AGC submitted comments Friday to the Financial Accounting Standards Board (FASB) in response to the Board's proposed Accounting Standards Update to create a single revenue recognition standard across multiple industries, including construction.  The accounting update could have significant impacts on construction contractors, including increased administrative costs and effects on surety credit.  By introducing considerable subjectivity into the process, the new standard also will open the door to financial manipulation leading to less consistency and transparency in the financial reporting process in the industry.

Although the October 22 comment period has passed, information about the proposal can be found here.  To read AGC's comments to FASB click here.

AGC is finalizing its comments on the Federal Accounting Standards Board's proposed accounting standard that would require the disclosure of withdraw liability from multiemployer pension plans on company financials. AGC's comments urge FASB to withdraw the Exposure Draft and reconsider the proposal.

AGC's concerns with the Exposure Draft (ED) are extensive. The draft under-appreciates the costs associated with compliance and overestimates the relevancy of the information that would be provided if the ED were to go into effect as written.  Any information included will be neither timely nor accurately reflective of the financial impact of participating in a multiemployer plan.  The draft significantly underestimates the complexity of the relationship between employers and multiemployer plans, and significantly underestimates the importance of the construction industry exemption that makes almost any liability merely theoretical rather than material.  Comments on the exposure draft are due Monday, November 1, 2010.

If you are interested in sending your own letter to the FASB, please keep in mind the following guidelines:

• Deadline is Monday, November 1, 2011.
• The FASB will not consider form letters.  Comments should be thoughtful and individually written.
• Letters can be mailed or emailed to the following addresses:

Technical Director
File Reference No. 1860-100
Financial Accounting Standards Board
401 Merritt 7
PO Box 5116
Norwalk, CT  06856-5116
Email: director@fasb.org (For emailed letters, please include "Comment Letter - File Reference No. 1860-100" in the subject line of the email.)

The U.S. House of Representatives today cleared H.R. 5297, the Small Business Jobs Act, a bill that would make $30 billion in funds available to community banks to make loans to small businesses and provide roughly $15 billion in tax and other incentives for businesses of all sizes. The bill now goes to President Obama for his signature. Below are a few highlights of provisions in the measure of particular benefit to the construction industry.

Increase of Section 179 Expensing and Expansion to Certain Real Property. Under current law, taxpayers may elect to write-off the costs of certain tangible personal property that is purchased for use in the active conduct of a trade or business in the year of acquisition in lieu or recovering these costs over time through depreciation. For the taxable year beginning in 2010, taxpayers may write-off up to $250,000 of these capital expenditures subject to a phase-out once these capital expenditures exceed $800,000.  After 2010, the thresholds revert to $25,000 and $200,000, respectively. This bill would increase the thresholds to $500,000 and $2,000,000 for the taxable years beginning in 2010 and 2011. Within those thresholds, this bill would allow taxpayers to expense up to $250,000 of the cost of qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property.

Extension of Bonus Depreciation and Special Rule for Long-Term Contract Accounting. Businesses are allowed to recover the cost of capital expenditures over time according to a depreciation schedule. Congress temporarily allowed businesses to recover the costs of certain capital expenditures made in 2008 and 2009 more quickly than under ordinary depreciation schedules by permitting those businesses to immediately write-off 50 percent of the cost of depreciable property placed in service in those years. This bill extends the additional, first-year 50 percent depreciation for qualifying property purchased and placed in service in 2010. In addition, the bill includes a special rule for long-term contract accounting at AGC's request via the plan, Build Now for the Future. The provision decouples bonus depreciation from allocation of contract costs under the percentage of completion method rules for assets with a depreciable life of seven years or less in order to allow contractors that do not complete contracts within the same year in which they are entered into to benefit from bonus depreciation.

Modify Section 6707A Penalty. The bill revises section 6707A of the Internal Revenue Code to make the penalty for failing to disclose a reportable transaction proportionate to the underlying tax savings. The penalty for failure to disclose reportable transactions to the IRS would be set at 75 percent of the tax benefit received. Reportable transactions are defined as investments in transactions that the IRS has identified as listed tax shelters or that have characteristics of tax shelters, including large losses or confidentiality agreements. The minimum penalty under this bill is $10,000 for corporations and $5,000 for individuals and the maximum penalty is $200,000 for corporations and $100,000 for individuals. The bill also requires the IRS to provide an annual report to the Senate Finance Committee and to the House Ways and Means Committee giving an account of certain tax-shelter related penalties asserted during the year. AGC supported inclusion of this provision to provide relief to contractors who face substantial section 6707A penalties.

Remove Cellular Phones from "Listed Property." This provision would "delist" cell phones so their cost can be deducted or depreciated like other business property, without onerous recordkeeping requirements.

On September 14, the Senate rejected the Johanns Amendment to the Small Business Credit and Jobs Act that would have repealed the new Form 1099 reporting requirement enacted in the healthcare bill earlier this year. The vote on the procedural motion was 46 to 52.

