Congress Passes Tax Package

On Monday, the Senate passed the $858 billion tax package sending the bill back to the House where it passed late Thursday night. The bill now heads to President Obama’s desk for his signature into law. While the package does not include a repeal of the Form 1099 health care requirement or extension of the Buy American Bond program, the bill does the following major items:

  • extends through 2012 the current individual income tax brackets, capital gains and dividends rates for all taxpayers;
  • increases the AMT exemption amounts for 2010 to $47,450 (individuals) and $72,450 (married filing jointly) and for 2011 to $48,450 (individuals) and $74,450 (married filing jointly);
  • extends through 2011 the ability 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;
  • exempts from taxation the first $10 million of a couple’s estate and the first $5 million of an individual’s estate, with the remaining portion taxed at the 35 percent rate;
  • extends and temporarily increases the bonus depreciation provision for investments in new business equipment;
  • reduces the payroll/self-employment tax during 2011 to 4.2 percent on wage-earners and to 10.4 percent on self-employment income up to the threshold;
  • reinstates through 2011 the research and development credit;
  • extends the 100 percent exclusion of the gain from the sale of qualifying small business stock that is acquired before January 1, 2012 and held for more than five years;
  • extends through 2011 the special 15-year cost recovery period for certain leasehold improvements, restaurant buildings and improvements, and retail improvements;
  • extends through 2011 the $0.50 per gallon alternative fuel credit and credit for energy-efficient improvements to existing homes.

Fed Proposes New Interchange Fees

On Thursday, the Federal Reserve announced a set of new debit-card fee restrictions more aggressive than most industry experts expected. The new restrictions, most of which will not be made final until April 21, are designed to restrict the fees that debit-card issuers can charge merchants. Banks would face a seven-to-12-cent-per-transaction cap on the interchange fees under either of the two proposals unveiled Thursday. Under the first plan, card-issuing banks could use a formula to determine the maximum amount of the interchange fee that it would collect, based on certain processing costs and would set a “safe harbor” standard at seven cents per transaction. The second alternative would set the cap at 12 cents without any safe harbor. Under the Fed’s proposal, the Fed Board would re-evaluate the cap every two years.

Insider Trading Charges Brought Against Expert Network’s Employee and Consultants

On Thursday, Manhattan U.S. Attorney Preet Bharara brought insider trading charges against four corporate managers who worked as consultants for Primary Global Research LLC, a so called “expert-network” firm, as well as an employee of Primary Global. Prosecutors said the managers passed along inside information about nine technology companies. “Expert networks” partner with hedge funds to provide industry information obtained from current and former corporate managers. Those arrested Thursday were James Fleishman, a former vice president and sales manager at Primary Global; and consultants Walter Shimoon, a former senior director of business development at Flextronics International Ltd. in San Diego; Mark Anthony Longoria, a former supply-chain manager with Advanced Micro Devices Inc.; and Manosha Karunatilaka, an account manager at Taiwan Semiconductor Manufacturing Co. They five were charged with wire fraud and conspiracy to commit securities fraud.

FDIC Proposes New Capital Standards

On Tuesday, the FDIC issued a proposal that would prevent bank holding companies from dipping below the strict capital standards of their federally insured bank units and would set a uniform capital floor across the banking industry. The new capital floor would also apply to any non-bank institution that regulators deem important to the financial system and therefore subject to supervision by the Federal Reserve. The FDIC was required to issue the proposal due to the amendment sponsored by Sen. Susan Collins (R-ME) in the Dodd-Frank Wall Street Reform Act. The FDIC voted to put the proposal out for 60 days of comment and seek feedback on how it should be implemented.

More Information

If you have any questions regarding any of these issues, please contact:

Matt Jessee, Policy Advisor
matt.jessee@bryancave.com
1 314 259 2463