The Senate has passed a bill to extend unemployment benefits through the end of the year as well as a number of tax cuts that expired at the end of last year.

The American Workers, State and Business Relief Act, passed Wednesday, extends unemployment insurance benefits and eligibility for the 65 percent COBRA health care tax credit through Dec. 31, 2010. The COBRA tax credit helps workers who have lost their jobs continue to afford health insurance through the Consolidated Omnibus Budget Reconciliation Act. 

The legislation also retroactively extends tax cuts for middle-class families and businesses that expired at the end of 2009.  The bill passed by a vote of 62 to 36 and will not be transmitted to the House of Representatives for consideration. 

The bill extends tax cuts for research and development; to allow restaurant owners and retail stores to depreciate improvements over 15 years rather than 39.5 years; to let small businesses continue to pay employees who have been called to active duty in the military; to encourage the use of biodiesel and renewable energy; for teachers who buy classroom supplies out of their own pockets; to help families afford college tuition; to enable families to make their homes more energy efficient; to allow taxpayers to continue to deduct state sales tax on their federal tax returns; and to encourage businesses to invest in low-income communities.

“Extending these tax cuts and the critical safety-net programs in this bill will give businesses the tax certainty they need to move forward and families the support they need to make ends meet,” said Senate Finance Committee chairman Max Baucus, D-Mont., in a statement. “When businesses know they can count on the tax cuts in this bill, they know they can add an extra shift or hire a new worker. When families know they can count on unemployment and COBRA benefits in this bill, they know they can put food on the table while they continue to look for work.”

The bill also provides relief for pension plans that were hit hard by the economic downturn and prevents a reduction in the federal poverty level from taking effect through 2010. The scheduled reduction is caused by a decrease in the average cost of goods resulting from the economic downturn. It allows families to continue to qualify for programs such as Supplemental Nutrition Assistance Program or food stamps, Medicaid and home-heating assistance. 

Likewise, the legislation allows individuals living below the poverty level to continue to disregard refundable tax credits and refunds as part of their income for 12 months after receipt. This provision ensures that families living in poverty are not penalized for receiving tax cuts by losing their eligibility for important safety-net programs. 

The bill also extends the increased federal assistance for state Medicaid programs, made available through the American Recovery and Reinvestment Act, for six months. 

In addition, the legislation continues funding for loan programs for small businesses, extending funding to reduce or eliminate fees under the Small Business Administration's 7(a) loan guarantee program and the 504 loan program through the end of this year.

In addition, the legislation reverses a scheduled 21 percent payment cut for doctors who provide services through Medicare and Tricare to enable seniors and military families to continue to have access to their physicians. 

The legislation also extends several other Medicare protections, including the exceptions process for Medicare beneficiaries who exceed their cap on therapy services and provisions affecting doctors and other health care providers who serve rural communities.

Senate Finance Committee ranking member Charles Grassley, R-Iowa, was among those who voted against the measure, although he had originally co-sponsored a measure last month with Baucus with many of the same tax extender provisions.

“I proved my support for extending tax provisions to encourage private-sector job creation, many of which I authored in the first place, and my support for extending unemployment benefits with the bipartisan legislation I proposed in February with Senator Baucus," he said in a statement. "Our bill did not include $100 billion of spending that was not paid for under federal budget rules. It hurts economic recovery efforts and America’s financial stability for Congress to continue rampant deficit spending. The fact that Democratic leaders let the biodiesel tax credit lapse at the end of 2009 has cost jobs in Iowa and 43 other states with biodiesel production. It was irresponsible and even offensive for congressional leaders to make the extension of important renewable energy tax incentives contingent on adding another $100 billion to the federal budget deficit.”

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