House Republicans retool year-end tax legislation

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House Republicans released a revised version Monday of their year-end tax package, putting special emphasis on tax relief for disaster victims, along with improvements to retirement and savings accounts, extensions on moratoriums to some taxes related to the Affordable Care Act, technical correction in the Tax Cuts and Jobs Act, and changes in the operation of the Internal Revenue Service.

The legislation eliminates many of the tax extenders included in the package introduced in late November by House Ways and Means Committee chairman Kevin Brady, R-Texas (see House GOP releases tax package for lame-duck session). The original 297-page bill has been scaled back to 253 pages.

“It’s irresponsible to wait until next year to deliver crucial tax relief for families in 14 states and territories struggling to recover from devastating wildfires, hurricanes, flooding, and other storms,” Brady said in a statement Monday. “Both parties need to come together to help these communities now. This package delivers bipartisan relief from some of Obamacare’s most egregious taxes including ones that stifle innovation, reduce jobs, and increase the cost of families’ health insurance. The package also includes bipartisan negotiated reforms to redesign the IRS for the first time in two decades, and helps workers save more and earlier for retirement and for their children’s education. It includes a handful of routine minor adjustments to the Tax Cuts and Jobs Act, similar to the nearly 250 tax technical corrections required following the bipartisan Reagan tax reform of the 1980’s.”

Despite the scaled-back package, it’s unclear whether the package will attract support from Democrats in the House or from Brady’s own Republican colleagues in the Senate in time to pass by the end of the year with so few days left on the legislative calendar. Republicans are still at odds over plans on how to prevent another government shutdown.

In the area of disaster tax relief, the package includes temporary tax provisions for victims of disasters across a number of affected states and territories, including Alabama, California, Florida, Georgia, Hawaii, Indiana, North Carolina, South Carolina, Texas, Virginia, Wisconsin, American Samoa, Guam, and the Northern Mariana Islands. The retirement and savings provisions include an expansion of 529 education savings accounts to include home schooling and apprenticeship programs, as well as for unborn children, and a repeal of the maximum age for IRA contributions.

The bill would delay the Affordable Care Act’s medical device tax for another five years, delay the ACA’s health insurance tax for another two years, delay the tax on so-called “Cadillac” tax plans for another year and permanently repeal the tanning tax. The bill also includes some technical corrections to the Tax Cuts and Jobs Act that are considered to be time sensitive, including allowing businesses such as restaurants and retail stores to immediately depreciate leasehold improvements instead of depreciating them over 39 years, as well as clarification regarding treatment of veterans groups for purposes of the Low Income Housing Tax Credit. The bill also contains some provisions for tax-exempt entities, including repealing a tax on transportation fringe benefits for entities such as nonprofits and religious organizations, and repealing the Johnson Amendment, which prohibits 501(c)3 tax-exempt organizations from endorsing or opposing political candidates.

The package also includes a number of IRS reforms that have attracted bipartisan support, including notices about the closures of Taxpayer Assistance Centers, whistleblower reforms, provision of information regarding low-income taxpayer clinics, and codification of the IRS Free File program.

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Finance, investment and tax-related legislation Tax reform Tax extenders Disaster recovery Kevin Brady