TAX: The Stimulus Package and Its Impact

    View Authors 13 February 2009

    To provide a sense of the stimulus package's overall funding levels, we have prepared a general overview of the bill by subject area. Please note that this is a general overview of funding levels only, and does not report on every aspect of the bill. For a detailed analysis on any subject matter and the process for securing these federal dollars, please contact the Patton Boggs professionals listed below for each respective subject area.

    TAX

    H.R. 1 includes approximately $287 billion of tax relief for individuals, businesses, and State and local governments.

    Bond Provisions

    • $10 billion allocation for recovery zone economic development bonds.

    • $15 billion allocation for recovery zone facility bonds.

    • Modification of a Tax-Exempt Interest Expense Rule for Financial Institutions.

    • Creation of new category of tax credit bonds for the construction, rehabilitation or repair of public schools.

    • Additional $ 1.4 billion of issuing authority for Qualified Zone Academy Bonds.

    • $2 billion of tax-exempt Tribal Development Bonds.

    Energy Incentives

    • $2.3 billion of Investment Tax Credit for certified Qualifying Advanced Energy Projects.

    • Facilities that produce electricity from wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, hydropower, landfill gas, waste-to-energy and marine renewable facilities:
      • Investment Credit in Lieu of Production Credit
      • Grants from Treasury in lieu of production credits

    • Extension of Energy Credit for Electricity Produced from Renewable Sources.

    • $1.6 billion of clean renewable energy bonds.

    • $2.4 billion of qualified energy conservation bonds to finance State and municipal and tribal government programs and initiatives.

    • Increase in alternative refueling property credit for businesses.

    Enhancement of New Markets Tax Credit

    • Additional $1.5 billion for 2008 allocations.

    • Additional $1.5 billion for 2009 allocations.

    Low-Income Housing Grants in Lieu of Tax Credits

    • Taxpayers would be allowed to receive a grant from the Treasury Department in lieu of tax credits.

    Build America Bonds

    • State and local governments are provided the option of issuing a tax credit bond instead of a tax-exempt governmental obligation bond.

    • State or local governments may elect to receive a direct payment from the Federal government equal to the subsidy that would have otherwise been delivered through the Federal tax credit for bonds.

    General Business Tax Provisions

    • Extension of carryback period for losses for small businesses

    • Extension of Bonus Depreciation.

    • Extension of monetization of accumulated alternative minimum tax and R& D credits in lieu of bonus depreciation.

    • Delay of the 3% withholding tax on payments to businesses that sell goods or services to governments.

    • Deferral of Income from Discharge of Indebtedness.

    • Modification of rules for original issue discount on high yield obligations.