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Summary of Federal Law
Changes — September 2002
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New tax package.
President Bush is considering putting together a package of tax cuts for small investors garnered from ideas raised at the economic forum. Bush is considering cutting taxes on dividends, cutting capital gains taxes, speeding up increases in the amount people can contribute to their Code Sec. 401(k) retirement accounts and increasing the amount of stock market losses that individuals can deduct in one year.
Capitol Hill reaction. House Republicans seem willing, but the Democrats are underwhelmed. Another round of tax relief is possible this fall, said Pete Jeffries, spokesman for Speaker of the House Dennis Hastert. “Whatever it takes to keep the economy alive and kicking is welcomed,” said Jeffries on August 19. The House Committee on Ways and Means is exploring different options and is working with congressional leaders on the issue, he said. A Republican House staffer who asked to remain anonymous told CCH that tax breaks to offset stock market losses and capital gains tax cuts are under discussion.
Democrats will not rule out any proposals but want Republicans and the Administration to hold a bipartisan meeting that considers Democratic economic alternatives, said Dan Maffei, spokesman for the House Committee on Ways and Means. For example, he indicated that Ways and Means ranking member Rep. Charles Rangel, D-NY recently introduced the Unemployment Extension Act of 2002 (HR 5089) that would extend unemployment benefits for six months, and Democrats want to discuss minimum wage issues.
SIFL rates. The Department of Transportation has released the applicable terminal charge and standard industry fare level (SIFL) mileage rates for the period July 1, 2002 through December 31, 2002. These rates will be used by the IRS to determine the value of noncommercial flights on employer-provided aircraft. The terminal charge is $38.02. The SIFL rates are $.2080 per mile for the first 500 miles; $.1586 per mile for 501 miles through 1,500 miles, and $.1524 per mile for miles over 1,500.
HIPAA privacy regulations. The Department of Health and Human Services has issued a comprehensive federal regulation that gives patients sweeping protections over the privacy of their medical records. The final regulation takes effect April 14, 2003.
The federal privacy regulation empowers patients by guaranteeing them access to their medical records, giving them more control over how their protected health information is used and disclosed, and providing a clear avenue of recourse if their medical privacy is compromised. The rule will protect medical records and other personal health information maintained by certain health care providers, hospitals, health plans, health insurers and health care clearinghouses.
To help people prepare for and meet the rule’s requirements, HHS’ Office for Civil Rights will continue to conduct outreach and education targeted to health plans, health care providers, consumers and others affected by the privacy regulation. These efforts include developing appropriate technical assistance materials as well as responding to frequently asked questions. HHS also will hold national educational conferences in the fall to address issues related to key parts of the privacy regulation. Technical assistance materials will be posted on
OCR’s privacy rule website.
Health care tax credit. The Andean Trade Preference Bill (HR 3009), signed by President Bush on August 6, includes a health care tax credit provision for displaced workers. On July 27, the House narrowly approved the bill. The Senate approved the bill on August 1.
The health care provisions of the proposal give displaced workers a 65 percent advanceable, refundable tax credit to help defray the cost of health insurance under the Consolidated Omnibus Budget Reconciliation Act or for the purchase of certain state-based group coverage options. It can also be used for individual insurance in instances where workers had purchased such a policy in the one month before job loss. The measure also extends eligibility to workers indirectly displaced by trade agreements, including farmers and fishermen. In addition, it extends eligibility to uninsured retirees between the ages of 55 and 64 who receive benefits from the Pension Benefit Guaranty Corporation.
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EEOC small business
handbook. “The Americans with Disabilities Act: A Primer for Small Business” is a practical, reader-friendly handbook outlining the employment provisions of the Americans with Disabilities Act of 1990 as they relate to both employees and job applicants. This publication is available on
the Commission’s website.
New bills. New bills were introduced over the month that would:
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Amend Title XVIII of the Social Security Act to require home health agencies participating in the Medicare Program to conduct criminal background checks for all applicants for employment as patient care providers (Health Workers Background Check Requirement, H 5170); and
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Improve the national instant criminal background check system (Our Lady of Peace Act, S 2826).
