Despite efforts by some members of Congress, legislative action on 29 tax extenders continues to be delayed. Tax extenders are items that are not permanent provisions in the tax law; they live in a continual state of life support. They are either kept alive through periodic extensions or terminated.
Historically, Congress has not often passed tax extenders as “stand-alone” legislation. More commonly, they have been attached to other, more urgent, bills that are considered “must pass” legislation (such as a government funding, infrastructure or debt limit bill) that may have broad support.
Due to the uncertainty surrounding the tax extenders, some of our clients that benefit from the expired provisions have chosen to extend their 2018 income tax returns hoping Congress may act before their returns need to be filed. However, hearings in the House of Representatives intended to address tax extenders have turned political, with Democrats criticizing the Tax Cuts and Jobs Act and how it was passed and Republicans touting the Act’s benefits and, in some circles, suggesting extenders are no longer needed.
A further complication involves the House’s “pay as you go” rules that generally require reduced taxes and increased spending to be offset by revenue raisers (unless waived). Whether political differences can be put aside to pass tax extender legislation in the House remains an open question.
Bipartisan Consensus in the Senate?
At the end of February, Senate Finance Committee Chairman Chuck Grassley (R-IA) and Ranking Member Ron Wyden (D-OR) introduced legislation to retroactively extend the tax provisions that expired at the end of 2017 and 2018 through 2019 as part of their Tax Extender and Disaster Relief Act of 2019. Comments by other senators suggest there may be broad bipartisan support for the tax extenders in the Senate; however, Senate rules generally require 60 votes to avoid a filibuster of legislation. With the current Senate consisting of 53 Republicans and 47 Democrats, some Democratic votes would be required to move tax extender legislation through the Senate. As noted above, the provisions of the Grassley/Wyden proposal will likely need to be tucked into other legislation initiated and passed by the House. There may be opportunities for a little “horse trading” to include some or all the tax extender provisions in major pieces of legislation as they move through Congress later this year.
What is on the Extender List?
Here is a list of the 29 tax extenders included in the Grassley/Wyden proposal:
Other tax provisions slated to expire at the end of 2019 may also be incorporated in an extender legislation deal. These include, for example, the suspension of the medical device excise tax and the “craft beverage” provisions.
We will continue to monitor activities in Congress and provide additional updates. If you have questions on any of the tax extenders or legislative prospects, please contact your Eide Bailly tax professional
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