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One of these proposals, the Small Business Jobs and Wages Tax Cut, will put more Americans back to work by giving businesses – particularly small business – a tax cut for new hiring.  The new proposal will also provide tax incentives for businesses to expand wages for their employees.

Through the Small Business Jobs and Wages Tax Cut:

• Businesses will receive a $5,000 tax credit for every net new employee that they employ in 2010. The total amount of the credit for any one firm will be capped at $500,000, to ensure that the majority of the benefit is targeted at small businesses.  Start –ups will be eligible for half of the tax credit.
• Small businesses that increase wages or hours for their existing employees will be reimbursed for the Social Security payroll taxes they pay on real increases in their payrolls. This bonus would be based on Social Security payrolls, so it would not apply to wage increases above the current taxable maximum of $106,800.
• Firms will be able to claim the credit on a quarterly basis, which gets money out to businesses quickly and provides and early incentive to hire and increase payrolls.

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The Tesla announcement marks the second loan agreement signed by DOE with an advanced technology vehicle manufacturer, following a $5.9 billion agreement with Ford Motor Company in September 2009. DOE has also signed conditional commitments with Nissan North America, Inc. and Fisker Automotive. Tenneco Inc. became the first advanced technology component manufacturer to obtain a conditional commitment from DOE in October of last year. Nissan plans to build electric cars and battery packs at the company’s Smyrna, Tennessee, manufacturing complex, while Fisker recently announced plans to build plug-in hybrid electric vehicles by reopening a shuttered GM plant in Wilmington, Delaware.

Congress appropriated $7.5 billion to DOE to support up to $25 billion in loans to companies using U.S. factories to make cars and components that increase fuel economy at least 25% above 2005 fuel economy levels. DOE plans to make additional loans over the next several months to large and small auto manufacturers and parts suppliers up and down the production chain. The intense technical and financial review process is focused not on choosing a single technology over others, but is aimed at promoting multiple approaches for achieving a fuel efficient economy. See the DOE release and the Model S page on the Tesla Motors Web site.

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“Striking the right balance between managing the FHA’s risk, continuing to provide access to underserved communities, and supporting the nation’s economic recovery is critically important,” said Commissioner Stevens. “When combined with the risk management measures announced in September of last year, these changes are among the most significant steps to address risk in the agency’s history. Additionally, by continuing to provide affordable, responsible mortgage products, FHA will support the housing market’s recovery. Importantly, FHA will remain the largest source of home purchase financing for underserved communities.”

Announced FHA Policy Changes:
Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending

• The first step will be to raise the up-front MIP by 50 bps to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge.
• If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP.
• This shift will allow for the capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing
• The initial up-front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring.

In addition to the changes proposed today, the FHA is continuing to review its overall response to housing market conditions, and continuing to evaluate its mortgage insurance underwriting standards and its measures to help distressed and underwater borrowers through FHA/HAMP and other FHA initiatives going forward.

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Washington, D.C., Jan. 4, 2010

Mr. di Florio comes to the SEC from PricewaterhouseCoopers (PwC), where he was a partner in the Financial Services Regulatory Practice and one of PwC’s national leaders in corporate governance, enterprise risk management and regulatory compliance and ethics. As head of OCIE, Mr. di Florio will oversee the SEC’s nationwide examination programs for investment advisers, broker-dealers, mutual funds, credit rating agencies and self-regulatory organizations among other entities.

“A strong inspections and examinations unit is instrumental to the SEC’s investor protection efforts. Investors rely on our examiners to ensure that their financial professionals comply with the law,” said Chairman Schapiro. “Carlo brings the energy, insight, and experience necessary to ensure that we keep pace with the rapid changes in the industry and continue to build upon the reforms of the past year.”

Mr. di Florio said, “I’m honored to join Chairman Schapiro, the Commissioners and the SEC staff during this critical time of financial regulatory reform. I’m excited to collaborate with an outstanding team of talented and dedicated professionals across the country as we work together to strengthen our examination strategy, structure, training programs, processes and systems, while also recruiting colleagues with valuable new skill sets, including trading strategies, risk management and quantitative analytics.”

At PwC, Mr. di Florio has played a leading role in strengthening the corporate governance, risk management and regulatory compliance practice and defining new industry standards, including the Committee of Sponsoring Organizations (COSO) Enterprise Risk Management standard and the Open Compliance and Ethics Guidelines (OCEG). Mr. di Florio has extensive experience leading independent reviews and advising clients on regulatory expectations and industry leading practices across capital markets, investment management, banking and other financial services sectors and regulatory regimes.

In addition to helping financial institutions strengthen corporate governance and regulatory compliance programs, Mr. di Florio also has played a leading role in numerous high-profile engagements where PwC was retained to investigate corporate fraud, corruption, conflicts of interest and money laundering. In this regard, Mr. di Florio has directed international teams and engagements across numerous jurisdictions around the world.

