Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010
Encyclopedia
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 , was passed by the United States Congress
on December 16, 2010 and signed into law by President
Barack Obama
on December 17, 2010.
The Act centers on a two-year extension of the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001
(EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003
(JGTRRA), together known as the "Bush tax cuts
." Income taxes would have returned to Clinton administration-era rates in 2011 had Congress not passed this law. The Act also extends some provisions from the American Recovery and Reinvestment Act of 2009
(ARRA or 'the Stimulus'). The act also includes several other tax- and economy-related measures intended to have a new stimulatory effect, mostly notably an extension of unemployment benefits and a one-year reduction in the FICA payroll tax
, as part of a compromise agreement between Obama and Congressional Republicans. The overall monetary impact of the measure has been placed at $858 billion.
The law was also known, during its earlier formulation in the House of Representatives, as the Middle Class Tax Relief Act of 2010. The package has been referred to as the "Obama-GOP tax deal" as well the "Obama tax cuts".
should be extended, and if so, how. Rolling back the cuts for the wealthiest taxpayers had been one of the core promises of Obama's 2008 presidential campaign
.
The issue came to a head during the lame duck
session of the 111th Congress. At the "Slurpee Summit
" of November 30, 2010, President Obama appointed Treasury Secretary Tim Geithner and Office of Management and Budget chief Jack Lew to help Republicans and Democrats hammer out an agreement on extending the Bush tax cuts. President Obama wanted to extend the tax cuts for taxpayers making less than $250,000 a year. Congressional Republicans agreed but also wanted to extend the tax cuts for those making over that amount. Indeed, all 42 Republican senators joined in saying that, until the tax dispute was resolved, they would filibuster
to prevent consideration of any other legislation, except for bills to fund the U.S. government.
The Middle Class Tax Relief Act of 2010 originated in the Democratic caucus within the House in early December 2010, and proposed to extend the Bush tax cuts for "middle incomes", meaning those earning under $250,000 for joint filers (and for singles, those earning under $200,000). It would restore the previous, higher rates for those "high income" people above that mark. A second proposal raised the dividing line to $1 million. Both proposals were able to pass in the House, but on December 4, 2010, both fell short in the Senate, getting only 53 votes and not the 60 needed for cloture.
On December 6, 2010, President Obama announced that a compromise tax package proposal had been reached with the Republican congressional leadership. This centered around a temporary, two-year extension of the Bush tax cuts and included additional provisions designed to promote economic growth. This proposal was identical to what became law.
In announcing the agreement, the president said, "I'm not willing to let working families across this country become collateral damage for political warfare here in Washington. And I'm not willing to let our economy slip backwards just as we're pulling ourselves out of this devastating recession. ... So, sympathetic as I am to those who prefer a fight over compromise, as much as the political wisdom may dictate fighting over solving problems, it would be the wrong thing to do. ... As for now, I believe this bipartisan plan is the right thing to do. It’s the right thing to do for jobs. It’s the right thing to do for the middle class. It is the right thing to do for business. And it’s the right thing to do for our economy. It offers us an opportunity that we need to seize."
At a press conference the next day, Obama strongly defended the compromise agreement, after numerous congressional Democrats had strongly objected to aspects of it. Obama labelled Republicans as "hostage takers" for forcing the situation, but also lashed out at liberal Democratic opponents of the deal as "sanctimonious" purists and compared it to their unhappiness over the lack of a public option in the health care reform legislation the previous year
. His stance led to immediate speculation among pundits that he was engaging in political triangulation
, akin to what President Bill Clinton
had done following the 1994 Republican Revolution
. The White House denied any such thing was happening.
Administration officials such as Vice President Joe Biden
worked to convince the wary Democratic members of Congress to accept the plan, notwithstanding a continuation of lower rates for the highest-income taxpayers. On December 10, Democratic-caucusing independent Senator Bernie Sanders
made a filibuster-like stand against the compromise tax proposal, speaking for over eight hours and mocking the need for the wealthy to own multiple homes. Overall, the compromise proved widely popular in public opinion polls, with two-thirds support or more among self-described liberals, moderates, and conservatives, and it allowed Obama to portray himself as a consensus-builder not beholden to the liberal wing of his party.
