Extenders taskforce reports show little consensus

Tax Hot Topics newsletter The Senate Finance Committee released reports from three of its tax extender taskforces on Aug. 13, yielding substantive recommendations on just two of the more than 40 temporary tax provisions that expired in 2017 or are expiring this year.

Six bipartisan taskforces comprised of members of the committee were assembled by Finance Committee Chair Chuck Grassley (R-Iowa) and ranking minority member Ron Wyden (D-Ore.) in May to examine each provision and develop a long-term solution to address it, if at all. The first wave of reports contained findings of the Energy, Cost Recovery and Individual, Excise, and Other Temporary Tax Policy task forces. Grassley indicated reports from the Employment and Community Development, Health and Disaster Tax Relief tax forces are forthcoming.

All three reports generally found that the uncertainty inherent in extenders and recent delays in addressing them is inefficient and burdensome for the taxpayers that rely on the provisions. However, only the Cost Recovery task force offered actionable recommendations, proposing that the Section 45G short line railroad maintenance credit and the Section 179D deduction for energy-efficient commercial building investments be made permanent. Both have already expired.

The lack of any other meaningful agreement and the delay in the remaining three reports may indicate division among lawmakers on the other provisions.

The 30-plus provisions that expired at the end of 2017 include:

  • Alternative fuel and biofuel credits
  • Energy-efficient new home credit
  • Special expensing for film and television products
  • Three-year depreciation for racehorses
  • Seven-year cost recovery for motor sports entertainment complexes
  • Expensing for advanced mine safety equipment

The nine are set to expire in December 2019 include:

  • Look-through treatment of payments between related controlled foreign corporations
  • Employer credit for paid family and medical leave
  • Health insurance cost credit
  • New markets tax credit

The impact of the task forces’ findings on extenders legislation for this year is uncertain. Grassley and Wyden introduced a bill early this year that would retroactively renew all of the provisions that expired in 2017 for two years. With 2019 quickly coming to a close, Grassley has expressed a desire to proactively address the expiring provisions as well. Democrats on the House Ways and Means Committee advanced a package in June that would extend nearly all of the expired and expiring provisions through 2020. However, it would partially offset the cost by accelerating the sunset of the increased estate and gift tax exclusion by three years, which will likely be a tough sell in the Republican-controlled Senate.

Dustin Stamper
Managing Director
Washington National Tax Office
T +1 202 861 4144

Omair Taher
Senior Associate
Washington National Tax Office
T +1 202 861 4143

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