

Ways and Means Summary of Revised Stimulus Bill

DATED DEC. 19, 2001
DOCUMENT ATTRIBUTES

 

=============== FULL TEXT ===============

 

Committee on Ways and Means

 

 

December 19, 2001

 

 

'Economic Security and Worker Assistance Act of 2001'

 

Summary of H.R. 3529

 

 

Individual Provisions

o Supplemental stimulus payments

 

Provide $300 (single), $500 (head of household), or $600

 

(couples) payments to individuals who filed U.S. tax returns

 

in 2000, but did not qualify for a full rebate check this

 

summer.

 

 

o Accelerated rate reduction

 

Reduce current 27.5% tax rate to 25% effective January 1,

 

2002.

 

 

o Alternative Minimum Tax relief

 

Hold harmless so that accelerated rate reduction does not

 

subject taxpayers to the AMT. In addition, repeal the

 

depreciation preference under the AMT and the 90% limitations

 

on use of foreign tax credits and net operating losses.

 

 

Business Tax Provisions

 

 

o 30% bonus depreciation for 36 months

 

Allow taxpayers to claim an additional first-year depreciation

 

deduction equal to 30% of the adjusted basis of qualifying

 

property.

 

 

o Increase small business expensing for 24 months

 

Increase the amount that can be expensed under sec. 179 from

 

$24,000 to $35,000. In addition, increase the beginning of the

 

phase-out threshold from $200,000 to $325,000.

 

 

o Extend Net Operating Loss Carryback Period for 36 months

 

Allow taxpayers the option of extending the NOL carryback

 

period from 2 years to 5 years. The 5-year carryback period

 

would be allowed for losses generated in 2001 - 2002.

 

 

o Reduce cost recovery period for leasehold improvements

 

Reduce the cost recovery period for leasehold improvements

 

from 39 years to 15 years.

 

 

o Alternative Minimum Tax reform

 

Repeal the depreciation preference under the AMT and the 90%

 

limitations on use of foreign tax credits and net operating

 

losses. Effective for taxable years beginning after 12/31/01.

 

 

o Extension and reform of Subpart F exception

 

Extend Subpart F exception for 5 years and allow use of

 

foreign statement of insurance reserves at the discretion of

 

the Treasury Department.

 

 

Extension of Expiring Provisions

 

 

o 2-year extension of expiring provisions

 

 

o Treatment of non-refundable personal credits under the AMT

 

 

o Work Opportunity tax credit

 

 

o Welfare-to-Work tax credit

 

 

o Tax credit for electricity produced from wind, closed-loop

 

biomass and poultry litter

 

 

o Suspension of 100% net income limitation on percentage

 

depletion method for oil and gas produced from marginal wells

 

 

o Qualified Zone Academy Bonds

 

 

o Increase in cover-over rate for rum excise taxes paid to

 

Puerto Rico and Virgin Islands

 

 

o Deduction for clean fuel vehicles and refueling property

 

 

o Tax credit for electric vehicles

 

 

o Mental health parity compliance tax

 

 

o Suspension (i.e., 0% rate) of section 809 (for 2001-2003)

 

 

o 1-year extension of expiring provisions

 

 

o Archer Medical Savings Accounts

 

 

o Accelerated depreciation and employment tax credit for

 

incentives on tribal land

 

 

o TANF Supplemental Grants program

 

 

o TANF contingency fund

 

 

o Permanent extension of expiring provisions

 

 

o Suspension of diesel and kerosene dying mandate

 

 

New York Reconstruction Incentives

 

 

o Authorize $15 billion of tax-exempt bonds

 

Authorize the issuance of up to $15 billion of tax-exempt

 

"Liberty Bonds" over the next three years for

 

financing commercial, residential rental, and public utility

 

property in the Liberty Zone.

 

 

o Bonus depreciation deduction

 

Enhance 30% bonus depreciation provision (described above) by:

 

(1) extending the bonus to real property located in the zone

 

and (2) extending the placed in service date to December 31,

 

2006 (or December 31, 2009 in the case of buildings.) Property

 

financed with Liberty Bonds also qualifies for the bonus

 

depreciation.

 

 

o Reduce recovery period for leasehold improvements

 

Reduce cost recovery period for leasehold improvements from 15

 

years (as provided above) to 5 years for leasehold

 

improvements made to commercial buildings located in the

 

Liberty Zone. Sunset for property placed in service after

 

December 31, 2006.

