In the final act of the 113th Congress, the Senate passed and sent to President Barack Obama for his signature the Tax Increase Prevention Act of 2014, extending through the end of 2014 numerous familiar deduction and credit provisions that expired at the end of 2013.
The ABLE Act, which is intended to help people with disabilities save money for health-care costs and other needs, was merged with the tax bill, and was also approved as a result.
Provisions expiring at the end of 2014 were not addressed.
Extended through the end of this year are a host of tax-related deductions and credits that affect both businesses and individuals, among them the Work Opportunity Tax Credit, the tax credit for residential energy efficiency improvements, and measures affecting business research, wind power and foreign profits.
The measures extended by this Congressional action will not be renewed for the tax year 2015 unless the new Congress takes the matter up again.
Outgoing Senate Finance Committee Chairman Ron Wyden (D-OR) voted against the measure in protest over the short-term nature of the extension, noting that the renewed life of the provisions,two weeks (and retroactive to January 1, 2014), was less than the “shelf-life of a carton of eggs.”
Incoming Senate Finance Committee Chairman Orrin Hatch (R-UT) also noted the limitations imposed by a short-term extension and suggested that “we certainly need to do an extender bill for more than two weeks.”
With the likelihood that Congress and the President will engage in an intensive effort at tax reform in the early part of the new Congress, the tax writers are concerned that calls for a longer extension and extensions of provisions that will expire shortly will detract from their ability to focus on tax reform. As a result, Chairman Hatch may try early in the session to produce the type of deal that eluded lawmakers several weeks ago, in which a number of the provisions were to be made permanent with others extended through the end of 2015.
Even if tax reform is enacted next year, it would not be effective until beyond 2015, leaving another gap unless a further extension is enacted.
Chairman Hatch and soon to be ranking member Wyden, as well as the new chairman of the Ways and Means Committee, Paul Ryan (R-WI), are expected to discuss the specifics of their agendas in the coming days as the new 114th Congress prepares to take office.