Three months after dozens of individual and business tax provisions expired, the Senate Finance Committee will mark-up a bill tomorrow that would extend 42 expired provisions—along with two provisions expiring in 2014—through the end of 2015.
Senate Finance Committee Chairman Ron Wyden (D-OR) and Ranking Member Orrin Hatch (R-UT)
released a bipartisan draft bill on April 1. Because it is a bipartisan draft, and Ranking Member Hatch favored extension of targeted measures rather than a blanket extension, the “Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act” leaves out several controversial measures opposed by some Republicans, notably the Production Tax Credit (PTC) for renewable energy, as well as several less-controversial but lesser-known energy efficiency provisions. Bonus depreciation and several advanced biofuels and clean energy provisions are included.
The following twelve provisions were not included in the mark released on April 1:
- Credit for certain non-business.
- Credit for certain non-business energy property (sec. 25C(g)).
- Credit for health insurance costs of eligible individuals (sec. 35(a)).
- Credit for energy efficient appliances (sec. 45M(b)).
- Beginning of construction date for renewable power facilities eligible to claim the electricity production credit or investment credit (secs. 45(d) and 48(a)(5)).
- Seven year recovery period for motorsports (sec. 168(i)(15)).
- Special rules for contributions of capital gain real property made for conservation purposes (secs 170(b)(1)(E) and 170 (b)(2(B)).
- Placed in service date for certain refinery property (sec. 179C(c)(1)).
- Energy efficient commercial buildings deduction (sec. 179D(h)).
- Special expensing rules for film and television productions (sec. 181(f)).
- Special rule for sales or dispositions to implement FERC or state restructuring policy (sec. 451(i)).
- Empowerment zone tax incentives CFC look through (sec. 954(c)(6)).
Even if the full Senate were to approve the tax extender package shortly after it passes out of the committee, as expected, the outlook in the House is far from certain. For months, Ways and Means Chairman Dave Camp (R-MI), who announced his retirement on Monday, has suppressed any talk of tax extenders so that his committee can focus on tax reform. Now that his own leadership has shown little appetite for tax reform before the election, he recently announced upcoming hearings evaluating the merits of extenders, but on a slower time frame than the Senate. Like Ranking Member Hatch, Chairman Camp seems more inclined to evaluate the merits of certain extenders and let certain ones expire permanently.
If a Senate-passed extender package increases pressure on the House to act, renewable energy credits may not fare as favorably in the House as they are predicted to do in the Senate, particularly because in his own tax reform bill, Camp proposed letting all renewable energy credits expire and retroactively reducing PTC payments for projects that had already qualified. House Ways and Means Ranking Member Sandy Levin (D-MI) recently told renewable energy advocates that an extension of the PTC is not “automatically a given.” Advocates can hope that the presumed full extension through 2015 in a Senate bill will strengthen the bargaining position with the House.
Still, Ways and Means Committee members express optimism that Congress will pass an extenders package this year. One senior committee member said that the Senate’s expected passage of extenders in the near future will put more pressure on the House to act. Whether the House will take up extenders before the election is an open question, with the odds more likely that such a House vote occurs after the election. On the one hand, the Ways and Means member speculated that House leadership would want to show that they could do something before the election; on the other hand, if past is precedent, the post-election “lame duck” session might be more likely given House leadership’s reluctance to vote on such an expensive package before the election. The only thing clear is that if energy extenders are extended this year, it will be because they were able to successfully ride the coattails of other, widely supported business tax provisions like the research and development credit. A list of those other provisions is included below.
The full report is available here.