Monthly Archives:' December 2015

Protecting Americans from Tax Hikes Act

Just before recessing for the holidays, the House and Senate passed the “Protecting Americans from Tax Hikes Act of 2015” (PATH Act.) On December 18th President Obama signed the PATH Act ” into law; which as a result allows over 50 expired tax provisions to be retroactively extended for the 2015 tax year. Unlike prior years, this year’s extender bill makes permanent over 20 of the expired tax provisions, including: the increased Section 179 fixed asset expensing limit, 100% gain exclusion for Qualified Small Business Stock, reduced recognition period for S-corp built in gains tax and others. In addition, many extenders have been enhanced.

Prior to approval of the Act, the Code Sec. 179 expensing dollar limit was $25,000 with an investment limit of $200,000. The Act permanently raises the dollar limit to $500,000 with an investment limit of $2,000,000 with both limits indexed to inflation starting in 2016.  The Act extended the 50 percent bonus depreciation for the 2015-2017 tax years with a gradual reduction through 2019.  Bonus depreciation allows taxpayers to claim an extra first-year depreciation deduction for new property placed in service during 2015-2019.

Several other important business tax provisions were either temporarily or permanently extended:

  • 100% gain exclusion for Qualified Small Business Stock
  • Reduced recognition period for S-corp built in gains tax- permanently a five year recognition period
  • Availability of 15 year straight line cost recovery for qualified leasehold improvements
  • Employer wage credits for employees who are active duty members of the armed forces
  • Work opportunity tax credit extended for five years
  • Energy Efficient Commercial Building deduction extended through 2016

The Act and the Omnibus budget bill passed the same day made several changes to the Affordable Care Act (Obamacare).  The excise tax on the so called “Cadillac” health insurance plans was delayed for two years.  Also, there is a one year moratorium on the health insurance provider fee which imposed a fee on entities providing health insurance.

The PATH Act proves to be extremely beneficial for businesses and individuals for the 2015 tax year and beyond, and is an estimated cost of over 800 billion dollars.

This article only highlights some of the many provisions in the 233 page Act.

Open Carry and Texas Banks

As appeared in Banker’s Digest on December 14, 2015

By: Karen Neeley

Probably no state embraces the second amendment as strongly as Texas.  However, private right to carry handguns—either concealed or openly—was limited until fairly recently.  The following briefly describes the history of this issue in Texas and describes some implications for financial institutions.

Concealed Handgun Licensing Created.  In 1995, the Texas Legislature enacted SB 60, which created the original concealed handgun scheme.  Almost immediately, Attorney General Dan Morales issued DM-363 which provided that private business owners could exclude persons from carrying concealed handguns onto their property.  But in order to enforce such prohibition through the criminal trespass laws, the AG opinion suggested that the property owner should give notice that carrying a concealed weapon was prohibited.  The best way to do that would be with written notice.

Criminal Trespass.  In 1997, the Texas Legislature responded by enacting HB 2909, which added Section 30.06 to the Penal Code.  Very explicit language and signage were required before criminal trespass could be asserted against someone carrying a concealed handgun on to private premises.  That written notice can be through a card or other document as well as a sign.  Oral communication is also permitted, but there is some concern that a mere oral communication may be hard to prove.

Open Carry.  In this last session, open carry was authorized for concealed handgun license (CHL) permit holders.  A new criminal trespass section was added as Section 30.07 of the Penal Code, and 30.06 was amended.  Both sections permit the owner (or someone with authority to act for the owner) to either give oral or written notice, prohibiting handguns on the premises. Written communication can include a card or other document or a sign with the language specified in each section.  The signs have to meet the formatting requirements (1” block letters, contrasting colors), be in both English and Spanish, and contain the specific language—which is different for each.

