Close
Close

Congress aims to address expired provisions and international reform after recess

RFP
Congress is set to return from the August recess on Sept. 8 to a full agenda that includes big tax priorities such as extending expired tax provisions and attempting international tax reform.

More than 50 popular tax provisions, including the R&D tax credit, expired at the end of 2014. Tax writers have largely finished their committee work on the provisions. The Senate Finance Committee approved a package that would extend all the provisions for two years retroactively from the start of 2015. The House voted to make permanent just eight expired provisions, including the R&D credit. All that’s left is to negotiate a compromise.

Republican leaders hope to resurrect a proposed agreement from late last year that would have made a handful of provisions permanent and extend the rest for two years. House Ways and Means Chair Paul Ryan, R-Wis., has pledged to push for a resolution quickly in September but likely faces an uphill battle. With all the competing legislative priorities, an agreement may have to wait until at least November or December. If a big compromise eludes lawmakers, Congress will likely settle for a one- or two-year extension of most of the provisions. (Tax Legislative Update 2015-04 discusses the outlook for the extenders and includes a table describing how House and Senate legislation would treat each provision.)

Lawmakers also need to extend highway funding by the end of October. The short-term extension passed at the end of July included several revenue-raising provisions. (For a full discussion of the revenue raisers, see Tax Legislative Update 2015-05.) Ryan still hopes to pair highway funding with international reform. He has yet to release a full proposal but has endorsed a reduced rate on certain intellectual property income that was proposed by Reps. Charles Boustany, R-La., and Richard Neal, D-Mass. (See our summary of the proposal for more information.) Ryan aims to combine this “IP box” with a transition to a territorial system and a one-time tax on all unrepatriated earnings. Ryan proposes dedicating some of the revenue from the one-time tax to highway spending and using the highway bill as a vehicle for the bill.

Assembling a viable international reform package by October will be difficult, especially with so many nontax items taking up limited space on the congressional calendar. Pope Francis’ visit to the United States, which will include an address to a joint meeting of Congress, will likely slow congressional action in late September. In addition, Congress will probably need to agree on a new spending deal to avoid a government shutdown at the end of October and will also have to contend with the debt limit around that time. Finally, the Senate will likely spend time considering the nuclear deal with Iran.

Contacts
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.