 

 

o Increase small business expensing

 

Enhance the sec. 179 provision (described above) for

 

qualifying property used in the Liberty zone by: (1)

 

increasing the amount that may be expensed by an additional

 

$35,000 (for a total of $70,000) and (2) providing that

 

only 50% of the cost of qualifying will be used to determine

 

the phase-out.

 

 

o Increase time period for reinvesting gains

 

Allow taxpayers to defer taxes on gains from insurance

 

proceeds as long as the gains are reinvested in New York City

 

within 5 years. Current law provides a 2-year time period in

 

most cases.

 

 

Victims Tax Relief

 

 

o Provides tax relief for victims of September 11,

 

Oklahoma City bombing and anthrax attacks

 

 

o Income tax relief -- Waives income tax liability for the

 

year of death and the year prior to death for victims. A

 

special rule would provide a minimum benefit of $10,000

 

to each victim. Include (but improve) Senate language

 

which limits opportunities for tax avoidance.

 

 

o Estate tax relief -- Provide a new estate tax rate

 

structure that would effectively shield the first $8.5

 

million of the estate from Federal estate tax and the

 

first $3 million of the estate from State estate tax.

 

 

o Exclusion for special death benefits -- Provide tax-free

 

treatment of death benefits paid by an employer to an

 

employee solely because the employee died as a result of

 

the September 11, Oklahoma City bombing or anthrax

 

attacks.

 

 

o Charitable organizations and private foundations -- Allow

 

charitable organizations to make pro rata payments

 

prospectively to families of victims without

 

demonstrating financial need. Allow employers to set up

 

private foundations for the purpose of making payments to

 

families of employees who died.

 

 

o Discharge of indebtedness -- Provides that income

 

resulting from the discharge of indebtedness in 2001 is

 

tax-free.

 

 

o Provides general tax relief provisions for victims of

 

terrorist/military actions, Presidentially-declared

 

disasters, and certain other disasters

 

 

o Clarifies that disaster relief payments (including

 

payments made from the Victims Compensation Fund) are

 

tax-free.

 

 

o Expands IRS, DOL and PBGC authority to postpone tax-

 

related and pension-related deadlines for taxpayers

 

affected by these disasters.

 

 

o Protects victims who sell structured settlements

 

Creates a 40 percent excise tax on transactions in which

 

structured settlement payments are sold for a lump sum unless

 

the transaction is approved by a court as being in the

 

victim's best interest.

 

 

o Reduces the taxation of disability trusts

 

Increases the exemption amount for disability trusts from

 

$100/$300 to $3,000.

 

 

o Expands IRS disclosure rules

 

Allows the IRS to share tax return and taxpayer information

 

with Federal law enforcement agencies investigating terrorist

 

attacks. The new rules would sunset after three years.

 

 

Miscellaneous and Technical Provisions

 

 

o Authorizes the electronic filing of 1099s as long as recipient

 

consents

 

 

o Reverses GitlitzSupreme Court decision

 

 

o Limits the use of the non-accrual experience method of

 

accounting

 

 

o Allows foster care parents to deduct foster care payments made

 

from private agencies as well as public agencies

 

 

o Increases interest rate band for the 30-year bond index

 

applicable to pension funding and PBGC premium purposes.

 

Effective for 2 years.

 

 

o Technical corrections to previously enacted tax legislation

 

 

o Above-the-line deduction in 2001 and 2002 for teachers

 

incurring classroom expenses

 

 

Dislocated Workers

 

 

Unemployment Assistance

 

 

o Provides up to 13 weeks of extended benefits available in any

 

State for those who became unemployed after March 15, 2001

 

(approximate start of recession) and who exhaust their regular

 

benefits.

 

 

o Transfers $9 billion in surplus Federal unemployment funds

 

("Reed Act transfers") to States, as provided in H.R.

 

3090. This provision specifies that States have the option to

 

use these funds to provide coverage for individuals seeking

 

only part-time work, as well as those who would qualify under

 

an alternative base period.

 

 

Health Insurance Assistance

 

 

o Provides a refundable tax credit of up to 60% (no cap) of

 

premiums paid by involuntarily unemployed workers.

 

 

o Allows involuntarily unemployed workers the right to

 

guaranteed issue/no pre-existing condition coverage in the

 

individual market as long as they were employed and covered by

 

health insurance for the previous 12 consecutive months.

 

 

o Provides $4 billion in NEG block grants.

 

 

o Provides immediate additional $4.6 billion directly to States

 

to expend on health care services.
DOCUMENT ATTRIBUTES
Copy RID