To comply, the card or sign must contain language that is “identical to the following:…”  For concealed carry, the language is: PURSUANT TO SECTION 30.06, PENAL CODE (TRESPASS BY LICENSE HOLDER WITH A CONCEALED HANDGUN), A PERSON LICENSED UNDER SUBCHAPTER H, CHAPTER 411, GOVERNMENT CODE (HANDGUN LICENSING LAW), MAY NOT ENTER THIS PROPERTY WITH A CONCEALED HANDGUN.  For open carry, the language is: PURSUANT TO SECTION 30.07, PENAL CODE (TRESPASS BY LICENSE HOLDER WITH AN OPENLY CARRIED HANDGUN), A PERSON LICENSED UNDER SUBCHAPTER H, CHAPTER 411, GOVERNMENT CODE (HANDGUN LICENSING LAW), MAY NOT ENTER THIS PROPERTY WITH A HANDGUN THAT IS CARRIED OPENLY.  The concealed handgun sign only needs to be displayed in a conspicuous manner, clearly visible to the public while the open carry notice must be at each entrance to the property.

Practical Implications:  here are possible options.

**Do nothing.  In communities where the Second Amendment reigns supreme, this may be the best solution.  To do anything could actually precipitate problems with the public or even with the board.

**Prohibit both concealed and open carry of handguns.  If the bank wants to be able to enforce this with a criminal trespass complaint, it will need to do one of the following:

*Post the statutory signs (both of them).  Follow the requirements identified above.

*Post a generic sign (international prohibition sign of circle with line across a gun).  Then hand out a card with the statutory language to a person who enters the premises with a visible handgun.

**Prohibit either concealed carry or open carry.  Follow the procedure described above, using either the statutory sign or the card process.

Finally, remember that all of this applies to handguns—not rifles or shotguns.  Second amendment advocates (including prior Land Commissioner Jerry Patterson) note that open carry of long guns is not proscribed by law.  If this is a concern, then also post the universal prohibition sign with a line through a rifle.

The changes to the Texas Labor Code were technical and did not alter the ability of an employer to adopt a personnel policy prohibiting handguns on the premises (but okay in the employee’s vehicle in the parking lot).

Finally, there is nothing in all of this to prevent a bank from having different requirements at different branches.  Thus, a bank might permit carry at its rural branches where hunting is a way of life but prohibit it in urban areas.

The changes described above all take effect January 1, 2016.  So, there is still a little time, for a bank board to cuss and discuss this issue and come up with its game plan!

Riders Pass for Regulatory Relief

Congress passed and President Obama signed into law the Fixing America’s Surface Transportation (FAST) Act. Conceived as transportation legislation, the legislation became hotly debated after several provision targeted the financial industry services. After advocacy by the financial industry and community banks a compromise was reached which included community bank regulatory relief. In the legislation, three bills were included in an amendment to the funding bill.

H.R. 601, the Eliminate Privacy Notice Confusion Act: This legislation will reduce confusion among consumers by clarifying that they will receive privacy notices after opening a new account (only) when their financial institution’s privacy policies change rather than on an annual basis.

H.R. 1553, the Small Bank Exam Cycle Reform Act of 2015: This legislation  allows  banks with assets up to $1 billion to use an 18‐month exam cycle. A longer exam cycle is believed to reduce distractions and allow bank management to focus on serving their customers and communities.

H.R. 1334, the Holding Company Registration Threshold Equalization Act of 2015: This legislation increases the shareholder registration and deregistration thresholds contained in the JOBS Act (passed a few years ago) to savings and loan holding companies. A thrift holding company will not be required to register with the SEC until it exceeds 2,000 shareholders. A thrift holding company that drops below 1,200 shareholders will be allowed to deregister.

The highway and transportation funding legislation also exempts community banks $10 billion and under from cuts to Federal Reserve Bank stock dividends which will save approximately $200 million per year (ICBA estimate). In addition to the exemption, the law also contains ICBA advocated measures which will: restore funds cut from the federal crop insurance program; drop language that would have extended higher Fannie Mae and Freddie Mac guarantee fees; remove language that a bank must operate “predominantly” in rural or underserved areas to qualify for a QM mortgage underwriting exemption; and establish a process for appealing the CFPB’s rural area designation.

Read More on the advocacy of the bill by ICBA