House GOP releases tax package for lame-duck session
House Ways and Means Committee chairman Kevin Brady, R-Texas, released a far-reaching tax and oversight package Monday night containing tax extenders, technical corrections to the Tax Cuts and Jobs Act, retirement and other savings enhancements, and change the way the Internal Revenue Service operates.
The package includes the Retirement, Savings, and Other Tax Relief Act of 2018, along with the Taxpayer First Act of 2018, as well as temporary tax relief for victims of the wildfires in California and for communities impacted by Hurricanes Florence and Michael and by storms and volcanoes in the Pacific.
The package also addresses tax extenders through the end of 2018, such as tax credits for qualified fuel cell motor vehicles and energy-efficient homes, as well as tax breaks for race horses and motor sports entertainment facilities. It also would make permanent a railroad track maintenance tax credit. However, at least one traditional tax extender is being phased out, for biodiesel and renewable diesel. The package also includes some time-sensitive technical corrections to the Tax Cuts and Jobs Act, particularly a technical glitch in the depreciation tax break that discouraged many retail stores and restaurants from making improvements to their property. It also would clarify the treatment of veterans as a specified group for purposes of the Low-Income Housing Tax Credit, as well as clarify the treatment of net operating losses and the timing of NOL deductions. The bill would also correct a provision in the TCJA involving the deduction of sexual harassment settlements by businesses that could have harmed victims who had signed nondisclosure agreements.
“This broad, bipartisan package builds on the economic successes we continue to see throughout our country,” Brady said in a statement. “The policy proposals in this package have support of Republicans and Democrats in both chambers. I look forward to swift action in the House to send these measures to the Senate.”
The bill would set up an independent appeals office at the IRS, codify the IRS Free File program and mandate a comprehensive customer service strategy at the IRS. The IRS would also have to submit a plan to Congress for a total overhaul of itself by September 2020. It would also provide new requirements before the IRS could seize taxpayer property based on allegations of "structuring transactions" to avoid bank-reporting requirements. The bill would also make changes in the structure of the IRS and its National Taxpayer Advocate office. The bill also includes provisions relating to cybersecurity and identity protection, including the public-private partnership set up by the IRS's Security Summit and the Information Sharing and Analysis Center they created, as well as guidelines for stolen identity refund fraud cases.
In the retirement savings area, one provision includes a repeal of the maximum retirement age of 70 1/2 for traditional IRA contributions. Other provisions involve multiple employer plans and pooled employer plans, as well as a prohibition on qualified employer plans from making loans through credit cards and similar arrangements. Parents would be allowed to withdraw up to $7,500 from a retirement account without incurring a penalty if they are about to have a child or adopt one. There is also a provision for startup businesses enabling them to deduct as much as $20,000 in startup expenses.
While some parts of the package have received bipartisan support, including the IRS reforms and retirement provisions, it is unclear whether there will be enough support from Democrats to pass the package in the Senate, although Republicans reportedly may force a vote in the House as soon as this week. The ranking Democrat on the Senate Finance Committee, Sen. Ron Wyden, D-Ore., told Politico he hadn’t been consulted on the package before it was introduced by Brady. “They are not having conversations with Democrats and to have an extenders package or a technical corrections package, at some point the majority has got to come to the minority and talk about plans,” he said.
Democrats are scheduled to take control of the House in January after winning seats in the midterm elections, and Rep. Richard Neal, D-Mass., will be taking over the chairmanship of the House Ways and Means Committee. The lame-duck session is only scheduled to last until mid-December.