CPA & Business Advisory Blog

Congress Tax Extension

Congress Considers Extending Expired Tax Provisions

Congress is considering several measures that would extend tax provisions that were previously allowed to expire.

Here are the facts:

  • On Sept. 17, 2015, the House Ways and Means Committee approved legislation to permanently extend expired tax provisions for bonus depreciation, qualified leasehold improvements and certain expenses for teachers
  • The Joint Committee on Taxation estimates the extension of various expired provisions would increase the federal deficit by over $400 billion over the 10-year budget period
  • The House bill would make permanent the 50% additional first year depreciation deduction for qualified purchases. Bonus depreciation would also be allowed for qualified leasehold improvements (QLIs)
  • The bill removes the requirement that QLIs must be placed in service more than three years after the date the building was first placed in service
  • The House bill also would make permanent the $250 above-the-line deduction for eligible educator expenses and index that amount for inflation.
  • In July, the Senate Finance Committee approved legislation to provide for a two-year retroactive extension of over 50 expired tax provisions, including bonus depreciation and increased Section 179 expensing limitations.

Status

Republicans are in favor of extending these expired tax provisions permanently.  However, Democrats oppose this noting that permanent extensions would be included in the official budget baseline, which explains why making them permanent would add to the federal debt.

While President Obama, and many Democrats, support the aim of the tax breaks, the president has vowed to veto the permanent extensions because of the deficit impact.

While none of these measures have been enacted, both the House and Senate are working on various packages to extend expired provisions.  Many are predicting it will be December before final action is taken.  It also remains unclear whether we will get permanent relief or just another short-term “extender package,” as was done at the end of 2014.

Do you have questions about how these tax provisions affect you and/or your business? Contact Jim Forbes, CPA, a member of Skoda Minotti’s Tax Planning and Preparation department, to learn more.

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