American Jobs and Closing Tax Loopholes Act of 2010 (HR 4213) Update – New Tax Breaks, Unemployment Insurance and Home Buyer Credit Extension

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[Update July 2010] – This bill – HR4213 – was passed by Congress and is expected to signed into law by the President. The bill, also known as the American Jobs and Closing Loopholes Act of 2010 originally contained a provision to extend unemployment benefits, as well as a number of expiring tax provisions, which passed through the House on May 28, 2010.  The approved bill was revised to only contain an extension for unemployment benefits, in order to secure passage through Congress. Details of the unemployment benefits extension can be found here.
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[Update] To appease Senate members concerned about the rising cost of this bill, Democrats have scaled back unemployment benefits and Medicare physician reimbursement measures. The revised jobs bill eliminates a $25 weekly supplement for the jobless that had been part of the last year’s stimulus act. Those currently receiving the supplement in their unemployment benefits check will continue to do so until they exhaust their extended benefits, or until the week of Dec. 7, whichever comes first. That cut will reduce the bill’s cost by $5.8 billion over the next decade.

The new version of the bill would also freeze a 21% cut to Medicare physician reimbursement rates only through November, instead of through 2011. This will reduce the bill’s size by $16.4 billion over 10 years. The legislation, which has been stuck in the Senate for more than a week, originally came in at about $140 billion and would have added about $78.7 billion to the deficit. The revised bill would raise the deficit by $55.1 billion.

Lawmakers are hoping to vote on the bill as early as Thursday. But if Democratic leaders can’t rustle up enough support, the vote could be pushed back to next week.

The grab-bag legislation still contain provisions to renew expired tax provisions, lengthens a small business lending program and adds to infrastructure investments. It also increases the tax on money paid to managers of hedge funds and investment partnerships to ordinary income levels instead of the much-lower capital gains rate.  Under the revised bill introduced Wednesday, investment fund managers would have to treat 75% of this money as ordinary income, beginning in 2011.

Senate lawmakers also voted Wednesday to include a measure in the bill that would push back the deadline to close on home purchases and still qualify for a federal home buyer tax credit of up to $8,000. Homebuyers would have until September 30, instead of June 30, to complete the transaction.

I will continue to monitor this  bill as it progresses through Congress for any further updates and encourage you to subscribe (free) via Email or RSS to get the latest news along with all the other stimulus payments in 2010 and 2011.  You can read the full bill and get more details here.

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The Committee on Ways and Means, the chief tax-writing committee in the House of Representatives, has introduced a new bill called the H.R. 4213 American Jobs and Closing Tax Loopholes Act. The “American Jobs and Closing Tax Loopholes Act” makes significant investments in American jobs and cuts taxes to help the nation continue along the path of economic recovery and job growth. The economy has added 573,000 jobs since December-this bill includes the following key provisions to continue that growth:

Promote American job creation

The bill would extend the American Recovery and Reinvestment Act small business lending program that eliminates the fees normally charged for loans through the SBA from 75% to 90%. Since its creation, the program has supported over $26 billion in small business lending, which has helped to create or retain over 650,000 jobs. This provision is estimated to cost $505 million over 10 years.

The bill would support over 300,000 jobs for youth ages 16 to 24 through summer employment programs. This age group has some of the highest unemployment levels – 25% unemployment for those aged 16 to 19.

Provide relief for working families - The bill is estimated to provide American families with an additional $5 billion of tax cuts in 2010.

Deduction of State and local general sales taxes. The bill would extend for one year (through 2010) the election to take an itemized deduction for State and local general sales taxes in lieu of the itemized deduction permitted for State and local income taxes. This proposal is estimated to cost $1.8 billion over 10 years, and benefit over 12 million families.

Additional standard deduction for real property taxes. The bill would extend for one year (through 2010) the additional standard deduction ($500 for individual filers and $1,000 for couples) for State and local real property taxes. This proposal is estimated to cost $1.551 billion over 10 years and benefit 30 million homeowners (some who also took advantage of the home buyer tax credit)

Above-the-line deduction for qualified tuition and related expenses. The bill would extend for one year (through 2010) the above-the-line tax deduction for qualified education expenses. This proposal is estimated to cost $1.501 billion over 10 years and will provide  tax relief for 4.4 million families. It would also extend the teacher’s out-of-pocket expenses deduction via extending the $250 above-the-line tax deduction for teachers and other school professionals for expenses paid or incurred for books, supplies (other than non-athletic supplies for courses of instruction in health or physical education), computer equipment (including related software and service), other equipment, and supplementary materials used by the educator in the classroom.

