Extenders face longer odds, but not dead yet

Tax Hot Topics newsletterSenate Finance Committee Chair Chuck Grassley (R-Iowa) has dismissed suggestions that tax “extenders” may be dead, but will need help from House Democrats to rescue the popular expired tax provisions.

Grassley remains the biggest champion of renewing popular tax provisions that expired at the end of 2017, which include several important business incentives:
  • Alternative fuel and biofuel credits
  • Energy-efficient new home credit
  • Energy-efficient commercial building property 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

Grassley remains undeterred after failing to attach extenders legislation to the government funding package Congress passed on Feb. 15. In a floor statement on the eve of the vote, he vowed to continue his effort to extend the provisions retroactively for 2018 and through 2019. Many House Democrats support the extenders, as do some Republicans. The provisions could certainly be extended later in the year, but several challenges make their extension less a foregone conclusion than in past years.

Grassley cannot advance an extenders bill in the Senate until the House passes a tax bill that the Senate can use as a vehicle, as the Constitution generally requires revenue measures to originate in the House. In addition, the House has reinstated “pay-as-you-go” that require offsets for any tax cuts. Although these rules can be waived, such a move might dampen Democratic support. In addition, as the year goes on, lawmakers may become leery of providing retroactive windfalls that would require amended returns for most taxpayers.

Despite the challenges, an extension remains possible. The provisions have appeared dead in the past only to be resurrected later.

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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