Other Legislative Issues of Concern to NACCTFO Members

Update on 3% Withholding Repeal: H.R. 275, S. 292
Efforts Continue to Repeal the 3 Percent Withholding Requirement Legislation has been introduced in both the House and Senate that would repeal the 3 percent withholding requirement on vendor payments for goods and services. The House bill (H.R. 275), sponsored by Rep. Kendrick Meek (D-Fla.), currently has 109 cosponsors, while the Senate bill (S. 292), has 11 cosponsors. A provision in the American Recovery and Reinvestment Act pushed back the effective date of the requirement to Jan. 1, 2012 overriding House-passed language supporting repeal. Earlier this year, NACo provided written and oral testimony to the Internal Revenue Service voicing opposition in response to its proposed regulations implementing the withholding requirement.
As seen in NACo's County News, September 7, 2009 edition (pg. 11).
Added October 2009.

NACCTFO is still urging support of this important initiative. Both bills were introduced again this January and are seeking co-sponsors. This issue is still a part of NACo's Top Legislative Priorities. Read more about the bills and their status from NACo. 
Added April 9, 2009

Proposed rule changes to SEC Rule 2a-7
NACCTFO signs on to comments submitted to the SEC by the national organizations regarding money market funds and muni bond credit ratings.  This issue was adopted in July as a part of NACo's 2009-2010 FIGA Resolutions (pg. 4).
Added September 2009

Municipal Securities Rulemaking Board Provides Educational Materials Regarding SEC Rule 15c2-12
Want to know about changes to SEC Rule 15c2-12 on municipal bond continuing disclosure and the new information repository where issuers will need to submit continuing disclosures beginning July 1, 2009?

"In December 2008, the SEC voted to simplify continuing disclosure filing requirements for municipal securities issuers. Beginning July 1, 2009, issuers or obligated parties will no longer need to file documents at multiple Nationally Recognized Municipal Securities Information Repositories (NRMSIRs) but instead will file at a single designated location. The SEC decision also will provide free public access to continuing disclosure documents filed by issuers."

The Municipal Securities Rulemaking Board has put together Fact Sheets and short presentation. Please view for more information.
Fact Sheet                                        Continuing Disclosure                       What Issuers, Obligors and Agents Need to Know
Added March 17, 2009

NACCTFO joins NACo in seeking assistance from Federal Reserve Chairman Ben Bernanke  
NACCTFO recently joined NACo and several other national organizations in requesting that Fed Chairman Ben Bernanke and the Federal Reserve find a mechanism that would allow for the ability to continue to purchase tax-exempt securities under the Federal Reserve Act and the newly created Commercial Paper Funding Facility (CPFF).

Some local governments are finding that it has become more difficult to access capital markets at commonly acceptable rates, especially in the short-term markets such as commercial paper and certain anticipation notes. Recent comments from the Federal Reserve indicate that the CPFF would not assist the tax-exempt, short- term market. Without the ability to access these markets, it is feared that local municipal governments will face increasing costs to handle short-term debt. These costs ultimately are shifted to our taxpayers. Read the entire letter.

NACo Adopts Resolution Urging Repeal of the Real ID Act
Issue: Real ID Act.

Adopted policy:  The National Association of Counties urges repeal of the Real ID Act of 2005.  It places an unfair burden on the motoring public, threatens privacy and leaves citizens vulnerable to identity theft.  The Act fails to accomplish its mission of improving security.  The National Association of Counties urges the federal government to ensure that Homeland Security should start at home by allowing driver's license renewal services to remain at home. 

Background: The United States Congress passed the Real ID Act as part of the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief Act (P.L. 109-13).  It creates national standards for the issuance of state driver licenses and identification cards.  If states do not meet these requirements by May 11, 2008, their driver licenses will no longer be accepted as valid identification by the federal government for airline travel and other purposes. 

The American Association of Motor Vehicle Administrators, National Governors Association and National Conference of State Legislatures have stated that Real ID will cost more than $11 billion over five years and have a major impact on services to the public.  In addition, since the Department of Homeland Security has not yet provided necessary regulations to states, it is clearly unrealistic to suppose that all airline travelers will have a Real ID by May 2008.  At a minimum the federal government will be required to relax this deadline.

Counties in several states share responsibility with the state for driver licensing.  However, the requirements of Real ID have prompted discussion in several states of eliminating or restricting over-the-counter issuance of driver licenses and closing branch offices and county offices.  In addition, the administrative burdens and costs of Real ID may be borne by counties. 