The bill was opposed some of the most conservative members of the Republican Party as well as by talk radio hosts such as Rush Limbaugh
and some groups in the Tea Party movement
. It was also opposed by several leading potential candidates for the Republican nomination in the 2012 presidential election
, including Sarah Palin
and Mitt Romney
, typically on the grounds that it did not make the Bush tax cuts permanent and that it would overall increase the national deficit.
The cut of the FICA payroll tax
in the agreement was for one year only at a two percent reduction. This tax holiday
was intended as an economic stimulus by Obama and the Democrats, with the value of boosting the disposable income of American families. It would not worsen the Social Security's financial strength
, as the shortfall would be made up from general revenues. Some Republicans thus criticized the idea for increasing the national deficit. Some Democrats were also wary of the notion, either because they thought the return to the normal rate one year hence would be characterized as a politically unpalatable "tax hike", or because they featured that reductions in the payroll tax would undermine the basic model that Social Security was based on.
On December 15, the Senate passed the compromise package with an 81–19 vote, with large majorities of both Democrats and Republicans supporting it. Near midnight of December 16, the House passed it 277–148, with it getting only a modest majority among Democrats and a large majority among Republicans (of the 148 votes against the bill in the House, 112 were cast by Democrats and only 36 by Republicans). Before that, an amendment put forward by Democratic Representative Earl Pomeroy
and the progressives among the Democratic caucus to raise the estate tax – the ultimate sticking point of the deal for them and the cause of a minor revolt among those against it – had failed on a 194–233 vote. The Washington Post
called the approved deal "the most significant tax bill in nearly a decade".
Obama signed the bill into law on December 17, 2010. Much of the Democratic Congressional leadership was absent from the signing ceremony, indicating their ongoing unhappiness with the law. Nevertheless, Obama's ability to win passage for the law indicated a renewed strength in his presidency and a possible course he would take during the next Congress.
Final House vote:
Employers had to modify payroll systems to adapt to the new lower amounts for the FICA payroll tax; the Internal Revenue Service
(IRS) said that employers had until January 31, 2011, to do so. While companies that specialize in payroll processing could adapt to the change quickly, smaller companies that do their own payrolls could take longer. It was possible that employees would have to wait for up to three paychecks to see the reduction take place.
The IRS said that it needed to reprogram its processing systems for some of the provisions in the law, and that those who like to file their tax returns early would need to wait until at least the middle of February if they itemize deductions or take certain other deductions. Any refunds coming to taxpayers would be delayed accordingly as well. Vendors of tax preparation software also had to modify their applications and get the updates to customers; Intuit, the vendor of Turbo Tax said they were ready and would hold affected returns until the IRS was ready to process them.
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
on December 16, 2010 and signed into law by President
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....
Barack Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...
on December 17, 2010.
The Act centers on a two-year extension of the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001
Economic Growth and Tax Relief Reconciliation Act of 2001
The Economic Growth and Tax Relief Reconciliation Act of 2001 , was a sweeping piece of tax legislation in the United States by President George W. Bush...
(EGTRRA) and the Jobs and Growth Tax Relief Reconciliation Act of 2003
Jobs and Growth Tax Relief Reconciliation Act of 2003
The Jobs and Growth Tax Relief Reconciliation Act of 2003 , was passed by the United States Congress on May 23, 2003 and signed into law by President George W. Bush on May 28, 2003...
(JGTRRA), together known as the "Bush tax cuts
Bush tax cuts
The Bush tax cuts refers to changes to the United States tax code passed during the presidency of George W. Bush and extended during the presidency of Barack Obama that generally lowered tax rates and revised the code specifying taxation in the United States...
." Income taxes would have returned to Clinton administration-era rates in 2011 had Congress not passed this law. The Act also extends some provisions from the American Recovery and Reinvestment Act of 2009
American Recovery and Reinvestment Act of 2009
The American Recovery and Reinvestment Act of 2009, abbreviated ARRA and commonly referred to as the Stimulus or The Recovery Act, is an economic stimulus package enacted by the 111th United States Congress in February 2009 and signed into law on February 17, 2009, by President Barack Obama.To...
