Week of 8-9-24

Congressional Overview
Congress is in recess until Sept. 9. Prior to the recess, the House failed to pass 12 full-year funding bills. That means lawmakers will have less than one month when they return to reach a funding solution before the next fiscal year begins on Oct. 1.

FCA International Supports Tax Relief for American Families and Workers Act
Earlier this year, the House passed H.R. 7024, the “Tax Relief for American Families and Workers Act,” by a vote of 357-70, with 47 Republicans and 23 Democrats voting against it. The House passed the package with wide bipartisan support after months-long negotiations between House Ways and Means Chairman Jason Smith (R-MO) and Senate Finance Chairman Ron Wyden (D-OR). FCA International supported this legislation.

The Senate had a 48-44 vote on Aug. 1, which did not garner the 60 votes needed to start debate on the legislation. If passed, it would revive a trio of business tax breaks, including deductions for research and development expenses, and expand the child tax credit to make it more generous to low-income families. More specifically, the following provisions support small business activities related to research and development, interest, and capital expensing.

• Research & Development: The research and development tax credit allows businesses to deduct the cost of certain research and experimental expenses, such as researcher pay and facility costs. The 2017 Tax Cuts and Jobs Act required companies, beginning in tax year 2022, to deduct domestic R&D expenses over five years, or over 15 years for research conducted outside of the US, rather than in the year incurred.

  The measure would reverse the change and allow businesses to immediately deduct the cost of their domestic research or experimental expenses in the year paid or incurred for tax years 2022 through 2025. The requirements for foreign R&D expenses wouldn’t be modified. Deductions would be allowed for software development expenses and would be prohibited for property acquisitions or oil and gas exploration.

• Business Interest Expenses: Prior to the 2017 tax law, businesses were allowed to deduct interest paid or accrued on a valid debt in a tax year. The overhaul limited the deduction to be 30% of a taxpayer’s “adjusted taxable income” (ATI), with some exceptions. The measure would allow businesses to calculate their ATI without including deductions for depreciation, amortization, and depletion for tax years 2022 through 2025.
• Bonus Depreciation: Bonus depreciation previously allowed businesses to immediately deduct some of the costs of qualifying depreciable property, such as equipment, specialized tools, heavy machinery, etc. The 2017 tax law modified the 100% bonus depreciation rate to decrease by 20 percentage points annually beginning in 2023 until it phases out after 2026. The measure would restore the 100% bonus depreciation for certain property placed in service in 2023 through 2025, for property with a longer production period placed in service in 2023 through 2026.
• Payments Reporting: Under current law, businesses are required to report information on tax forms for payments of at least $600 executed by an independent contractor. The measure would generally increase the reporting threshold on 1099-NEC and 1099-MISC forms for such payments to at least $1,000 beginning in calendar year 2024. The reporting threshold would be adjusted for inflation beginning in 2025.

Senate Passes the Water Resources Development Act (WRDA)
Last week, the Senate passed the Thomas R. Carper Water Resources Development Act of 2024 (S. 4367) by unanimous consent. The legislation authorizes new levee, harbor, and ecosystem restoration projects and set policy at the Army Corps of Engineers. The bill, named for the retiring committee chairman, approves 13 new or modified Corps projects and includes provisions to boost tribal authority over water resource projects and allows Western dams to store more water. On July 22nd, the House voted 359-13 to pass its version of WRDA (H.R. 8812). The Senate and House will now move to conference committee to resolve differences between the two bills.

FCA International unsuccessfully attempted to include H.R. 1740 in WRDA, which would ensure proper financial protections are in place for public-private- partnership (P3) water infrastructure projects receiving Water Infrastructure Finance and Innovation Act (WIFIA) assistance. This bill would have ensured essential payment and performance security protections continue to exist for all forms of financing where federal funds are being used.

FY 25 Appropriations Update
It’s August, and we find ourselves in the same place as in past years, slowly rolling towards another continuing resolution (CR). This puts departments and agencies in slow-down mode, awaiting final actions on their funding for the coming fiscal year. When Congress returns in September there will only be 13 days when the House and Senate are both in session before they recess until after the November election.

A CR will need to be passed to keep the government funded until final negotiations can take place. A fight over the end date is expected, and one would assume that mid-December would be the logical choice. However, this is an election year, and some may want to push out that end date until March of 2025. The CR will probably also contain some supplemental funding for disaster relief.

U.S. Jobs Update
The U.S. added 114,000 jobs in July and the unemployment rate rose to 4.3 percent, per data released by the Labor Department. Economists expected the U.S. to add 175,000 jobs and keep the jobless rate steady at 4.1 percent, per consensus estimates. The Federal Reserve is leaving interest rates unchanged. The federal funds rate is in a range of 5.25% to 5.5%.  The Fed’s announcement, which was widely expected by investors, means the federal funds rate has been parked at that level since July 2023, when the central bank last raised rates.

Week of 6-7-24

Congressional Overview

Congress returned to Washington, D.C. this week. The Senate considered nomination votes and voted on the Right to Contraception Act. The House heard from retired former director of the National Institute of Allergy and Infectious Diseases, Dr. Anthony Fauci, on the U.S. response to the COVID-19 pandemic. Finally, both chambers are working on their FY25 appropriations bills this month.
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Delaying the Overtime Rule
The Partnership to Protect Workplace Opportunity (PPWO) is requesting that the Wage and Hour Division (WHD) stay the effective date of its overtime final rule published in the Federal Register on April 26, 2024, (89 FR 32842) to allow for judicial review, as the rule is currently being challenged in two federal courts. Rep. Tim Walberg (R-MI) and Sen. Mike Braun (R-IN) also introduced a Congressional Review Act (CRA) challenge this week that would nullify the overtime rule.

