Stimulus act offers retrofit funds, tax breaks

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In addition to $27.5 billion in funding for highway construction, the new $787 billion economic stimulus act includes some measures that motor carriers may find useful. The act, signed into law by President Obama on Tuesday, Feb. 17, provides $300 million for diesel emissions reduction grants. The grants would be awarded under a program established by the Energy Policy Act of 2005 with the principal goal of reducing diesel emissions exposure from fleets operating in areas designated by the U.S. Environmental Protection Agency as poor air quality areas.

Under the program, almost all the funds must be allocated for projects using engine-related technologies certified or verified by either EPA or the California Air Resources Board. The 2005 legislation requires that at least 50 percent of the funds granted be made available for public fleets.

The stimulus package also extends for another year previously enacted measures that allow companies to deduct current expenditures on equipment up to $250,000 and to take advantage of bonus depreciation on capital purchases. Another provision that could help troubled small carriers that had until recently been profitable is an extension of net operating loss carrybacks for businesses that averaged less than $15 million in revenue over the past three years. For 2008 tax returns, businesses that qualify can carry back losses for five years, compared to two years under prior law, and may be able to amend prior-year returns for profitable years to claim tax refunds.

Employers that have reduced or may need to reduce employment levels need to pay close attention to a measure subsidizing COBRA benefits for involuntarily terminated employees. Employees terminated between Sept. 1, 2008, and Dec. 31, 2009, will be required to pay only 35 percent of the premium, with the employer covering the remainder. The employer, in turn, will receive reimbursement through a payroll tax credit and, ultimately, a payment from the U.S. Treasury if the tax credit does not cover the employer’s entire premium cost. Terminated employees who previously had not elected COBRA coverage have 60 days from the Feb. 17 effective date to enroll.