The Emergency Unemployment Compensation (EUC) program is scheduled to phase-out at the end of May 2010. This program provides (depending on a State’s unemployment rate) up to fifty-three (53) weeks of extended benefits. The bill would extend the EUC program through December 2010. Further, the 100% Federal funding for the Extended Benefits (EB) program is scheduled to phase-out at the end of May 2010. This program provides up to an additional 13 to 20 weeks of benefits in certain States (i.e., 13 weeks for States at or above 6.5% unemployment and another 7 weeks for States at or above 8% unemployment). The bill would extend full funding for the EB program through December 2010

Close tax loopholes

The bill would prevent investment fund managers from paying taxes at capital gains rates on investment management services income received as carried interest in an investment fund. To the extent that carried interest reflects a return on invested capital, the bill would continue to tax carried interest at capital gain tax rates. However, to the extent that carried interest does not reflect a return on invested capital, the bill would require investment fund managers to treat seventy-five percent (75%) of the remaining carried interest as ordinary income (50% for taxable years beginning before January 1, 2013).

IRA Charitable Contributions. The bill would restore the ability of people older than 70 1/2 to distribute up to $100,000 from their IRAs to charitable organizations without the money being recognized as income or being subject to itemization rules that have size limits on tax-favored contributions. CCH says the measure does not apply to SEP or SIMPLE IRAs or, in certain circumstances, to inherited IRAs.


Maintain access to affordable health care

Medicare physician payment rates (scaled back). Medicare physician payment rates are scheduled to be reduced by more than twenty percent (20%) in June. This provision would provide a 1.3 percent update to physician payment rates for the rest of this year and a 1 percent update for next year. For 2012 and 2013, annual updates would be determined based on a new payment system. Rates would continue to increase if spending growth on physician services is within reasonable limits, with an extra allowance for primary and preventive care.

Extension of premium assistance for COBRA benefits. The ARRA created a program to provide a 65% COBRA health insurance premium subsidy for up to 15 months for workers who have been involuntarily terminated. Under current law, eligibility for the COBRA premium assistance program will expire for individuals terminated after May 31, 2010. The bill would extend eligibility for the program for individuals terminated on or before December 31, 2010. This provision is estimated to cost $7.799 billion over 10 years.

Energy Efficiency

The bill extends a tax credit for the manufacture of energy efficient homes and  clarifies important standards with respect to the installation of energy efficient windows. The bill would also ensure that tax-incentives for manufacturers of energy-efficient appliances continue to work during this economic recession, by allowing manufacturer to exchange their tax credits for a direct payment equal to eighty-five percent (85%) of the tax credit that would otherwise have been allowed.

Hybrid Vehicles. An alternative motor vehicle credit will continue to be available for hybrid vehicles that use gasoline and electricity. Separate credits are available for autos and light trucks, and for medium and heavy trucks.

The Obama Administration strongly supports House passage of the House Amendment to the Senate Amendment to H.R. 4213. Passage of this legislation will provide much-needed relief to families, including extended access to health care benefits for workers who have lost their jobs and extended unemployment insurance benefits for millions of Americans who are looking for work. It will also provide critical assistance to hard-pressed States while encouraging continued job creation by America’s businesses.

[Update] A Possible September 2010 Extension to Home Buyer Credit June 30 2010 Tax Credit Deadline has also been included in this bill. The U.S. Senate has approved this provision aspart of the  American Jobs and Closing Tax Loopholes Act (Bill: HR 4213) to extend the closing date for claiming the credit to September 30th. The U.S. House still has to approve the plan (very likely). See more in this article.

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{ 15 comments… read them below or add one }

Ray June 29, 2010 at 4:36 pm

Why not allow anyone who closes by september 30th get the tax credit? There are so many people who took advantage of this program… quite litterally… and there are alot of people who could not sign an agreement by April 30th who will close this week or next week. Just because someone tried a short sale and could not complete it in time… they get an extension. How about allow anyone who closes by the end of september and let home sales rise again and make a fair end to the program.