A wide variety of organizations have urged repeal of Real ID and the state legislature in Maine has adopted legislation that would refuse participation in Real ID.  Several additional states are considering doing so.  In addition, Senators Daniel Akaka (D-HI) and John Sununu (R-NH) have introduced legislation, the "Identification Security Enhancement Act of 2006", to address many of the problems with the legislation. Senator Akaka has indicated that he is not yet moving forward with this legislation as many challenges of the challenges facing states will be clarified upon issuance of guidelines by the Department of Homeland Security.

Fiscal/Urban/Rural Impact:  The Real ID Act is a significant unfunded mandate on states that may also be passed on to counties.

Adopted by the NACo Board of Directors, March 5, 2007

3% Withholding: NACCTFO Represented in Washington, DC
On April 19th, President Barbara Ford-Coates was invited to testify on behalf of NACCTFO and NACo on the proposal to expand the IRS offset program to include county tax debts, and weigh in on the 3% withholding tax issue (the proposed property tax reporting requirement and related ‘tax gap’ issues).  This testimony was given before the House Committee on Government Oversight and Reform, Subcommittee on Government Management, Organization and Procurement.  Also invited to testify were Oklahoma City Mayor Mick Cornett and Arlington County Deputy Treasurer for Litigation Patricia Weth.  Read NACo's Official Press Release and President Ford-Coates' Testimony.
 

Click on image to see a larger picture.

President Barbara Ford-Coates & Alysoun McLaughlin, NACo Associate Legislative Director & Liaison	Mayor Mick Cornett, President Barbara Ford-Coates & Deputy Treasurer for Litigation Patricia Weth seated before the Committee (L to R)

Repeal of 3% Withholding: H.R. 1023, S. 777
The most recent piece of federal legislation NACCTFO has taken a stance on is H.R. 1023 & S. 777 which supports the repeal of Section 511 of the Tax Increase Prevention and Reconciliation Act of 2005 (P.L. 109-222).  Section 511 will require federal, state and local governments to withhold 3% from payments for goods and services beginning in 2011.  In effect, this imposes a 3% federal sales tax on nearly every purchase made by a state and many counties and cities. 

Read the submission, co-sponsored by NACCTFO, to members of the Small Business Committee for the March 22, 2007 hearing on "The New Hidden Tax on Small Business" which addresses reasons for opposing Section 511.

Also, read the official statement, co-sponsored by NACCTFO and signed by President Barbara Ford-Coates, submitted to Senator Larry Craig, ID in support of S. 777 and the official statement to Representatives Kendrick Meek, FL & Wally Herger, CA in support of H.R. 1023 repealing Section 511.
 

More on Withholding, Legislation Affecting Your County: HR 6242 (as seen in Nov. 2006 Treasury Marks)
Does your county purchase anything from “plumbing services to paperclips”? If so, you will want to read an article written by Alysoun McLaughlin, NACo Associate Legislative Director & NACCTFO Liaison. The article discusses HR Bill 6242 which proposes the repeal of a tax bill signed in May which will require some counties “to withhold 3% of nearly every payment to a vendor or contractor and send it to the federal government”. 
To read Alysoun's article, click on Counties: Uncle Sam wants you to collect federal taxes.

Proposed property tax reporting requirement
Under current law, taxpayers can claim an itemized deduction for state and local real estate taxes.  However, these taxes are only deductible if they are based on the assessed value of the real property and charged uniformly against all property under the jurisdiction of the taxing authority; fees for services such as trash collection and user fees and assessments for streets, sidewalks, water mains, sewer lines and other improvements are not deductible.

Click here to read NACCTFO's official statement sent to Senator Max Baucus, Senate Finance Committee Chairman; Senator Charles Grassley, Senate Finance Committee Ranking Member; Representative Charles Rangel, House Committee on Ways & Means Chairman; and Representative James McCrery, House Committee on Ways & Means Ranking Member.

For more background on the issue see the full text of the proposal which begins on page 11 of http://www.senate.gov/~finance/press/Gpress/2005/prg101906.pdf.

Resolution for consideration
Also read NACo & NACCTFO Joint Resolution to the Finance & Intergovernmental Affairs Committee opposing the proposed property tax deductibility reporting requirement for consideration under normal order at the legislative conference.
 

Public Law 109-432, the Tax Relief and Health Care Act of 2006
Signed into law on December 20, 2006.  It includes a one-year extension of the option to deduct state and local sales taxes in lieu of income taxes; makes several billion dollars in “technical corrections” to Medicaid; relaxes last year’s new requirement for proof of citizenship for foster children and child welfare recipients; opens areas of the Gulf of Mexico to oil and gas production and contains a number of other provisions of interest to county government. 
Highlights are in the a recent issue of County News; view it online at www.countynews.org. 
 

Bankruptcy Legislation Read about NACCTFO's involvement in Bankruptcy Code reform August, 1998.

 

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