Mr. di Florio received his Master of Laws (LL.M) with distinction from Georgetown University Law Center, his JD from Penn State University, and his BA in Political Economy from Tulane University.

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The proposed rule will permit FHA to more effectively focus its resources on lenders that pose the greatest potential threat to its insurance funds and to ensure that lenders possess the resources appropriate for the financial services they deliver.  FHA is soliciting comment for 30 days on its proposals and the comments received will be considered in the development of a final rule.

“With FHA’s crucial role in today’s housing market, it is critically important that we are able to manage risk and to ensure that our reserves are adequate to cover future losses,” said FHA Commissioner David Stevens.  “We are taking a number of aggressive steps to ensure that we are able to continue to support the housing market in the short-term and provide access to home ownership to the underserved in the long term, while minimizing the risk to the American taxpayer.”

On September 18th, Stevens announced a set of credit policy changes that will enhance FHA’s risk management function, including the hiring of a Chief Risk Officer for the first time in the agency’s 75-year history.  In addition, Stevens announced his intent to propose new regulations to further strengthen FHA’s risk management.   The proposed rule published today makes good on that promise and would:

• Strengthen and Streamline Lender Approval – Lenders seeking approval to originate underwrite, or service an FHA loan must meet the eligibility criteria for a supervised or non-supervised mortgagee.  FHA-approved Mortgagees must assume liability for all the loans they originate and/or underwrite.  While loan correspondents (mortgage brokers) will continue to be able to originate FHA-insured loans through their relationships with approved mortgagees, they will no longer receive independent approval for origination eligibility. This will require the FHA-approved mortgagee to assume responsibility and liability for the FHA-insured loan underwritten and closed by the approved mortgagee. These changes align FHA with Fannie Mae and Freddie Mac and will potentially increase the number of loan correspondents (mortgage brokers) who are eligible to participate in the origination of FHA-insured loans while providing for more effective oversight of loan correspondents through the FHA approved mortgagees.

• Strengthen the Capacity of FHA-Approved Mortgagees – Since 1993, FHA has required approved mortgagees have a net worth of at least $250,000.  To strengthen the financial capacity of FHA counterparties to ensure they can meet their obligations, the proposed rule would require mortgagees maintain a minimum of $1 million in net worth within the first year and at least $2.5 million of net worth within three years of the effective date of the rule.   These changes are consistent with industry standards and will ensure that FHA lenders are sufficiently capitalized to meet potential needs, thereby permitting FHA to mitigate losses and decrease risks to its insurance fund.

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“Effective cybersecurity is a shared responsibility between individuals, communities, government and the private sector to protect our cyber networks from terrorism and intrusion,” said Secretary Napolitano. “The virtual job fair will help us recruit top cyber analysts, developers and engineers to serve their country by leading the nation’s defenses against cyber threats.”

Through the virtual job fair, DHS is looking for applicants with experience in cyber risk and strategic analysis; malware/vulnerability analysis; incident response; exercise facilitation and management; vulnerability detection and assessment; intelligence analysis; and cyber-related infrastructure interdependency analysis.

The new hiring authority, which results from a collaborative effort between DHS, the Office of Personnel Management (OPM) and the Office of Management and Budget, streamlines the hiring process to allow the Department to hire up to 1,000 positions over three years across DHS to fulfill critical cybersecurity roles. Although DHS does not anticipate the need to fill all 1,000 positions, this cap reflects the Obama administration’s commitment to building a world-class cyber organization and competing for the nation’s top cybersecurity talent.

Secretary Napolitano announced the new hiring authority in October as part of National Cybersecurity Awareness Month—a campaign to highlight the steps being taken by the federal government to secure the nation’s cyber infrastructure, systems and networks and educate citizens about guarding against cyber threats at home, work and school.

For more information, visit www.dhs.gov/cyberjobfair.

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Some of these changes include the following:

Special Charitable Contributions for Certain IRA Owners

This provision, currently scheduled to expire at the end of 2009, offers older owners of individual retirement accounts (IRAs) a different way to give to charity. An IRA owner, age 70½ or over, can directly transfer tax-free up to $100,000 per year to an eligible charity. This option, created in 2006, is available for distributions from IRAs, regardless of whether the owners itemize their deductions. Distributions from employer-sponsored retirement plans, including SIMPLE IRAs and simplified employee pension (SEP) plans, are not eligible.

To qualify, the funds must be contributed directly by the IRA trustee to the eligible charity. Amounts so transferred are not taxable and no deduction is available for the transfer.

Not all charities are eligible. For example, donor-advised funds and supporting organizations are not eligible recipients.