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Angie June 21, 2010 at 11:23 pm

Why cant Congress understand that we need more time looking for work, Congress knows that there are no jobs no work Congress just turns the other way and ignores the truth. I think they really don’t know what todo and their afraid to make a decision the right decision that is helping the people that were laid off due to the economy, I didn’t ask to get laid off I loved my job and enjoyed going everyday I never missed a day or late. And this is what we get a kick in the A** it’s not fair, I feel our country is turning into a communist country. I’ve been out of work going on 2 years in Nov. and gone to interviews where the employer told me I was competing against 400 other resumes that came in. Out of 400 people at that 1 job you think I landed that position the answer is NO. Congress needs to receive letters from the unemployed because they need something to open their eyes. Maybe Congress should loose their home and move in with their inlaws My family and I lost everything. We the unemployed will not let them take our Dignity.

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Cari June 21, 2010 at 11:20 pm

I have lost all faith in our government at this point..I cannot believe that the bill for unemployment extension has not been rushed through on an emergency basis! The stimulus money is there, use it! I have worked my entire life to end up with absolutely nothing after losing my job through NO fought of my on! I need my unemployment benefits to even survive. I have gone through every penny I have and now my unemployment benefits have expired. Please listen to the people we need help and without the help of the government I do not know many of us will survive. I am at the end of my rope! I have faith in God that he will get me through and hopefully it is his will for the extentsion to go through. This is a terrible feeling to feel and to be going through is a nightmare.

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Mark Landis June 21, 2010 at 11:20 pm

I am simply astounded by the Senate’s care-free attitude about the millions that are losing benefits because of their in-fighting. If ANYTHING is worthy of deficit spending, it is helping the hard working men and women of America who have worked all of their adult lives only to be laid off in this last recession.Do NOT abandon these people. Doing so comes at great electoral risk.It cannot be long until the cry grows loud enough, but it will be a very long time until those of us whom, you turned your back will forget. Our memory is long when it comes to you stepping away from your responsibility to the people that elected you.You wont make us forget by using negative campaign ads against your opponent. After a time, we will vote for ANYONE who is not you.Next, we will see about trimming some of YOUR perks and benefits. Please pull your head out of the sand, and listen to the cry of the people

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Robert s June 19, 2010 at 12:59 pm

Whatever you want to call it, the bill is dead in its current form in the Senate. The Senate on Wednesday voted 45-52 in opposition to moving forward on the $140 billion tax extenders bill that resuscitates expired tax breaks and extends several spending measures. The bill was authored by Senate Finance Chairman Max Baucus (D-Mont.), who argued that the proposal would help shore up the job market. However, centrist senators in both parties were uncomfortable with supporting the bill because it added approximately $80 billion to the federal deficit.

Now the Republicans will offer a revised bill that will be turned down by the Democrats. Once that occurs, Baucus is expected to offer a smaller package that may get the support of a couple of Republicans and the new bad boys on the block, the so called conservative blue dog Democrats.

Both parties feel the need to play games with this legislation. Hopefully the Senate can gets its act together enough to pass some kind of unemployment benefits bill before week’s end, but even if that happens, the bill needs to go back to the House for approval, since their bill was changed in the Senate.

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cmfoster June 17, 2010 at 9:35 am

If congress doesn’t want to extend the unemployent benefits for all the 100s of thousands of us out of work then they should pass a bill preventing U.S companies that are shipping all the jobs over seas for cheaper labor!Ask these companies to remove the hiring freezes that have been for over a year! Maybe this country would not have so much debt if we quit sending money to countries that our killing our soldies and sending suicide bombers over here,(probably using the aid money we gave them). Maybe if the elected officials, CEO’s and Execs would stop using the bailout money (that was supposed to be used to help stimulate our economy) so they can give theirselves huge bonuses or going to luxury resorts for “business meetings” that conveniently lasts for weeks and allow their families to go Not all of us are just wanting a hand out .However, its pretty tough to find a job when there is 1 job for every 6 people unemployed. Even if you can find a job, what arewe to do, work 3 jobs(due to having to work minimum wage, never sleep , never see our families or take a temporary job that only lasts for 3 days then we are right back to being unemployed.
I haven’t recieved one interview for a job not even Walmart!!I have some college( had to quit due to no more money) I have 20 years of customer service experience and I can’t even get a job at Walmart. I have only been out of work for 6 mos, I was told by the unemployement office that I would have atleast 12 months of benefits. I only found out that I would no longer be receiving my check when 2 weeks ago I just didn’t get one. I called the office who stated that had I lost my benefits 2 days sooner I would have automatically been given the extension. I was working for GM, when they recieved the bailout we were informed we would be safe, however, 3 months later they had to downsize the office employees. I am not just wanting a handout. I am frustrated that cogrees doesn’t seem to have to debate for months on sending money to other countries but when it comes to their own country in a mess they want to attack the poor and middle class,who already are so stressed, meanwhile the rich keep getting richer and just keep getting richer.
People who still have their jobs seem to think all the unemployed workers are just lazy scum that are just wanting free money.They don’t care as long as its not one of their own that is homeless and starving. I bet there would not be a debate on this extension if one of those senators was getting ready to loose their house and family. I bet if one of their family members were unemployed and on the verge of a nerveous breakdown due to being weeks or months without any money they would think twice about what they are doing to the unemployed.
How is one supposed to look for a job when their phone and internet are shut off, don’t have any gas in their cars or even 50 cents to buy a newspaper for the classified ads? If we not able to look for work will the unemployement office make an exception and approve our benefits IF congress does finally pass this bill,and not punish us. Congress is surly kicking us while we are we are at our lowest.

