H.R. 3590: Service Members Home Ownership Tax Act of 2009

H.R. 3590

Service Members Home Ownership Tax Act of 2009

Sponsor
Rep. Charles B. Rangel

Date
October 7, 2009 (111th Congress, 1st Session)

Staff Contact
Communications

Floor Situation

H.R. 3590 is being considered under suspension of the rules, requiring a two-thirds vote for passage. The legislation was introduced by Rep. Charles Rangel (D-NY) on September 17, 2009.

Bill Summary

H.R. 3590 would modify the first-time homebuyers' tax credit for Armed Forces members, as well as Foreign Service and Intelligence Community employees on extended duty. The bill would waive recapture of the credit for qualifying individuals who must sell a residence after December 31, 2008, due to government orders for extended duty.

H.R. 3590 also extends the tax credit for taxpayers who serve on duty outside of the U.S. for at least 90 days in 2009, and who purchase homes before December 1, 2010. Qualifying taxpayers would also be permitted to treat a purchase made between December 31, 2009, and July 1, 2010, as a purchase made in a prior year for tax purposes. The extension would apply to residences purchased after November 30, 2009.

To offset the cost of the legislation, the bill increases the penalties for failure to file a partnership or S-corporation return from $89 to $110, beginning in taxable years following December 31, 2009. H.R. 3590 also increases by half percentage point-to 100.75 percent-the amount of any required installment of corporate estimated tax which is otherwise due in July, August, or September 2014.

 

Background

This legislation seeks to address inadvertent tax inequities imposed on uniformed service members and other federal employees deployed abroad as a result of other recent home-related tax legislation. Under current law, a tax credit of up to $8,000 is available for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009, and before December 1, 2009. The IRS defines a first-time home buyer as someone who has not owned a principal residence during the three-year period prior to the purchase. Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit. This tax credit was authorized by the American Recovery and Reinvestment Act of 2009, the "stimulus" bill.

One of the bill's offsets is an increase in the amount of required corporate estimate taxes due in 2014 for companies with more than $1 billion in assets. In recent years, Congress has often shifted the timing of corporate estimated tax payments from the beginning of one fiscal year to the end of the prior year to increase revenue during the first part of CBO's budget window. In this case, the bill increases revenues that will be collected in the first five years of the current budget window and offsets reduced tax receipts from those same companies in the sixth year. While not changing the total revenue impact of the bill over ten years, the timing shift helps meet the PAYGO requirement of revenue neutrality. Thus, the bill would satisfy both the five year and ten-year tests for the Democrats' PAYGO rules. Earlier this year, Congress passed H.J. Res. 56, which, among other things, shifted corporate tax rates for certain companies at the end of 2014 to 100.25 percent of the otherwise required amount. H.R. 3590 would increases that amount by 0.5 percent, to 100.75 percent. Companies with assets more than $1 billion would be subject to the increase in July, August, and September of 2014, and would receive an offsetting tax reduction in 2015.

 

Cost

The Congressional Budget Office (CBO) has not yet produced a cost estimate for H.R. 3590.