(ARRA or 'the Stimulus'). The act also includes several other tax- and economy-related measures intended to have a new stimulatory effect, mostly notably an extension of unemployment benefits and a one-year reduction in the FICA payroll tax
Federal Insurance Contributions Act tax
Federal Insurance Contributions Act tax is a United States payroll tax imposed by the federal government on both employees and employers to fund Social Security and Medicare —federal programs that provide benefits for retirees, the disabled, and children of deceased workers...
, as part of a compromise agreement between Obama and Congressional Republicans. The overall monetary impact of the measure has been placed at $858 billion.
The law was also known, during its earlier formulation in the House of Representatives, as the Middle Class Tax Relief Act of 2010. The package has been referred to as the "Obama-GOP tax deal" as well the "Obama tax cuts".
Provisions
Key aspects of the law include:- Extending the EGTRRA 2001 income tax rates for two years. Associated changes in itemized deduction and personal exemption rules are also continued for the same period. The total negative revenue impact of this was estimated at $186 billion.
- Extending the EGGTRA 2001 and JGTRRA 2003 dividends and capital gains rates for two years. The total negative revenue impact of this was estimated at $53 billion.
- Patching the Alternative Minimum TaxAlternative Minimum TaxThe Alternative Minimum Tax is an income tax imposed by the United States federal government on individuals, corporations, estates, and trusts. AMT is imposed at a nearly flat rate on an adjusted amount of taxable income above a certain threshold . This exemption is substantially higher than the...
to ensure an additional 21 million households will not face a tax increase. This was done by increasing the exemption amount and making other targeted changes. The negative revenue impact of this measure was estimated at $136 billion.- The above three measures are intended to provide relief to more than 100 million middle-class families and prevent an annual tax increase of over $2,000 for the typical family.
- A 13-month extension of federal unemployment benefitsUnemployment extensionUnemployment extension is when regular unemployment benefits are exhausted and extended for additional weeks.Unemployment extensions are created by passing new legislation at the federal level often referred to as an "unemployment extension bill". This new legislation is introduced and passed...
. The cost of this measure was estimated at $56 billion. - A temporary, one-year reduction in the FICA payroll taxFederal Insurance Contributions Act taxFederal Insurance Contributions Act tax is a United States payroll tax imposed by the federal government on both employees and employers to fund Social Security and Medicare —federal programs that provide benefits for retirees, the disabled, and children of deceased workers...
. The normal employee rate of 6.2 percent is reduced to 4.2 percent. The rate for self-employed individuals is reduced from 12.4 percent to 10.4 percent. The negative revenue impact of this measure was estimated at $111 billion. - Extension of the Child Tax CreditChild tax creditA child tax credit is the name for tax credits issued in some countries that depends on the number of dependent children in a family. The credit may depend on other factors as well: typically it depends on income level. For example, in the United States, only families making less than $110K per...
refundability threshold established by EGTRRA, ARRA, and other measures. According to the White House, this would benefit 10.5 million lower-income families with 18 million children. - Extension of ARRA's treatment of the Earned Income Tax CreditEarned income tax creditThe United States federal earned income tax credit or earned income credit is a refundable tax credit primarily for individuals and families who have low to moderate earned income. Greater tax credit is given to those who also have qualifying children...
for two years. According to the White House, this would benefit 6.5 million working parents with 15 million children. - Extension of ARRA's American opportunity tax creditAmerican opportunity tax creditThe American Opportunity Tax Credit is a partially refundable tax credit detailed in Section 1004 of the American Recovery and Reinvestment Act of 2009.The act specifies:...
for two years, including extension of income limits applied thereto. According to the White House, this would benefit more than 8 million students and their families.- The above three provisions, as well as some other similar ones, are intended to provide about $40 billion in tax relief for the hardest-hit families and students.
- An extension of the Small Business Jobs and Credit Act of 2010's "bonus depreciation" allowance through the end of 2011, and an increase in that amount from that act's 50 percent to a full 100 percent. For the year of 2012, it returns to 50 percent. The White House hopes the 100 percent expensing change will result in $50 billion in new investments, thus fueling job creation.
- An extension of Section 179 depreciation deductionSection 179 depreciation deductionSection 179 of the United States Internal Revenue Code , allows a taxpayer to elect to deduct the cost of certain types of property on their income taxes as an expense, rather than requiring the cost of the property to be capitalized and depreciated...
maximum amounts and phase-out thresholds through 2012.- Together, the above two business incentive measures were estimated to have a negative revenue impact of $21 billion.
