Congress Passes Funding Extension Through Dec. 16, Lame Duck Session Awaits
A stopgap funding bill that will keep the government open through mid-December passed the Senate yesterday, the House today, and is expected to receive President Biden’s signature tonight. (Bill text and summary)
CR Buys Time
- The “continuing resolution” (CR) passed Congress after an energy permitting measure sponsored by Sen. Joe Manchin (D-WV) was removed earlier in the week. (Business Insider, Sept. 27)
- The funding bill will keep federal agencies operating through Dec. 16, buying time for lawmakers during the upcoming lame duck session to craft a possible FY2023 “omnibus” budget package by year-end.
- The CR includes reauthorization of the National Flood Insurance Program (NFIP), which has been extended more than 20 times. Bloomberg reported that House Financial Services Chair Maxine Waters (D-CA) wants a longer-term NFIP extension and other program changes. “It has to be bipartisan. We are working on keeping the premiums down, and some of the other issues that have been brought to our attention,” she said.
Lame Duck Awaits
- After the November election and before the new Congress is seated in January, current members of Congress will return for a “lame duck” legislative session. In addition to addressing outstanding legislative issues, lawmakers will meet with newly elected members, organize their respective party conferences, vote on leadership and committee positions, and discuss their post-election policy agendas.
- On Thursday, Senate Leader Chuck Schumer announced the Senate would not return until Nov. 14. (The Hill, Sept. 29)
- The House is scheduled to return from recess on Nov. 9, after the midterm elections.
- Legislative issues that will vie for attention in the lame duck session include federal appropriations, reauthorization of defense programs, and expiring tax provisions affecting real estate such as certain temporary expansions of the low-income housing tax credit.
- The elections, tax policy, inflation and other policy issues were among the topics discussed by industry leaders and national lawmakers last week during the Fall Roundtable meeting in Washington. (Roundtable Weekly, Sept. 23).
Next on The Roundtable’s calendar is the Real Estate Capital Policy Advisory Committee (RECPAC) meeting on Nov. 2 in New York City.
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Treasury Issues Final Rule Requiring Disclosure of “Beneficial Owners”
The Treasury Department issued a final rule yesterday that will require millions of companies to report information about their “beneficial owners”—persons who own at least 25% of a company or exert significant authority over it—to the Financial Crimes Enforcement Network (FinCEN). (Final Rule | Fact Sheet | Wall Street Journal and Bloomberg Law, Sept. 29)
- Treasury Secretary Janet Yellen said, “This rule … will help strengthen our national security by making it more difficult for oligarchs, terrorists, and other global threats to use complex legal structures to launder money, traffic humans and drugs, and commit other crimes that threaten harm to the American people.” (Treasury statement, Sept. 29)
- The rule will require most corporations, limited liability companies, and other entities created in or registered to do business in the United States to disclose beneficial ownership information.
- FinCEN notes that the definition of reporting company applies only to legal entities that have 20 or fewer employees and less than $5 million in gross receipts or sales as reflected in the previous year’s federal tax returns. These entities also must not otherwise benefit from the exemptions described in the regulations.
- Reporting companies created or registered before Jan. 1, 2024, will have one year (until Jan. 1, 2025) to file their initial reports. Those entities created or registered after Jan. 1, 2024, will have 30 days to file their initial reports.
- The required data about individuals who own, control or create firms will include the name, birthdate, address, and a unique identification number from driver’s licenses or passports—as well as images of the documents. (AP, Sept. 29)
- Treasury states the database will be available only to law enforcement and government agencies under the CTA’s beneficial ownership information reporting provisions. (Treasury Department, “Beneficial Ownership Information Reporting”)
- The Real Estate Roundtable submitted comments with other industry organizations earlier this year about CTA’s anti-money laundering regulations affecting real estate transactions. (Industry comment letter and Roundtable Weekly, Feb. 25 | (Coalition letter to FINCEN, Feb. 4)
- The Roundtable and three other national real estate organizations submitted detailed comments to FinCEN on May 5, 2021 addressing several implementation concerns related to the beneficial ownership registry. (Roundtable Weekly, May 7)
- Separately, a broad business coalition that includes The Real Estate Roundtable submitted comments yesterday to congressional leaders in opposition to the Establishing New Authorities for Business Laundering and Enabling Risks to Security (ENABLERS) Act.
- The ENABLERS Act would dramatically expand CTA reporting requirements and subject the owners, board members, and senior executives of most businesses and charities to audits. (Coalition letter, Sept. 29)
The Roundtable’s Real Estate Capital Policy Advisory Committee (RECPAC) will continue to work with industry partners to address the implications of FinCEN’s 330-page rule and the impact it could have on capital formation and the commercial real estate industry. RECPAC meets on Nov. 2 in New York City.
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Yellen, House Committee Promote Inflation Reduction Act Climate Investments; CRE Webinars Focus on New Tax Incentives
Incentives in the Inflation Reduction Act (IRA) will accelerate private sector investment in clean energy technologies, according to remarks this week from Treasury Secretary Janet Yellen, above. (Yellen’s remarks, Sept. 27)
- Yellen announced that Treasury will host “a series of roundtable discussions to help inform our efficient and effective implementation of the tax credits.” (Barron’s and AFP News, Sept. 27)
- A House Committee yesterday considered how the IRA’s climate investments will lower families’ utility bills, create jobs, and expand U.S. manufacturing of green tech and electric vehicles. (Video of Congressional hearing)
- Several of the IRA’s revisions to the federal tax code can help the U.S. real estate sector reduce GHG emissions. Roundtable fact sheets detail the IRA’s Clean Energy Tax Incentives (Sept. 20) and Revenue Provisions (Aug. 17)
Industry Education on the IRA
- Roundtable Senior Vice Presidents Ryan McCormick (tax counsel), right, and Duane Desiderio, left, (energy counsel) recently participated in a number of panel discussions on how the IRA’s tax credits and deductions can spur energy efficiency and renewable energy projects in buildings. (Roundtable’s IRA fact sheet)
- McCormick participated in a Sept. 27 Engineered Tax Services webinar. (Powerpoint slides)
- Desiderio participated in a Sept. 27 CBRE podcast moderated by Co-Chair of The Roundtable’s Research Committee, Spencer Levy (Senior Economic Advisor, CBRE) (Podcast transcript).
- Desiderio also participated in a Sept. 28 briefing hosted by the Urban Land Institute (ULI) featuring members of The Roundtable’s Sustainability Policy Advisory Committee (SPAC) – Immediate Past Vice Chair Dan Egan (Managing Director, Real Estate ESG - Americas, Blackstone), Suzanne Fallender (VP Global ESG, Prologis), and ULI EVP Billy Grayson.
- SPAC Chair Tony Malkin [Chairman, President, and CEO, Empire State Realty Trust, Inc.], center above, led a discussion with Desiderio and McCormick last week regarding the IRA at The Roundtable’s fall 2022 meeting. (Watch the discussion) (Roundtable Weekly, Sept. 23)
The Treasury Department is expected to issue multiple regulations and guidance documents in the coming months to implement the new law. The Roundtable plans to submit comments as the new rules are proposed to help accelerate industry investments in tackling the climate crisis.
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