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Baby Boomer June 2, 2010 at 6:48 pm

I heard Congress believes, the long-term unemployed are not seeking employment as long as we receive EUC. THEY HAVE GOT TO BE KIDDING! The only people able to gain employment are those working construction, doing highway, bridges, road-work, clean air and hybrid car projects. I don’t enjoy, “NOT” being a viable American worker. We need full-time employment and I’m finding it difficult, jobs I’m qualified for are farmed to other countries, or 10 people are competing for the same job. If this extension isn’t approved, sadly many great Americans whom have worked, paid taxes and kept the economy moving all their lives, will lose their homes/apartments, living on the street, or begging for places to stay with family or friends, or vagrant and living in their cars. Is this a way to treat our own educated populous of people in this country. We are not a 3rd world country… or are we heading in that direction.

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Kurt May 30, 2010 at 8:27 am

Re: Sally,

In response to you ! If you attack investments to bring money back to Government , GUESS what ?????Investments will go over seas…If companies don’t have investment, GUESS WHAT ???YOU don’t get hired

So attacking so called Wall Street is not the answer . When the market drops Sweetie, you loose !
This is the last thing any of us need. I am into investments and when investments are not attacked, we as a nation prosper. You attack WALL STREET , you attack MAin street ..They are not separate no matter how much Obama wants you to believe they are . Obama throws out “attack the Rich, Attack Wall Street , attack anyone making over $200k , with little understanding what the heck is is making companies do.
Polaris form Wisconsin with 90% profit just let go off all 5000 employees and is packing up the company and moving to Mexico. Why do you think that is? Its because they want to hold onto their 90% and not be taxed more

So tell me , you think this is good ? Heck no Sally wake up and become informed . Companies and investments are leaving in droves . in 2009 more then ever People have been giving up their citizenship and moving away to avoid these taxes and income distribution. My family is seriously thinking about it.. ALL the rest of America can be hired as census workers for the illegal immigration coming.. We will be gone

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Michelle May 30, 2010 at 8:14 am

I can honestly say I think the Goal of this White House is to ruin America…….No leader can be this blind unless his intentions were to destroy us. Maybe the dems want America to collapse so everyone will be dependent on them. I know you may think this sounds crazy, but when you add all the facts up
why would any one put their citizens under such hardship! The Dems are not for the people they are against the people. Hilary Clinton was saying on TV the other day how the higher tax rate was working and we were prosperous until it was repealed . UMMM sure Hillary , that when we were in the DOT COM boom, you know the one your Husband Billy Boy allowed. This was before all the outsourcing started in after Y2k and thousands of high tech programming jobs went over seas where they get paid 1.00 an hour . Sure Hillary the Housing bubble was formed from your Billy Boy husband who repealed the Glass Glass Stagall Act and removed all rules for lending in the Community Investment act. So now what Hillary? What bubble will help extend the total collapse and mask it while you raise taxes? Americans are equivalent to an open wound and this leadership pushing more regulation, more taxes more this more that is like pouring bacteria covered dirt on that wound !

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mrscowhall May 27, 2010 at 11:11 am

Well again we go through the same routine and we all know that this is just the preliminary reports. This bill does noting for the long termed unemployed and we are still in a recession. The jobs are scarce if any and we are expected to find employment when companies are still laying off workers due to not being able to afford to keep them on. There is definitely something wrong with people who don’t believe that we are in a recession and think there are jobs out there for the picking. Wake up!!!. I am a 43 yr old woman who has a degree in business and I have been unemployed since 04/30/08. I send out 15-20 resumes per week and no one has responded. So, you tell me, is it my fault that the company I previously worked for, laid me off, went out of business or maybe its my fault that companies are not hiring. If I had the power to make those kinds of changes dont you think I would at least create a company for myself, hire myself and other unemployed workers. Get real!!!!