- Various business tax credits for alternative fuels, such as the Volumetric Ethanol Excise Tax Credit, were also extended. Others extended were credits for biodiesel and renewable diesel, refined coal, manufacture of energy-efficient homes, and properties featuring refueling for alternate vehicles. Also finding an extension was the popular domestic Nonbusiness Energy Property Tax CreditNonbusiness Energy Property Tax CreditThe Nonbusiness energy property tax credit, in the United States, provides a nonrefundable personal tax credit for Federal income tax purposes, for making a home more energy efficient...
, but with some limitations. - Estate tax adjustment. EGTRRA had gradually reduced estate tax ratesEstate tax in the United StatesThe estate tax in the United States is a tax imposed on the transfer of the "taxable estate" of a deceased person, whether such property is transferred via a will, according to the state laws of intestacy or otherwise made as an incident of the death of the owner, such as a transfer of property...
until there was none in 2010. After sunsetting, the Clinton-era rate of 55 percent with a $1 million exclusion was due to return for 2011. The compromise package sets for two years a rate of 35 percent with an exclusion amount of $5 million. The negative revenue impact of this provision was estimated at $68 billion. - An extension of the 45G short line tax credit, also known as the Railroad Track Maintenance Tax CreditRailroad Track Maintenance Tax CreditThe Railroad Track Maintenance Tax Credit, also known as the 45G Tax Credit, is a federal income tax credit for track maintenance conducted by shortlines and regional railroads in the United States. The credit granted an amount equal to 50% of qualified track maintenance expenditures and other...
, through January 1, 2012. This credit had been in place since December 31, 2004 and allowed small railroad companies to deduct up to 50% of investments made in track repair and other qualifying infrastructure investments.
Legislative history
The years leading up to 2010 were filled with speculation and political debate about whether the Bush tax cutsBush tax cuts
The Bush tax cuts refers to changes to the United States tax code passed during the presidency of George W. Bush and extended during the presidency of Barack Obama that generally lowered tax rates and revised the code specifying taxation in the United States...
should be extended, and if so, how. Rolling back the cuts for the wealthiest taxpayers had been one of the core promises of Obama's 2008 presidential campaign
Barack Obama presidential campaign, 2008
Barack Obama, then junior United States Senator from Illinois, announced his candidacy for the presidency of the United States in Springfield, Illinois, on February 10, 2007. On August 27, 2008, he was declared nominee of the Democratic Party for the 2008 presidential election...
.
The issue came to a head during the lame duck
Lame duck (politics)
A lame duck is an elected official who is approaching the end of his or her tenure, and especially an official whose successor has already been elected.-Description:The status can be due to*having lost a re-election bid...
session of the 111th Congress. At the "Slurpee Summit
Slurpee Summit
The Slurpee Summit was a White House meeting between U.S. President Barack Obama and U.S. Congressional leaders that occurred on 30 November 2010. The name "Slurpee Summit" is a reference to an analogy Obama used while campaigning for the 2010 midterm elections...
" of November 30, 2010, President Obama appointed Treasury Secretary Tim Geithner and Office of Management and Budget chief Jack Lew to help Republicans and Democrats hammer out an agreement on extending the Bush tax cuts. President Obama wanted to extend the tax cuts for taxpayers making less than $250,000 a year. Congressional Republicans agreed but also wanted to extend the tax cuts for those making over that amount. Indeed, all 42 Republican senators joined in saying that, until the tax dispute was resolved, they would filibuster
Filibuster
A filibuster is a type of parliamentary procedure. Specifically, it is the right of an individual to extend debate, allowing a lone member to delay or entirely prevent a vote on a given proposal...
to prevent consideration of any other legislation, except for bills to fund the U.S. government.
The Middle Class Tax Relief Act of 2010 originated in the Democratic caucus within the House in early December 2010, and proposed to extend the Bush tax cuts for "middle incomes", meaning those earning under $250,000 for joint filers (and for singles, those earning under $200,000). It would restore the previous, higher rates for those "high income" people above that mark. A second proposal raised the dividing line to $1 million. Both proposals were able to pass in the House, but on December 4, 2010, both fell short in the Senate, getting only 53 votes and not the 60 needed for cloture.
