Close
Close

Tax writers look to add extenders to year-end agenda as international reform flounders

RFP
Tax Hot Topics
Tax writers look to add extendersThe focus of the tax-writing committees is expected to shift to the 50-plus provisions that expired at the end of 2014 after negotiations over highway funding and international reform all but collapsed.

House Ways and Means Committee Chair Paul Ryan, R-Wis., has been negotiating with Sen. Chuck Schumer, D-N.Y., on an international reform package to pay for highway spending. Ryan hoped to pair a transition to a territorial system with an “innovation box,” and use a onetime tax on repatriated earnings to raise revenue (See our discussion of the innovation box proposal for more information). Ryan and Schumer have not been able to reach agreement on the details of international reform or how much revenue from reform should be used to fund highway spending.

The current authorization of highway funding is scheduled to expire on Oct. 29, and Ryan instructed appropriators to start working on a bill without him. He said he has not fully abandoned efforts to attach international reform, but prospects are grim. Schumer expressed little hope for a compromise, and pairing international reform with highway spending has always been unpopular with Senate Majority Leader Mitch McConnell, R-Ky., and Finance Committee chair Orrin Hatch, R-Utah.

Tax writers are now expected to shift their focus to renewing the expired tax extender provisions. Ryan had discussed adding permanent extensions of some expired provisions to the highway bill as a way to sweeten his international reform package, but it looks likely now that extenders will have to move separately or with other year-end legislation.

Lawmakers have a slew of high priority issues to work through before the end of the year. The debt limit will need to be raised by early November to avoid default, and government funding will expire on Dec. 11. On top of that, House Republicans are in the midst of a contentious debate over who the next Speaker of the House will be. Speaker John Boehner, R-Ohio, is expected to exit Congress at the end of October, and his successor has not yet been picked. House Majority Leader Kevin McCarthy of California was the presumptive favorite, but he abruptly quit the Speaker race on Oct. 8. McCarthy’s withdrawal from the Speaker race makes enactment any legislation, including extenders, more difficult. Given those factors, there will be little time for the extender provisions.

There was some hope that lawmakers would try and resurrect a proposed deal from late last year that would have made a handful of provisions permanent and extended the rest for two years. But with the compressed legislative calendar, it now looks increasingly likely that lawmakers will enact only a one- or two-year extension very late in the year, perhaps as part of a spending bill by Dec. 11 or even after. Tax Legislative Update 2015-04 has a full discussion of the outlook for the extenders and a table describing how House and Senate legislation would treat each provision.

Contact
Dustin Stamper
T +1 202 861 4144

Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.