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The U.S. House Committee on Ways and Means held a hearing on April 8 on several expired business tax provisions that would be extended long-term or made permanent under Chairman Dave Camp’s (R-Mich.) comprehensive tax reform discussion draft released in late February. Throughout the week following the hearing, Ways and Means Committee members introduced several bipartisan bills to make several tax extenders permanent.
Camp’s discussion draft would address several expired provisions—so called “tax extenders”—including the research and development (R&D) tax credit, “look through” treatment for payments between related controlled foreign corporations (CFCs), the subpart F exceptions for active financing income, enhanced section 179 “small business” expensing limits, and certain S corporation relieve provisions. Camp, who announced his retirement from Congress last month, expressed in his opening statement his desire to make certain tax policies permanent now in advance of tax reform to support economic growth.
Camp did not close the door on tax extenders not included in his discussion draft Democrats support, such as the New Markets Tax Credit, the Work Opportunity Tax Credit, parity for mass transit benefits, and the federal deduction for state and local sales tax.
Camp did not commit to a process for moving forward with tax extenders legislation, but said that the Ways and Means Committee is likely to have more than one markup. Camp also left open the issue of how to pay for tax extenders, noting that Congress has a history of not offsetting the cost of extending temporary provisions. Ways and Means Committee Ranking Member Sander Levin (D-Mich.) noted that the cost of making the seven provisions in Camp’s discussion draft permanent would be $125 billion.
During the week, Ways and Means Committee members introduced a number of bipartisan tax extender bills before the House departed for a two-week recess. They include:
- H.R. 4429, introduced by Rep. Pat Tiberi (R-Ohio) to make permanent the subpart F exceptions for active financing income
- H.R. 4438, introduced by Rep. Kevin Brady (R-Tex.) to modify and make permanent the R&D tax credit
- H.R. 4453, introduced by Rep. David Reichert (R-Wash.) to make permanent the reduced recognition period for build-in gains of S corporations
- H.R. 4454, introduced by Rep. Reichert to make permanent certain rules regarding basis adjustments to stock of S corporations making charitable contributions of property
- H.R. 4456, introduced by Rep. Tiberi to make permanent the increased section 179 “small business” expensing limits
- H.R. 4464, introduced by Rep. Charles Boustany (R-La.) to make permanent the “look-through” treatment of payments between related controlled foreign corporations
The Senate Finance Committee approved a bill on April 3 to renew nearly all of the 55 business and individual tax provisions that expired Dec. 31, 2013 for two years. The
“Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act,” would extend 53 provisions, including the deduction for state and local taxes and the research and development tax credit, through Dec. 31, 2015.
Congress may move on tax extenders when it returns to Washington, D.C., during the week of April 28, with possible floor consideration of the Senate Finance Committee-approved bill and a House Ways and Means Committee markup of a bill to make permanent the R&D tax credit (H.R. 4438).
FEI supports efforts to reform the tax code but also urges Congress to renew the tax extender provisions that expired at the end of 2013 in a timely manner to provide U.S. businesses with continuity and certainty for planning.
For more information, contact Karen Lapsevic, Director, Government Affairs, at 202-626-7809 or [email protected].