On December 6, 2010, President Obama announced that a compromise tax package proposal had been reached with the Republican congressional leadership. This centered around a temporary, two-year extension of the Bush tax cuts and included additional provisions designed to promote economic growth. This proposal was identical to what became law.
In announcing the agreement, the president said, "I'm not willing to let working families across this country become collateral damage for political warfare here in Washington. And I'm not willing to let our economy slip backwards just as we're pulling ourselves out of this devastating recession. ... So, sympathetic as I am to those who prefer a fight over compromise, as much as the political wisdom may dictate fighting over solving problems, it would be the wrong thing to do. ... As for now, I believe this bipartisan plan is the right thing to do. It’s the right thing to do for jobs. It’s the right thing to do for the middle class. It is the right thing to do for business. And it’s the right thing to do for our economy. It offers us an opportunity that we need to seize."
At a press conference the next day, Obama strongly defended the compromise agreement, after numerous congressional Democrats had strongly objected to aspects of it. Obama labelled Republicans as "hostage takers" for forcing the situation, but also lashed out at liberal Democratic opponents of the deal as "sanctimonious" purists and compared it to their unhappiness over the lack of a public option in the health care reform legislation the previous year
Patient Protection and Affordable Care Act
The Patient Protection and Affordable Care Act is a United States federal statute signed into law by President Barack Obama on March 23, 2010. The law is the principal health care reform legislation of the 111th United States Congress...
. His stance led to immediate speculation among pundits that he was engaging in political triangulation
Triangulation (politics)
Triangulation is the name given to the act of a political candidate presenting his or her ideology as being "above" and "between" the "left" and "right" sides of a traditional democratic "political spectrum". It involves adopting for oneself some of the ideas of one's political opponent...
, akin to what President Bill Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...
had done following the 1994 Republican Revolution
Republican Revolution
The Republican Revolution or Revolution of '94 is what the media dubbed Republican Party success in the 1994 U.S. midterm elections, which resulted in a net gain of 54 seats in the House of Representatives, and a pickup of eight seats in the Senate...
. The White House denied any such thing was happening.
Administration officials such as Vice President Joe Biden
Joe Biden
Joseph Robinette "Joe" Biden, Jr. is the 47th and current Vice President of the United States, serving under President Barack Obama...
worked to convince the wary Democratic members of Congress to accept the plan, notwithstanding a continuation of lower rates for the highest-income taxpayers. On December 10, Democratic-caucusing independent Senator Bernie Sanders
Bernie Sanders
Bernard "Bernie" Sanders is the junior United States Senator from Vermont. He previously represented Vermont's at-large district in the United States House of Representatives...
made a filibuster-like stand against the compromise tax proposal, speaking for over eight hours and mocking the need for the wealthy to own multiple homes. Overall, the compromise proved widely popular in public opinion polls, with two-thirds support or more among self-described liberals, moderates, and conservatives, and it allowed Obama to portray himself as a consensus-builder not beholden to the liberal wing of his party.
The bill was opposed some of the most conservative members of the Republican Party as well as by talk radio hosts such as Rush Limbaugh
Rush Limbaugh
Rush Hudson Limbaugh III is an American radio talk show host, conservative political commentator, and an opinion leader in American conservatism. He hosts The Rush Limbaugh Show which is aired throughout the U.S. on Premiere Radio Networks and is the highest-rated talk-radio program in the United...
and some groups in the Tea Party movement
Tea Party movement
The Tea Party movement is an American populist political movement that is generally recognized as conservative and libertarian, and has sponsored protests and supported political candidates since 2009...
. It was also opposed by several leading potential candidates for the Republican nomination in the 2012 presidential election
Republican Party (United States) presidential primaries, 2012
The 2012 Republican presidential primaries are the selection processes in which voters of the Republican Party will choose their nominee for President of the United States in the 2012 presidential election. The primary contest began with a fairly wide field, and is the first presidential primary...
, including Sarah Palin
Sarah Palin
Sarah Louise Palin is an American politician, commentator and author. As the Republican Party nominee for Vice President in the 2008 presidential election, she was the first Alaskan on the national ticket of a major party and first Republican woman nominated for the vice-presidency.She was...
and Mitt Romney
Mitt Romney
Willard Mitt Romney is an American businessman and politician. He was the 70th Governor of Massachusetts from 2003 to 2007 and is a candidate for the 2012 Republican Party presidential nomination.The son of George W...
