BRIEFLY: ‘Every tool’ now available to transition from LIBOR; Agencies expand paid tax leave credit for vaccinations

(July 30, 2021) Market participants now “have every tool they need to transition from LIBOR,” the vice chair of the Federal Reserve said this week, as a Fed-backed group developing an alternative to the widely used reference rate announced it had made a formal recommendation for the replacement, the Secured Overnight Financing Rate (SOFR). The recommendation came after a change in interdealer trading conventions that were adopted Monday (July 26), which outlined loan conventions and use cases for how best to use the SOFR. Federal Reserve Board Vice Chair for Supervision Randal Quarles also said that “all firms should be moving quickly to meet our supervisory guidance advising them to end new use of LIBOR this year.” LIBOR will no longer be used for new contracts beginning Jan. 1 and will be discontinued for existing contracts after June 30, 2023. Separately, the federal banking regulators Thursday jointly published FAQs concerning the regulatory capital treatment of capital instruments whose terms reference LIBOR … The Treasury Department and IRS Thursday announced that eligible employers can claim tax credits equal to the wages paid for providing paid time-off to employees to take a family or household member or certain other individuals to get vaccinated, or to care for a family or household member or certain other individuals recovering from the vaccination. Comparable tax credits are also available for self-employed individuals, the agencies said. In April, Treasury and the IRS announced eligible employers, such as businesses and tax-exempt organizations with fewer than 500 employees and certain governmental employers, could receive paid leave tax credits available under the American Rescue Plan Act of 2021 (ARP) for providing leave for each employee receiving the vaccine and for any time needed to recover from the vaccine.


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To Enable More Vaccinations, Treasury Expands Paid Leave Tax Credit