• Tax Extenders Begin to Move
  • April 7, 2014
  • Law Firm: McDonald Hopkins LLC - Cleveland Office
  • With comprehensive tax reform a non-starter this year, all eyes have been on tax extenders. This week, the Senate Finance Committee took the first step, moving forward with an effort to extend some of the 55 expired or expiring provisions in the tax code for businesses and individuals. Earlier this week, Senate Finance Committee Chair Ron Wyden (D-OR), released a chairman’s mark that proposed extending all but 12 of the 56 tax provisions in question.

    Among the provisions not making the cut in Wyden’s two-year extender language—worked out with finance ranking member Orrin Hatch—are write-offs for NASCAR and other race-car tracks, a tax credit for wind energy production (though the wind energy production credit may have the bipartisan support necessary to also get extended), and special “expensing rules” for the TV and film industries. Also chopped was a rule that corporations use to sidestep income tax on transfers of capital among offshore affiliates.

    In addition to leaving out some favored tax incentives, some breaks that Wyden and Hatch propose for renewal would be modified. For example, an individual income tax credit for “highway-capable plug-in motorcycles” would be extended for two years. But that provision is written to no longer include three-wheel vehicles, such as golf carts.

    Overall, the package as proposed would extend more provisions than it would leave behind. Without any changes, it would cost an estimated $67.3 billion over 10 years.

    Provisions to be extended for two years include federal rum rebates to Puerto Rico and the Virgin Islands; a general sales-tax deduction that mainly benefits those in states without an income tax like Florida and Texas; and rules allowing owners of racehorses to depreciate those investments over a three-year cost-recovery period.

    Also included are extensions of deductions related to corporate research and development; giving to public charities, expenses by teachers for books and other nonathletic supplies, special tax treatment for military basic housing allowance, and credit for certain railroad expenditures made to maintain tracks.

    These “temporary” provisions have over the years been almost routinely renewed, often on a retroactive basis.

    Renewal of most of these items is likely to occur again this year—though Republicans in the House, led by retiring Ways and Means Committee Chairman Dave Camp, have promised a stricter “policy-by-policy” review.

    Indications are that action on a bill in the House could be put off until after the November elections, perhaps in a lame-duck session. It could be one of Camp’s last acts as a chairman who tried, but failed, to get action on a tax-code overhaul.