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Traveling sales crews. Shortly before breaking for its August recess, the Senate approved a bill designed to protect young people working in the traveling sales industry. The bill, the Traveling Sales Crew Protection Act (S 2549), would prohibit children under the age of 18 from selling goods door-to-door as part of traveling sales crews that take employees away from their homes for more than 24 hours.
The bill's sponsor, Sen. Herb Kohl, D-WI, said the bill is needed because the approximately 30,000 people working in traveling sales crews do not receive basic protections under state and federal labor laws. Kohl said the workers often are subjected to verbal and physical abuse. A 1999 van accident that killed seven young people in Wisconsin who were selling magazines door-to-door prompted him to introduce the legislation.
New bills. New bills were introduced over the month that would:
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Authorize appropriations for the Merit Systems Protection Board and the Office of Special Counsel, to provide for the protection of certain disclosures of information by federal employees (S 2829); and
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Provide benefits to domestic partners of federal employees (S 2874).
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Substitute Forms W-2 and W-3. The IRS has updated the requirements for paper substitutes for Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements. Redundancies were eliminated as much as possible and they are in an easier-to-read format. To receive approval of your laser-printed forms,
E-Mail the SSA to obtain a template and further instructions in .pdf or Excel format.
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Pension reform. President Bush, speaking at his economic forum on August 13, 2002, urged the Senate to pass his pension reform proposal. He also reiterated his view that the tax cuts passed in 2001 be made permanent.
Diversification, investment advice provisions. The President noted that "more and more Americans are building their balance sheets through pension plans." To make sure that those who own their pensions are fully protected, he urged passage of his pension reform proposal.
"I proposed a law, the House passed it – the Senate needs to
act – which says the following things. One, people should not be forced to hold a large portion of their accounts in a company’s stock. If you’re working for a company and you own that stock, you should be able to diversify after a three-year period of time. Secondly, you ought to get sound investment advice every quarter, not every year. Thirdly, as we pass a corporate responsibility bill, if the CEO is able to unload the stock, so should the employee. What’s good for the boss is good for the people working for the boss. And we need to make sure that all investment advice is sound investment advice. And these workers have got their money and their future tied up in these pension plans ought to get the best advice possible."
Permanent tax cuts. The President also called on Congress to make permanent the tax cuts enacted under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). In addition to rate reductions, EGTRRA substantially increased qualified plan and IRA contribution and deduction limits. "The tax relief was incredibly important and it’s going to be important as time goes on, because it’s phased in," the President said. "[W] hat Congress needs to do is to join us in the call to make these tax relief permanent."
Corporate accountability, pension changes. President Bush on July 30, 2002, signed the Sarbanes-Oxley Act (HR 3763), legislation that would make wide-ranging corporate and accounting reforms. The measure has been designated as Public Law 107-204. Contained in the Act are provisions that would increase criminal penalties under ERISA and would bar insider selling during 401(k) plan blackout periods.
Blackout periods banned. The Act prohibits directors and public officers from engaging in transactions involving any equity security of the issuer during a blackout period when at least half of the issuer's 401(k) plan participants are not permitted to purchase, sell, or otherwise transfer their interests in that equity security. No blackout period may take effect until at least 30 days after written notice of the blackout is provided by the plan administrator to the participants or beneficiaries.
ERISA criminal penalties. The legislation substantially increases criminal penalties for pension fund violations under ERISA Sec. 501. These penalties are imposed for willful violations of the reporting and disclosure rules and coercive interference with protected rights under ERISA. Previously, a person convicted of such wrongdoing was subject to fines of not more than $5,000 or imprisonment of not more than one year. Under the Act, the fines increase substantially, to $100,000, and maximum jail time increases to 10 years. In the case of a violation by an entity other than an individual, the maximum fine increases to $500,000.
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