The U.S. Court of Appeals for the Fifth Circuit is considering the Department of Labor’s (DOL) statutory authority to implement a minimum salary threshold related to the overtime pay requirements under the Fair Labor Standards Act. Additionally, a lawsuit filed on May 22, 2024, before the U.S. District Court for the Eastern District of Texas is challenging the legality of the substantial increase to the minimum salary threshold included in the final rule as well as the rule’s triennial automatic updates to the threshold.
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House Considers FY 25 NDAA
The FY 25 National Defense Authorization Act (NDAA) advanced out of the Armed Services Committee on May 22 by a 57-1 vote. It is now being considered by the House at large, with members filing more than 1,000 proposed amendments. It would authorize $895 billion in spending in accordance with statutory budget caps set by Congress last year.

Filed amendments would shore up support for Israel; bar the use of authorized funds to build, maintain or repair the pier being used to deliver humanitarian aid to Gaza; and would prohibit TRICARE from covering gender-affirming care. The NDAA authorizes funding for the Department of Defense (DoD) and often serves as a legislative vehicle for the procurement of military construction.
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Sen. Manchin Files as an Independent
West Virginia Sen. Joe Manchin announced last Friday he has officially left the Democratic Party and filed as an independent. Manchin, a lifelong Democrat who previously served two terms as governor, said that since his election to the Senate in 2010, he has “seen both the Democrat and Republican parties leave West Virginia and our country behind for partisan extremism while jeopardizing our democracy.” He will continue to caucus with the Democrats while he serves out his Senate term.

Older Reports

FULL REPORT FOR 1-8-24

FULL REPORT FOR 1-29-24

FULL RPEORT FOR 2-9-24

FULL Report for 3-8-24

FULL REPORT FOR 3-22-24

FULL REPORT FOR 4-22-24

Recently approved requirements that may apply to you and your business

IDOL Equal Pay Certificate

 Per HB 4604 (P.A. 102-0705) of the 102^nd General Assembly, private businesses with 100 or more employees are required to submit an application to obtain an Equal Pay Registration Certificate by providing certain pay, demographic and other data to the IL Department of Labor by March 24, 2024 and recertify every two years after the first submission.  The law also requires such employers to submit certain information with their application, including: a statement certifying that the business is in compliance with the Equal Pay Act of 2003 and other State and Federal laws related to equal pay.  For the purposes of this requirement, “business” is defined as “any private employer who has 100 or more employees in the State of Illinois and is required to file an Annual Employer Information Report EEO-1 with the Equal Employment Opportunity Commission, but does not include the State of Illinois or any political subdivision, municipal corporation, or other governmental unit or agency.  Please visit IDOL’s Equal Pay Registration Certificate page to access the online portal that businesses must use to submit their contact information and required data to IDOL, a training guide for use of the portal, a compliance statement template, and other certification information and resources.  In addition, you are encouraged to review the Frequently Asked Questions section of the IDOL webpage.

Paid Leave for All Workers Act

On January 10, 2023, the Illinois General Assembly approved SB 208 (P.A. 102-1143), the “Paid Leave for All Workers Act”.  This new law requires private employers to provide earned paid leave to employees to be used for any reason.  The Paid Leave for All Workers Act takes effect on January 1, 2024 and sets forth a minimum of 40 hours (or 5 days) paid leave for all employees (regardless of size of employer).

The new law includes an exemption for signatory employers of collective bargaining agreements in the construction industry and states the following: “In no event shall this Act apply to any employee working in the construction industry who is covered by a bona fide collective bargaining agreement…”.  In addition, the Act includes a very specific definition of “construction industry”: “Construction industry” means any constructing, altering, reconstructing, repairing, rehabilitating, refinishing, refurbishing, remodeling, remediating, renovating, custom fabricating, maintenance, landscaping, improving, wrecking, painting, decorating, demolishing, or adding to or subtracting from any building, structure, highway, roadway, street, bridge, alley, sewer, ditch, sewage disposal plant, waterworks, parking facility, railroad, excavation or other structure, project, development, real property, or improvement, or to do any part thereof, whether or not the performance of the work herein described involves the addition to or fabrication into, any structure, project, development, real property, or improvement herein described of any material or article of merchandise.  “Construction industry” also includes moving construction related materials on the job site or to or from the job site, snow plowing, snow removal, and refuse collection.

However, while the law exempts signatory contractors in the construction industry from these new requirements, the new law will apply to a contractor’s administrative and other support staff who are not covered by a collective bargaining agreement.  Please visit IDOL’s Paid Leave for All Workers Act page to access more information on this new law.  The webpage also includes a Frequently Asked Questions section.

Annual Sexual Harassment Prevention Training

Public Act 101-0221, Illinois employers are required to train employees on sexual harassment prevention on an annual basis.  The training must be completed by December 31, 2023.  This requirement applies to all employers with employees working in this State.  Please visit the IL Department of Human Rights Sexual Harassment Prevention Training Program page to access more information, including Frequently Asked Questions.

Older Documents

End of Session Report May 23