Senate Finance Committee Passes Tax Extenders Bill
On Tuesday, July 21, the U.S. Senate Finance Committee voted 23-3 to approve semi-annual extensions of dozens of popular business tax credits and deductions. If ultimately approved by Congress, would extend more than 50 credits and deductions until the end of 2016, R&D Tax Credit being one of the credits extended.
“Today the Finance Committee advanced a bipartisan bill aimed to help both families and businesses,” said committee chairman Orrin Hatch, R-Utah, and ranking member Ron Wyden, D-Ore., in a joint statement. “By allowing committee members to work their will, the committee succeeded in passing a number of widely supported tax provisions that will provide some certainty in the tax code for the next two years. We look forward to continuing to work together in a bipartisan fashion to enact tax extenders legislation.”
Generally, the bill would extend expired provisions for two years—retroactively from January 1, 2015, through December 31, 2016. The bill also includes modifications to some of the expired provisions, as well as a few revenue raising provisions.
Earlier this year, the House passed legislation to extend permanently and modify the research credit. The House also has passed legislation this year to extend permanently increased Section 179 expensing limits, certain S corporation provisions, certain charitable giving provisions, and the federal deduction for state and local sales taxes. House Ways and Means Chairman Paul Ryan (R-WI) recently said that he hopes to address other tax extenders in September.
The bill addresses substantially the same expired provisions that Congress extended through 2014, in late December 2014. Thus, for example, the bill generally would extend through 2016 the following (among other) provisions:
- The research credit
- Increased Section 179 “small business” expensing limitations.
- Bonus depreciation
- The exception under subpart F for active financing income
- Look-through treatment of payments between related controlled foreign corporations (CFCs) under foreign personal holding company income rules
- Reduced recognition period for S corporation “built-in gains” tax
- Basis adjustment to stock of S corporations making charitable contributions of property
Left out of prior extender bill but reinstated in this new bill is the 10% credit for the purchase of electric motorcycles in 2015 and 2016. The credit, which is capped at $2,500 per qualifying vehicle, was in place prior to 2014, but was allowed to expire on December 31, 2013. The credit passed by the Finance Committee today would apply only to two-wheel, not three-wheel, electric vehicles.
Approval of tax extenders legislation by the Senate Finance Committee is a significant step toward renewing expired business and individual tax provisions, although the timing of further action by the full Senate on tax extenders this year remains uncertain. This leaves the spotlight on the House to act next by either adopting the Senate two-year approach or continuing to push for permanence for certain extenders. That process is likely to begin when Congress returns to Washington in the fall. The House and Senate also will need to reconcile their differing approaches to tax extender legislation.
For additional resources, please view:
- The Finance Committee also provided summary descriptions of the provisions in the extenders bill on the Finance website.
- JCT descriptions of the chairman’s mark
- chairman’s modification of the markfor the tax extenders bill
- chairman’s modification to the mark revenue estimate