While Congress is attempting to wrap up its Lame Duck session, important issues remain on the table. With only a handful of days left on the 111th congress’ calendar, expiring provisions and impending mandates continue to remain unresolved.
Please be aware of the following issues affecting franchisees across the country:
Last week the House passed the “Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010” (H.R. 4853) which passed in the Senate earlier this week. Some of the highlights of the legislation that will be signed into law by President Obama within the next few days include the following:
• Extension through 2012 of the Bush Tax Cuts (Individual Rates, Dividends, and Capital Gains) for all Taxpayers
• Reinstatement of the Estate Tax for 2011 and 2012 at a 35% rate with a $5 Million Exemption
• Reduction in the Social Security Payroll Tax for Individuals (Not the Employer Share) from 6.2% to 4.2% in 2011
• Allow Businesses to Fully Expense Capital Investments in 2011
• Extend the Alternative Minimum Tax (AMT) “Patch” for 2010 and 2011 to Prevent Millions from Paying the AMT
• Extend through 2011 Funding for Emergency Unemployment Benefits
• Extension for 2010 and 2011 of 15-Year Depreciation for Restaurant New Construction/Improvements
• Extension for 2010 and 2011 of the Enhanced Charitable Deduction for Contributions of Food Inventory
• Extension through 2011 of Energy Tax Incentives Including Those for Ethanol
• Extension through 2011 of the Work Opportunity Tax Credit (WOTC)
Expanded 1099 Reporting
Last week, Republicans blocked an attempt by Democrats to attach a repeal of the 1099 tax-reporting provision to the tax cut legislation described above. Despite recent attempts by the GOP to repeal the new requirements that all businesses file 1099 forms for purchase of goods or services over $600 per year, Republican leaders stated their opposition to any add-ons to the tax cut measure. A Republican aide said that the 1099 repeal “wasn’t part of the original framework” of the tax cut bill, “and nobody involved in the negotiations allowed any add-ons.” It is believed that Congress will attempt to revoke the new 1099 requirements early next year.
Credit Card Interchange Fees
As you may recall, Senator Durbin introduced an amendment which was included in the Wall Street Reform and Consumer Protection Act and signed into law in July of this year. In addition to allowing merchants to set minimum amounts for credit card purchases and provide discounts for other forms of payment, the law requires that the Federal Reserve issue regulations which ensure that interchange fees on debit card transactions are “reasonable and proportional” to the cost incurred. A rule on the implementation of new credit card interchange fee laws is expected to be issued this week.
The Merchant Payments Coalition, of which CFA is a member, will carefully study the proposed rule and offer suggestions which will help strengthen the language and benefit merchants across the country.
The Federal Reserve Board will take comments for 60 days and is expected to issue a final rule by April 21st of this year. If issued on time, the regulations will likely go into effect on June 21, 2011.
Paycheck Fairness Act
In November, the Senate failed to pass the Paycheck Fairness Act – a key legislative issue for CFA. As you may recall, the Paycheck Fairness Act mandates that employers can only overcome a claim of gender discrimination if they can demonstrate that a “business necessity” demands it. Opposing this bill has been a legislative priority for CFA, as it prohibits employers from considering factors such as previous experience and prior salary to justify pay differentiations. This bill was one of the first passed by the 111th Congress early in 2009. During the 2010 Lame Duck session, however, the Senate voted on whether to move forward with the bill; while 60 votes were needed to continue, the final vote was 58-41. Keep your eyes out for its re-introduction in the 112th Congress.