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Telvin May 27, 2010 at 11:11 am

I know that many people are unemployed and have been for a very long time. I am in Tier 1 and I will not receive any benefits when my 1st tier expires in May 2010. I do believe that I can find a job, but without any income it will become impossible. Unfortunately, my husband can’t help because he is a self-employed contractor, that has been not had much work for the last 2 years. I don’t want to rely on the government to feed me and my family, but right now we don’t have a choice. Our congressman (mine – Jack Kingston) really need to step up and help middle class Americans get back on our feet. I am currently working on re-training and updating my work skills, but I need more time.

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RetiredPublicSafetydotCom May 27, 2010 at 11:10 am

This bill punishes achievement, just like the IRS Early Retirement Penalty, which Rep. Rangel also supports. It will help to drive “certain corporations” from our country to someplace where they can do business without being punished by the IRS.

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Sally May 26, 2010 at 10:26 am

Significant parts of the bill would be paid for by eliminating the tax incentives that encourage companies to ship American jobs overseas. The bill would prevent corporations from using current U.S. foreign tax credit rules to subsidize their foreign activities, and close a host of corporate tax loopholes that allow companies to avoid paying U.S. taxes through a variety of foreign tax credit schemes.

But here’s the best part. You know how working folks are required to pay regular income and employment taxes? Even if you are unemployed you likely have to pay the regular income tax on your unemployment insurance payments. But wealthy investment fund managers don’t. No siree. The fees they “earn” are taxed as so-called “carried interest”, a tax loophole that allows their income to be taxed at only 15 percent, as if it were capital gains.

Super-rich hedge fund managers, private equity fund managers and other high-flying Wall Street traders pay a much lower tax rate than working people do — even if you’re on unemployment! And taxpayers are left holding the bag for an estimated $2 billion a year in lost revenues due to this one loophole.

Well, they helped bring down the economy while making out like bandits — and now it’s high time they paid their fair share. This jobs bill would close their “carried interest” tax loophole.

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Refa May 26, 2010 at 9:44 am

What about Alternative Minimum Tax? That 1970′s era law that does not index for inflation is going to pound a lot of people this year if left unchanged.

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Poster May 25, 2010 at 9:20 pm

Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Committee Chairman Sander Levin (D-Mich.) will today release legislative text of the American Jobs and Closing Tax Loopholes Act, legislation to provide critical tax cuts and support for American workers through the end of this year. Provisions included in the legislation would:

* Provide tax relief to businesses and state and local governments to help them invest and create jobs;
* Provide important tax cuts to put money back in the pockets of working families;
* Help restore the flow of credit to enable small businesses to expand and hire new workers by extending small business loan programs;
* Expand career training programs for Americans who are looking for work;
* Extend eligibility for unemployment insurance benefits, COBRA health care tax credits and other critical programs that families and communities depend on through December 31, 2010;
* Ensure that seniors, military service members and Americans with disabilities continue to have access to doctors they know and trust; and
* Close tax loopholes for wealthy investment fund managers and foreign operations of multinational companies.

“Our economy is just beginning to show signs of recovery, yet too many hard-working Americans lost their jobs in this recession and we can’t leave them behind,” Baucus said. “Our bill will provide the tax cuts American businesses need to grow and hire more workers, and it will ensure American families continue to have the support of unemployment insurance and other programs they depend on while we work to create jobs. This bill is the jump start our economy needs to help create new job opportunities for American workers and get our economy moving again.”

“Provisions in this legislation will help companies and State and local governments spur job growth while also providing critical tax relief and economic assistance to American families who were hit hard by the recession,” said Levin. “By promoting jobs here in the U.S. and cracking down on loopholes that encourage companies to move overseas, we strengthen opportunities for American workers and businesses so that we can continue building on recent economic growth toward a robust recovery. This legislation also contains a vital extension of unemployment and health benefits through the end of the year to help workers and their families make ends meet while they continue to seek out their next job opportunity.”

The American Jobs and Closing Tax Loopholes Act will be released today as the House Amendment to the Senate Amendment to H.R. 4213. The original legislation, the Tax Extenders Act of 2009, passed the House of Representatives on December 9, 2009. The Senate passed a similar package, the American Workers, State and Business Relief Act, as an amendment to that bill on March 10, 2010. Baucus and Levin worked with House and Senate leadership and their colleagues to merge these two packages into the American Jobs and Closing Tax Loopholes Act they will release later today.

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