Amounts transferred to a charity from an IRA are counted in determining whether the owner has met the IRA’s required minimum distribution. Where individuals have made nondeductible contributions to their traditional IRAs, a special rule treats transferred amounts as coming first from taxable funds, instead of proportionately from taxable and nontaxable funds, as would be the case with regular distributions. See Publication 590, Individual Retirement Arrangements (IRAs), for more information on qualified charitable distributions.

Rules for Clothing and Household Items

To be deductible, clothing and household items donated to charity generally must be in good used condition or better. A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return. Household items include furniture, furnishings, electronics, appliances and linens.

Guidelines for Monetary Donations

To deduct any charitable donation of money, regardless of amount, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Bank records include canceled checks, bank or credit union statements, and credit card statements. Bank or credit union statements should show the name of the charity, the date, and the amount paid. Credit card statements should show the name of the charity, the date, and the transaction posting date.

Donations of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. For payroll deductions, the taxpayer should retain a pay stub, a Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity.

These requirements for the deduction of monetary donations do not change the long-standing requirement that a taxpayer obtain an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. However, one statement containing all of the required information may meet both requirements.

Reminders

To help taxpayers plan their holiday-season and year-end giving, the IRS offers the following additional reminders:

• Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of 2009 count for 2009. This is true even if the credit card bill isn’t paid until 2010. Also, checks count for 2009 as long as they are mailed in 2009 and clear, shortly thereafter.
• Check that the organization is qualified. Only donations to qualified organizations are tax-deductible. IRS Publication 78, available online and at many public libraries, lists most organizations that are qualified to receive deductible contributions. The searchable online version can be found at IRS.gov under Search for Charities. In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even if they are not listed in Publication 78.
• For individuals, only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions. This deduction is not available to individuals who choose the standard deduction, including anyone who files a short form (Form 1040A or 1040EZ). A taxpayer will have a tax savings only if the total itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceed the standard deduction. Use the 2009 Form 1040 Schedule A to determine whether itemizing is better than claiming the standard deduction.
• For all donations of property, including clothing and household items, get from the charity, if possible, a receipt that includes the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property. If a donation is left at a charity’s unattended drop site, keep a written record of the donation that includes this information, as well as the fair market value of the property at the time of the donation and the method used to determine that value. Additional rules apply for a contribution of $250 or more.
• The deduction for a motor vehicle, boat or airplane donated to charity is usually limited to the gross proceeds from its sale. This rule applies if the claimed value is more than $500. Form 1098-C, or a similar statement, must be provided to the donor by the organization and attached to the donor’s tax return.
• If the amount of a taxpayer’s deduction for all noncash contributions is over $500, a properly-completed Form 8283 must be submitted with the tax return.

For additional information on charitable giving:

• Charities & Non-Profits
• Publication 526, Charitable Contributions.
• On-line mini-course, Can I Deduct My Charitable Contributions?

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In October, President Obama called for a finance summit to bring bankers and small businesses to the table and help get credit flowing to small businesses again. The forum took place on November 18.

