Congress approved a continuing resolution to extend government funding at existing levels through Dec. 20, setting up this deadline as the likely last chance to move tax legislative priorities. Government funding had been set to expire on Nov. 21.
An omnibus spending bill by the Dec. 20 deadline remains the best hope for carrying a tax package. Tax writers have been working for months to find consensus on tax extenders, a very limited set of technical corrections to the Tax Cuts and Jobs Act (TCJA) and retirement incentives. Negotiations have been slow-going, with Republicans accusing Democrats of asking for disproportional concessions in exchange for extender provisions that both sides support.
Lawmakers on both sides support renewing many of the temporary expired tax provisions and fixing a drafting error in the TCJA that resulted qualified improvement property being excluded from bonus depreciation. The SECURE Act (H.R.1994), a package of retirement incentives, also passed the House of Representatives with a near unanimous majority, only to be blocked by a handful of senators. Democrats are more resistant to other technical corrections for TCJA, and are pushing priorities such as enhancing renewable energy incentives, expanding the Earned Income Tax Credit, child tax credit, and the child and dependent care tax credit, and even relief from the $10,000 SALT cap. Republicans are very unlikely to entertain any SALT cap changes for now.
Negotiations remain fluid, with discussions of incremental steps, such as a one-year extenders bill, as a means of breaking the deadlock. If an agreement is not reached on the extenders before year-end, momentum could evaporate for full retroactive extensions for the provisions that expired at the end of 2017.
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