Leaders of the Senate Finance Committee are hoping their fellow members of Congress will work on passing tax extenders legislation to renew expired tax provisions for individual and business taxpayers, but the legislation probably will not be passed until after the midterm elections this fall.
“Today, American businesses of all sizes are making their required quarterly tax payments to the IRS and trying to chart their path forward for 2014 and beyond,” said Senate Finance Committee Chairman Ron Wyden, D-Ore., in a statement Monday. “At a time when entrepreneurs and innovators should be identifying investments to support their business strategies and pursuing growth opportunities, Congress’s failure to renew expired tax provisions is forcing these companies to make “no interest loans” to the federal government through higher taxes. It’s unacceptable that inaction by Congress is denying American business the clarity and certainty they need to plan for tomorrow.”
Wyden noted that the issue of the expired tax breaks is having an impact on those at the heart of U.S. economic growth, pointing to the lapsed tax break that expanded Section 179 expensing limits from $25,000 to $500,000 (see Enhanced Section 179 Amounts for Fiscal Year Entities).
“For example, because Congress has not renewed increased expensing limits under Section 179, industrious Oregon wine makers will be forced to pay more for a new wine press needed today to expand their business, or they may be forced to choose between new equipment and hiring new employees,” said Wyden. “Also, with renewable energy incentives like the wind productive tax credit in question, hundreds of millions of dollars in job-creating investments are at risk, and the United States is falling further behind its economic competitors, like Germany and China, in transforming its energy markets.”
Wyden also pointed to the impact on homeowners whose mortgages exceed the value of their homes. “Finally, congressional inaction also severely complicates the ability of underwater homeowners to reduce their mortgage debt without being socked with a big tax bill,” he said. “Today, with taxes due, continuing inaction on renewing expired tax provisions is diverting business investment, driving unnecessarily higher taxes, and slowing economic growth. We cannot let this uncertainty drag on. “
He noted that the Senate Finance Committee came together this spring to produce the EXPIRE Act, which dealt with extending most of the dozens of expired tax breaks, in a cooperative, bipartisan way (see Senate Finance Committee to Markup Tax Extenders Bill). “It wasn’t easy, but it got done,” said Wyden. “Now is the time to revive the EXPIRE Act and renew these important tax provisions while we push ahead on comprehensive reform.”
However, the bill stalled when it came before the full Senate, as Republicans objected to the Democratic leadership’s efforts to restrict amendments (see Tax Cuts in Limbo as Senate Republicans Block Extenders Bill).
Wyden’s counterpart on the Senate Finance Committee, ranking Republican member Orrin Hatch, R-Utah, predicted that Congress will take up the extenders legislation after the midterm elections in November.
“We're going to get it done,” he reportedly told the U.S. Chamber of Commerce, according to Investment News. “I'm confident it will pass, likely during the lame-duck session after the midterms.”
Failure to pass tax extenders before the end of the year could also delay the IRS's efforts to get ready for tax season next year as it will need to complete the programming for its systems and the forms for claiming various tax breaks such as deducting state and local taxes.
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