TAX CHANGES

Corporate Tax Changes in the American Recovery & Reinvestment Act of 2009

Corporate Tax Changes in the American Recovery & Reinvestment Act of 2009

Federal handouts to the wealthy have long been a topic of controversy. Many lawmakers and politicians seek to justify the use of taxpayer's money that is handed out to the wealthy. Aid to Dependent Corporations, Exposing Federal Handouts to The Wealthy is one reading that seeks to exploit and expose these loopholes in the federal tax system(Robert, 2009). At a time when Congress is attempting to slash and eliminate the small benefits received by the poor, it seems we are spending far more to subsidize wealthy corporations and individuals.

March 2009 - On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (the Recovery Act), into law, requiring a high degree of transparency and accountability from those receiving Recovery Act resources. Federal agencies, states and other recipients of these funds will have to expand their program, fiscal and project management reporting capabilities and enhance controls over the use and disbursement of funds(Jonathan, 2005).

Key Points

The Recovery Act makes “supplemental appropriations” across most federal agencies and directly to states and other recipients. In addition, the Act contains several provisions that increase regulation of commercial enterprises. The legislation contains two major sections. The first represents appropriations to federal agencies while the second includes specific tax provisions and monies sent directly to states and other recipients according to specific funding formulas(Gordon, 2008). The Recovery Act focuses spending on a number of specific areas:

?? The creation and management of incremental reporting and program management tools and process to meet the requirements for increased transparency and reporting. Many federal and state agencies are quickly ramping up to address this challenge. Agencies should begin now assessing their management systems to ensure they can meet request volumes and requirements to make stimulus funds data publicly available.

?? “Shovel-ready” transportation and other construction projects. Cost monitoring of these projects will be critical to limiting waste and fraud as required by the Office of Management and Budget (OMB) guidelines highlighted below.

?? Not-for-profit educational facilities will have to manage project funding related to loans and grants under the Act. Best practices will include assessing IT governance programs and leveraging financial IT processes to ensure reporting

capabilities that comply with accountability and transparency requirements.

?? Small and medium-sized businesses can maximize the SBA Loan Expansion funding by carefully managing their working capital and expenses, and developing and implementing processes to ensure they're meeting accountability and transparency requirements.

?? Subsidizing COBRA payments for workers who've recently lost their jobs. To avoid penalties, all companies need to develop compliance processes to notify recently terminated employees and manage the tax implications of this requirement.

Expanded and extended tax credits for energy projects, net operating losses and certain state exemptions. Organizations across all industries will need to assess the impact of corporate tax changes on their Federal, state and local tax

compliance programs. This may include managing changes to treasury and tax accounting ...