AGC urged Senators to support the Johanns Amendment and may include how Senators voted in AGC's Legislative Scorecard. To see a copy of AGC's Key Vote letter, click here. To see how your Senator voted, click here.

The Senate also rejected the Bill Nelson Amendment that offered an alternative to the Johanns Amendment by a vote of 56 to 42. The Nelson Amendment would have exempted small businesses under 25 employees from the 1099 reporting requirement and would have increased the reporting threshold from $600 to $5,000 a year. AGC and the business community urged Senators to oppose the Nelson Amendment as it would not have provided full relief from the reporting requirement and was overly complex.

Although there are few legislative days left before the end of the year, Congress may try and pass repeal again. AGC will continue to monitor the debate and will post calls to action here.

Finally, thank you to all the AGC members who heeded the call and contacted their Members of Congress.

The massive healthcare bill enacted in March contained a provision that requires government, nonprofits and businesses of all sizes to file Form 1099s with the IRS when goods or services purchased without a credit card from another business exceed $600 in a year. 

Currently, a Form 1099 filing is required only for services-not goods-provided by self-employed independent contractors.  The provision was justified as a way to identify businesses that are not reporting or underreporting income to avoid paying their fair share of taxes.  The Congressional Budget Office estimated that the provision would raise $17 billion to offset a small portion of  the healthcare bill,  but AGC members know the increase in paperwork and compliance costs will be a tremendous burden on their businesses.

AGC supports full repeal of the provision rather than a modification, which is why AGC supports the Small Business Paperwork Mandate Elimination Act. 

The House considered legislation prior to the August recess that would have repealed the provision; however, the bill ultimately failed.  The Senate is scheduled to vote on two amendments to a small business jobs bill when they return next week: one that would repeal the provision (Senator Mike Johanns), and one that would modify the provision (Senator Bill Nelson).  Because the proposed modification would not repeal the 1099 requirement, but would instead put in place new exemptions, AGC does not believe the amendment would provide adequate relief for businesses.

AGC continues to request members write their Senators and Representative in support of the Small Business Paperwork Mandate Elimination Act and in support of a full repeal of the burdensome 1099 reporting requirement.  For more information on the 1099 reporting requirement and to write your Members of Congress, use the AGC Legislative Action Center.

The massive healthcare bill enacted in March contained a provision which requires businesses to send Form 1099s for all business-to-business transactions for services and goods equaling $600 or more in a year.  The provision was justified as a way to identify businesses that are not reporting or underreporting income to avoid paying their fair share of taxes. The Congressional Budget Office estimated that the provision would raise $17 billion to offset a small portion of  the healthcare bill,  but AGC members know it will be a tremendous burden on businesses and increase paperwork and compliance costs.

Legislation has been introduced in both the House and Senate to modify and repeal the 1099 requirement. AGC supports full repeal of the provision rather than a modification, which is why AGC supports H.R. 5141 and S. 3578, the Small Business Paperwork Mandate Elimination Act. 

The House considered legislation prior to the August recess that would have repealed the provision; however, the bill ultimately failed.   The Senate is scheduled to vote on two amendments to a small business jobs bill when they return in September: one that would repeal the provision and one to modify the provision. Because the proposed modification would not repeal the 1099 requirement, but would instead put in place new exemptions, AGC does not believe the amendment would provide adequate relief for business.

AGC continues to request members write their Senators and Representative in support of H.R. 5141 and S. 3578 and in support of a full repeal of the burdensome 1099 reporting requirement.  For more information on the 1099 reporting requirement and to write your Members of Congress, use the AGC Legislative Action Center.

A provision in the massive healthcare bill enacted in March requires businesses to send Form 1099s for all business-to-business transactions equaling $600 or more in a year.  The provision was passed to help identify businesses that are not reporting or underreporting income to avoid paying their fair share of taxes. The Congressional Budget Office estimated that the provision would raise $17 billion to help pay for the healthcare bill.  However, the new requirement will be a tremendous burden on businesses, increasing their paperwork and compliance costs.

Legislation has been introduced in both the House and Senate to modify and repeal the 1099 requirement. AGC supports repeal of the provision rather than a modification, which is why AGC supports H.R. 5141 and S. 3578, the Small Business Paperwork Mandate Elimination Act.  The House considered legislation prior to the August recess that would have repealed the provision; however, the bill ultimately failed.   The Senate is scheduled to vote on an amendment to a small business jobs bill that would repeal the provision when they return in September. 

AGC is requesting members write their Senators and Representative in support of H.R. 5141 and S. 3578 and in support of a full repeal of the burdensome 1099 reporting requirement.  For more information on the 1099 reporting requirement and to write your Members of Congress, use the AGC Legislative Action Center.