, typically on the grounds that it did not make the Bush tax cuts permanent and that it would overall increase the national deficit.
The cut of the FICA payroll tax
Federal Insurance Contributions Act tax
Federal Insurance Contributions Act tax is a United States payroll tax imposed by the federal government on both employees and employers to fund Social Security and Medicare —federal programs that provide benefits for retirees, the disabled, and children of deceased workers...
in the agreement was for one year only at a two percent reduction. This tax holiday
Tax holiday
A tax holiday is a temporary reduction or elimination of a tax. Programs may be referred to as tax abatements, tax subsidies, tax holidays, or tax reduction programs. Governments usually create tax holidays as incentives for business investment...
was intended as an economic stimulus by Obama and the Democrats, with the value of boosting the disposable income of American families. It would not worsen the Social Security's financial strength
Social Security debate (United States)
This article concerns proposals to change the Social Security system in the United States. Social Security is a social insurance program officially called "Old-Age, Survivors, and Disability Insurance" , in reference to its three components. It is primarily funded through a dedicated payroll tax...
, as the shortfall would be made up from general revenues. Some Republicans thus criticized the idea for increasing the national deficit. Some Democrats were also wary of the notion, either because they thought the return to the normal rate one year hence would be characterized as a politically unpalatable "tax hike", or because they featured that reductions in the payroll tax would undermine the basic model that Social Security was based on.
On December 15, the Senate passed the compromise package with an 81–19 vote, with large majorities of both Democrats and Republicans supporting it. Near midnight of December 16, the House passed it 277–148, with it getting only a modest majority among Democrats and a large majority among Republicans (of the 148 votes against the bill in the House, 112 were cast by Democrats and only 36 by Republicans). Before that, an amendment put forward by Democratic Representative Earl Pomeroy
Earl Pomeroy
Earl Pomeroy is a lobbyist and former U.S. Representative for , serving from 1993 until 2011. He is a member of the North Dakota Democratic-NPL Party.- Early life, education and career :...
and the progressives among the Democratic caucus to raise the estate tax – the ultimate sticking point of the deal for them and the cause of a minor revolt among those against it – had failed on a 194–233 vote. The Washington Post
The Washington Post
The Washington Post is Washington, D.C.'s largest newspaper and its oldest still-existing paper, founded in 1877. Located in the capital of the United States, The Post has a particular emphasis on national politics. D.C., Maryland, and Virginia editions are printed for daily circulation...
called the approved deal "the most significant tax bill in nearly a decade".
Obama signed the bill into law on December 17, 2010. Much of the Democratic Congressional leadership was absent from the signing ceremony, indicating their ongoing unhappiness with the law. Nevertheless, Obama's ability to win passage for the law indicated a renewed strength in his presidency and a possible course he would take during the next Congress.
Legislative voting breakdown
Final Senate vote:| Vote by Party | Yea | Nay |
|---|---|---|
| Democrats | 43 | 13 |
| Republicans | 37 | 5 |
| Independents | 1 | 1 |
| Total | 81 | 19 |
Final House vote:
| Vote by Party | Yea | Nay |
|---|---|---|
| Democrats | 139 | 112 |
| Republicans | 138 | 36 |
| Total | 277 | 148 |
Implementation
The passage of the new law almost at year's end caused a scramble for many parties involved.Employers had to modify payroll systems to adapt to the new lower amounts for the FICA payroll tax; the Internal Revenue Service
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
(IRS) said that employers had until January 31, 2011, to do so. While companies that specialize in payroll processing could adapt to the change quickly, smaller companies that do their own payrolls could take longer. It was possible that employees would have to wait for up to three paychecks to see the reduction take place.
The IRS said that it needed to reprogram its processing systems for some of the provisions in the law, and that those who like to file their tax returns early would need to wait until at least the middle of February if they itemize deductions or take certain other deductions. Any refunds coming to taxpayers would be delayed accordingly as well. Vendors of tax preparation software also had to modify their applications and get the updates to customers; Intuit, the vendor of Turbo Tax said they were ready and would hold affected returns until the IRS was ready to process them.