By Jay Heflin - 07/02/10 05:48 PM EDT
The legislation defers the tax small businesses incur from being reimbursed by BP as long as the proceeds are reinvested in a trade or business located in the oil spill recovery zone. It also affords companies an IRS refund on taxes paid for past profits by extending the net operating loss carryback period to five years for losses related to the spill. People affected by the oil would also be able to make penalty-free withdraws from retirement accounts to better handle their hardships.
"Small businesses in Louisiana and the rest of the Gulf Coast have faced unprecedented obstacles over the last five years," Landrieu said in prepared remarks. "Make no mistake of it, BP will be on the hook for all losses and damages caused by this disaster, but, in the meantime, thousands of small businesses are struggling to keep their doors open and workers are being let go by no fault of their own. Right now, Congress must do everything within its power to make sure that not a single Gulf Coast business is bankrupted by this oil spill."
To stimulate economic growth, the bill extends the Work Opportunity Tax Credit to employers hiring new workers in the affected area, and allows these owners to expense investments in certain equipment. It also provides a Gulf Coast hotel/car rental tax holiday to help attract out-of-state visitors and seeks a special two-year allocation for New Markets Tax Credits, which provide incentives to invest in distressed areas of the country, to be applied to the oil spill recovery zone.
Landrieu's bill is co-sponsored by members whose states have been affected by the disaster: Sens. Bill Nelson (D-Fla.), Roger Wicker (R-Miss.), George LeMieux (R-Fla.) and David Vitter (R-La.). They sent a letter today urging Senate Finance Chairman Max Baucus (D-Mont.) and ranking member Chuck Grassley (R-Iowa) to move on their legislation.
"[We] believe that federal tax policy can and should play a role in the region's economic recovery," they wrote, adding, "we ask you to support and include the [measures] in upcoming tax legislation."
After the July 4 recess, the Senate is expected to return its attention to legislation providing tax relief and loan assistance to small businesses. Landrieu and Baucus are the chief sponsors for that bill, which is likely the most expedient vehicle for getting these measures enacted.