AGLF Alert On Sunday, March 12, 2023, Signature Bank was closed by the New York State Department of Financial Services and the FDIC was named receiver. To protect depositors, the FDIC transferred all the deposits and substantially all of the assets of Signature Bank to Signature Bridge Bank, N.A., a full-service bank that will be operated by the FDIC as it markets the institution to potential bidders. The transfer of all the deposits was completed under the systemic risk exception recommended by the Federal Reserve and FDIC and approved by Treasury Secretary Yellen. This action followed the collapse of Silvergate Capital Corp. and SVB Financial Group’s Silicon Valley Bank last week. On Sunday, to bolster the capacity of the banking system to safeguard deposits and ensure the ongoing provision of money and credit to the economy, the Federal Reserve Board announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors, through the creation of a new Bank Term Funding Program (BTFP), offering loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions pledging U.S. Treasuries, agency debt and mortgage-backed securities, and other qualifying assets as collateral. AGLF LEGAL UPDATE On February 1, 2023, New York Department of Financial Services (“NYDFS”) announced that it has adopted new regulations (“NY Regulations”) relating to disclosure requirements for commercial financing, pursuant to sections 801 to 811 of the New York Financial Services Law (the “NY Commercial Finance Disclosure Law”). As noted in AGLF’s prior legal updates, New York SB 5470 has been codified under Article 8 of the New York Financial Services Law and will require certain commercial lenders that provide financings of $2.5 million or less (and brokers involved in such offers) to make certain disclosures to the recipients. Although the NY Commercial Finance Disclosure Law became effective on January 1, 2022, Section 600.25 of the NY Regulations provides that the NY Regulations take effect upon publication of the Notice of Adoption in the State Register (i.e. February 1, 2023) and the compliance date for the NY Regulations is six months after the date of publication of the Notice of Adoption in the State Register (i.e. August 1, 2023). AGLF TAX LEGAL UPDATE On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 into law. The legislation includes certain changes to the alternative minimum tax that impose a new 15% minimum tax on certain large corporations for tax years beginning after December 31, 2022. In general, the new corporate minimum tax applies to corporations with average annual adjusted financial statement income greater than $1,000,000,000 for a 3-year taxable period ending with such tax year (to the extent that this AMT amount is larger than the corporate tax that the corporation would otherwise pay on its taxable income). The Joint Committee on Taxation estimates approximately 150 corporations may be impacted by this new minimum tax. It is worth highlighting that this new 15% corporate minimum tax applies to financial statement income as opposed to taxable income. Applicability of the new corporate minimum tax depends upon both the financial statement income of a corporation and the corporation’s effective tax rate. To the extent that tax-exempt income is included in a corporation’s adjusted financial statement income such corporation may be subject to this new corporate minimum tax. At this point, it is uncertain if this new corporate minimum tax will impact demand and pricing for tax-exempt debt obligations. Full text of the legislation may be found here: https://www.congress.gov/bill/117th-congress/house-bill/5376/text AGLF LEGAL UPDATES
AGLF TAX UPDATE Pursuant to its November 18, 2021 memorandum, the Internal Revenue Service has revised its prior April 15, 2021 memorandum to extend until October 31, 2023 the period during which it will accept (by postmark, or in the case of UPS or FedEx delivery, actual delivery) Forms 8038, 8038-G and 8038-GC signed with electronic, digital or facsimile signatures. (Note that this temporary relief does not apply to Forms 8038-CP, 8038-R or 8038-T, which continue to require wet ink signatures.)
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