Banking Bill With Tax Provisions Signed Into Law
For the past couple of weeks, we have been posting articles on legislation that is winding its way through the Congress that contains important tax provisions. Our first article, noted that the Senate had voted to cut-off debate on a bill that contained numerous tax provisions. Later, on September 16, the Senate passed the Bill (H.R. 5297 as amended) by a 68-31 vote (two Republicans supported the Bill). There were slight variations in the Bill as it worked its way through the Senate from an earlier version that the House had passed. But, after Senate passage of its version of the Bill, House leadership announced that the House would simply approve the Senate version, pass the Bill, and send it to the President for signature. Indeed, on September 23, the House approved the legislation by a 237-187 vote (with only one Republican supporting the Bill). On September 27, the Bill was signed into law.
The primary focus of the legislation, termed the Small Business Jobs Act of 2010 (“Act”), is another TARP-like bailout of the banking system. The theory behind the Act’s sponsor (the Act was originally sponsored by Rep. Barney Frank (D-Mass.) and supporters is that banks either lack the funds to lend or need additional incentives to lend to small businesses. Accordingly, the Act establishes a "Small Business Lending Fund" authorizing the U.S. Treasury to make up to $30 billion in credit available to small community banks at various interest rates. Under the Act, the Treasury Secretary is instructed to require "capital investment recipients" to provide "linguistically and culturally appropriate outreach and advertising in the applicant pool using media outlets which target organizations, trade associations, and individuals that represent or work within or are members of minority communities, women and veterans." In addition, to get funds, a bank must submit to the Treasury Department a small business lending plan describing how its business strategy and operating goals address the needs of small businesses in the areas it serves and a plan to provide "linguistically and culturally appropriate outreach." Lower rates on capital borrowed from the fund are available to banks that successfully meet these requirements, just as they are to banks that are owned by minorities, women or veterans that serve low and moderate income communities and other underserved or rural communities.
Along with the banking bailout provisions, the Act does contain several important tax provisions purportedly designed to stimulate business activity. But, tax increases, additional filing requirements and penalties are also included in the Act.
Here are the details of the tax provisions contained in the Act that has now been sent to the President.
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