Archive for August, 2010

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Cap and Trade Legislation Coming Closer to Fruition

Monday, August 23rd, 2010

The American Clean Act Energy and Security Act of 2009 passed in the U.S. House of Representatives.  The U.S. Senate has since constructed a similar bill.

The bill consists of a cap-and-trade system, in which greenhouse gas emissions in the United States would be reduced in an effort to encourage companies to use and develop renewable resources.

Under the cap-and-trade system, the federal government would apply limits, or caps, on the total volume of greenhouse gas emissions that U.S. companies could emit yearly.  Companies would have an allowance for each ton of greenhouse gas emitted.  These allowances can then be bought and sold among companies.

The National Association of Manufacturers opposed the original House bill, due to the threat of increased costs and regulation to American manufacturers and consumers.  The Association also expressed concerns that the Act could potentially cause severe competitive damage if the U.S. industry is the first to act, and other international manufacturing economies do not limit their own emissions. We will continue to monitor the proposed bill.

Posted in Manufacturing, Tax | 3 Comments »

New Tax Legislative Update – Education Jobs and Medicaid Assistance Act

Friday, August 20th, 2010

On August 10, 2010, The Education Jobs and Medicaid Assistance Act was signed into law.  The Act includes several international tax reforms affecting multinational corporations. The measure provides $26 billion in aid to state and local governments, preserving public-sector jobs at a time of persistent unemployment. The law will raise $10.8 billion through changes to the tax code, according to Joint Committee on Taxation estimates. Among the offsets is a provision that prevents the splitting of creditable foreign taxes from the associated foreign income. The law also prevents businesses from claiming tax benefits when they engage in covered asset acquisitions and limits the use of section 956 for foreign tax credit (FTC) planning.

Other offsets in the law:

  • Separate the application of the FTC limitation to items
  • Re-sourced under tax treaties;
  • Ensure that earnings of foreign subsidiaries of U.S. companies
    are subject to withholding tax when those earnings are repatriated to a
    foreign parent corporation as a dividend;
  • Tighten affiliation rules that seek to prevent taxpayers from
    excluding foreign interest expense from the FTC limitation by placing it
    in foreign subsidiaries;
  • Repeal the 80/20 withholding rules for dividends; and
  • Eliminate the advance earned income tax credit

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Posted in Tax, Tax Legislation | 4 Comments »

New Form 990 Presents Many Challenges, But Redesign Was Worth It, Practitioners Say

Sunday, August 15th, 2010

The redesign of Form 990 was a necessary and positive change despite the many challenges it presents to organizations and practitioners, participants in an Aug. 11 BNA Tax & Accounting webinar said.

The form, which lists revenues, expenses, and program services of charities and other tax-exempts, went through a massive redesign in 2007—the first in nearly 30 years. Most of the largest tax-exempt organizations have filed the 2008 redesigned form and if applicable, going forward, starting with the 2009 forms, they must add in two new mandatory schedules—Schedule H for hospitals and Schedule K for organizations with certain tax-exempt bond liabilities.

After 30 years, it was “definitely” time to redesign the Form 990, said Travis Patton, a partner at PricewaterhouseCoopers. “If you looked at the old form it had become very choppy. Sections were out of order; there was revenue that was reported in two different places and it didn’t give the focus on some of the critical activities that organizations are currently doing and allow them to describe those in a nice manner,” Patton said. “I do think that the redesign is extensive. It obviously requires organizations to report a great amount of more detail than they did before. But I think it was necessary.”

Meredith Monroe, a senior associate in PricewaterhouseCoopers’ Exempt Organization Tax Services practice, agreed the redesign was needed and said that many of the challenges experienced by taxpayers and practitioners with the 2008 forms will not be as daunting with the 2009 forms and beyond because they will be more accustomed to the larger amount of detail and record-keeping required for the form. “Once organizations start to get a little bit more organized and their policies are in line, I think it will be really beneficial to the public and to the organization as a whole to get more organized,” Monroe said.  Source: BNA Tax Daily.

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Posted in Tax | 3 Comments »

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