Failure to agree on how to handle bigger tax provisions continues to block consideration  

The Senate today failed by a vote of 58 to 42 to pass a procedural vote (60 votes needed for passage) on a new substitute amendment to the Small Business Jobs Act.  The Senate Democrat and Republican leadership were once again unable to reach an agreement on amendments to be offered by Republicans to the bill prior to the vote. 

The Bill would make $30 billion in funds available to community banks to make loans to small businesses and provide $12 billion in tax cuts, including quicker write-offs for depreciation. The bill also includes relief from small businesses from Internal Revenue Code section 6707A penalties.

The measure had been stalled for weeks in the Senate over Republican amendments on issues including the estate tax, federal spending, border security, nuclear loan guarantees, and other expiring tax provisions.  Another pending amendment offered by Senator Mike Johanns (R-Neb.) would repeal the expanded Form 1099 reporting requirements enacted in the health care reform bill that requires every business and corporation to file a Form 1099 for every purchase of goods or services totaling $600 or more in a calendar year.

Further action on the bill in the Senate may be delayed until after the Senate returns from its August recess in September.

AGC of America this week signed a letter to Congress with over 312 companies and 80 employer organizations to express concern about misinformation circulating regarding multiemployer defined benefit plan relief proposals before Congress.  Joining AGC of America in signing the letter are 11 AGC Chapters and 45 AGC member firms. 

Recent press stories have referred to H.R. 3936, the Preserve Benefits and Jobs Act, and S. 3157, the Create Jobs and Save Benefit Act, as a "union bailout" and to multiemployer plans as "union plans."  The letter states that contributions to multiemployer plans are funded entirely by employers and not unions.

The majority of defined benefit plans have been negatively impacted by the recent financial crisis, and the median investment loss by multiemployer plans has exceeded 20 percent.  The losses occurred in the first year of new aggressive funding rules required by the Pension Protection Act, giving rise to potential additional contribution increases, deep benefit cuts, or both.  The financial crisis also exacerbated funding problems that certain multiemployer plans were already facing prior to the market downturn.  For details on the House proposal, clickhere.

Asreported on July 1, President Obama signed into law the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, a stand-alone measure to prevent a scheduled cut in Medicare reimbursements to physicians.  While the relief now enacted into law is not the preferred language advocated by AGC and the multiemployer pension community, there may be an opportunity to enact "technical corrections" or otherwise provide Congressional guidance to the Treasury who will now interpret the law to ensure the intent of the preferred language is followed. 

AGC and the multiemployer coalition is continuing to work on additional longer-term relief for more troubled multiemployer plans, including the "partitioning" proposal included in H.R. 3936 and S. 3157.  In May, the Senate Health, Employment, Labor, and Pensions Committee last Thursday held hearing on multiemployer pension plans, including S. 3157.  The hearing was a first step towards Congressional action on additional multiemployer plan relief called for in H. R. 3936 and S. 3157 that would facilitate mergers and alliances of funds and allow the Pension Benefit Guaranty Corporation (PBGC) to provide assistance to certain plans (e.g., Central States) through a process called "partitioning" to lower long-term costs.  The bill would also update PBGC benefit guarantees.

A stalemate over a small business jobs bill (H.R. 5297) continued this week in the Senate.  The Senate had adjourned for the July 4^th recess after beginning debate on the measure, which includes a package of tax cuts and provisions to increase access to capital for community banks and small businesses.

Senate Democrats have not been able to reach agreement within their own caucus and with Republicans on amendments for floor consideration.  One issue that is causing disagreement is a proposal offered by Senators Blanche Lincoln (D-Ark.) and Jon Kyl (R-Ariz.) that would make permanent changes to the now-expired estate tax.  The proposal would set the top rate at 35 percent with a $5 million exemption level for individuals ($10 million for couples) phased in over 10 years and indexed for inflation.  It also would provide a stepped up basis for inherited assets.  The Senators' plan would allow the estates of taxpayers who die in 2010 to choose between the current rate of zero with a modified carryover basis or their proposal establishing a top rate of 35 percent. 

There is also pressure for the Senate to consider extensions of the expiring 2001 and 2003 tax cuts on which Senators are wary to vote prior to the November elections, as well as on other pieces of stalled legislation, including the annual tax extenders package.

AGC supports a provision in the small business jobs bill that would extend enhanced section 179 expensing and bonus depreciation through 2010.  AGC is working with Senator Landrieu on an amendment that would allow for the modification of the bonus depreciation extension to allow contractors engaged in long-term contracts that use the percentage-of-completion (PCM) method of accounting and purchase 7-year depreciable property to take bonus depreciation. 

AGC submitted a statement for the record of a House Small Business Committee hearing Wednesday on bonus depreciation in support of the one-year extension and the modification under consideration in the Senate. 

AGC has also advocated in support of another provision in the bill that would provide relief from section 6707A penalties for taxpayers who failed to timely and properly disclose a transaction the Internal Revenue Service (IRS) characterizes as a "listed transaction."