As the U.S. economy emerges from the crevasse that most nations have slipped into during the past few years, two things are very clear: small businesses and financing have both fallen on hard times and both will be instrumental in the economy’s march forward.
The Small Business Administration
and the Office of Advocacy are both tuned into these related issues: the SBA as an important source of loan guarantees, and the Office of Advocacy as a key source of research and analysis on small business lending.
Jump-starting small business borrowing and commercial lending was the focus of a forum sponsored by the SBA and the U.S. Department of the Treasury in November. President Obama called for this summit during meetings with small business owners in October, as part of the effort to get credit flowing to them again. Small business owners from many regions of the country were in attendance and were able to discuss the current environment and the credit challenges they face. Small and large lenders, industry associations, and community development financial institutions also took part. Representing the Office of Advocacy were Acting Chief Counsel Susan Walthall and Economist Brian Headd.
Treasury Secretary Timothy Geithner discussed the government’s
policies that have stabilized the financial system, and he urged banks to lend to qualified businesses. SBA Administrator Karen Mills stressed that SBA financing has filled some of the gap during thiscredit crunch for small businesses. SBA has become a bigger and more important supplier of credit in the small business market, particularly with its new targeted programs reducing loan fees and increasing loan guarantees. And Treasury’s Coalition of Community Development
Financial Institutions has helped businesses in overlooked rural and urban markets, even before the economic downturn. Small business owners discussed financing issues in recent times. Their myriad of financing adventures illustrated a couple of things: financial self-reliance is back in vogue as banks have all but shuttered their lending windows; and relationship lending, while valuable, is not a panacea, as even banks worry about their bottom lines. Additionally, policymakers and analysts were reminded that behind the dismal aggregate statistics circulating in Washington are actual business owners, employees, and communities. Bankers defended their restrictive lending practices: while they try not to let their customers fail, especially with years of a relationship at stake, they are businesses too, and are required to make financially prudent decisions.
Small business owners and representatives from the lending community
urged Congress to continue funding to extend SBA’s 90 percent guarantee and the reduction of fees on SBA 7(a) and 504 loans. They all agreed that this will be a crucial step in the continued recovery of small businesses.
Congress was well represented, with Senate Small Business Committee
Chair Mary Landrieu and House Small Business Committee Chair Nydia Velazquez in attendance, along with Senators Sherrod Brown (Ohio) and Mark Warner (Virginia). They added to the discussion, and stressed related problems such as lending in manufacturing sectors and distressed areas. In fact, Senator Warner mentioned that while healthcare dominates the news, increasing financing and jobs should be our current focus. While mentioning that small business financing problems are not behind us, he detailed a government proposal to increase small business lending. Agriculture Secretary Thomas Vilsack also attended, and he discussed his agency’s prominent role as a lender to small agriculture businesses.
Measures to help alleviate the credit crunch were offered: additional
expansion and streamlining of SBA programs; letting small businesses tap into the Troubled Asset Relief Program (TARP); reducing the stigma that has accompanied banks’ use of TARP funds; and spreading government financing
assistance more broadly. (That is, instead of just increasing financing
assistance, increase support for businesses in distressed areas and increase counseling for small businesses.) But the overwhelming sentiment of the conference was that the bruising that small business balance sheets have taken is now healing, and banks need to recognize this. Secretary Geithner had a pointed comment to banks with regard to solutions. He stressed that banks should not wait for government help, but should do what they can to regain the trust of the public.
An analogy that several speakers returned to was the time-worn picture of getting the elementary girls in one corner and boys in the other corner together to dance, or getting good bank and small business matches for lending. One could not help but feel that the two groups were at least meeting on the dance floor for a handshake, as small businesses and banks got a better understanding of each others’ positions. For the sake of the unemployed and our economy overall, let’s hope the dancing begins soon.

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Environmental

Advocacy has not identified any current rulemakings under this subject heading. Please contact Advocacy if there is a proposed rule open for comment of importance to small businesses.

Finance

Proposed Regulation Z: Docket No. R-1366
On August 26, 2009 the Board of Governors of the Federal Reserve System (FRS) issued a proposed rule to amend Regulation Z, which implements the Truth in Lending Act (TILA) and staff commentary as part of a comprehensive review of TILA’s closed-end credit. This proposal would revise the rules for disclosure of closed-end credit secured by real property or a consumer’s dwelling, except for rules regarding rescission and reverse mortgages. The proposal would require transaction specific disclosures at least three business days before consummation. Comments are due December 24, 2009.

Proposed Regulation Z: Docket No. R-1367
On August 26, 2009 the Board of Governors of the Federal Reserve System issued a proposed rule to amend Regulation Z, which implements the Truth in Lending Act (TILA) and staff commentary as part of a comprehensive review of TILA’s rules of open-end home secured credit or home-equity lines of credit.(HELOCS) This proposal changes the format, timing, and content requirements of four HELOC disclosures required by Regulation Z: disclosures at application, disclosures at account opening, periodic statements, and change in terms notices. Comments are due December 24, 2009.

Procurement

Small Business Size Regulations; 8(a) Business Development/Small Disadvantaged Business Status Determinations
On October 28, 2009, the United States Small Business Administration published a proposal to make changes to the regulations governing the 8(a) Business Development (8(a) BD) and Small Disadvantaged Business (SDB) programs, and to the U.S. Small Business Administration’s (SBA or Agency) size regulations.
There are six proposed changes to SBA’s size regulations, two dealing with mentor/protege´ situations, one amending requirements for joint ventures, one clarifying how a procurement should be classified, one further explaining the nonmanufacturer rule, and one relating to who may request a formal size determination. The remaining proposed changes are to the regulations governing SBA’s 8(a) BD and SDB programs. Comments are due no later than December 28, 2009.

Advocacy has not identified any current rulemakings under this subject heading. Please contact Advocacy if there is a proposed rule open for comment of importance to small businesses.

Safety, Health & Labor

Advocacy has not identified any current rulemakings under this subject heading. Please contact Advocacy if there is a proposed rule open for comment of importance to small businesses.

Tax

Advocacy has not identified any current rulemakings under this subject heading. Please contact Advocacy if there is a proposed rule open for comment of importance to small businesses.

Telecommunications

Advocacy has not identified any current rulemakings under this subject heading. Please contact Advocacy if there is a proposed rule open for comment of importance to small businesses.

Transportation

Advocacy has not identified any current rulemakings under this subject heading. Please contact Advocacy if there is a proposed rule open for comment of importance to small businesses.

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