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Brief renewal ahead for U.S. ‘extenders’ tax breaks

WASHINGTON (Reuters) – Congressional Republicans stepped back on Tuesday from a fight to overhaul a package of special-interest U.S. tax breaks, known as the “extenders,” by saying all of them would soon be renewed retroactively, but only through the end of this year.

The Obama administration also weighed in, with Treasury Secretary Jacob Lew meeting with congressional Democrats and saying in a statement that the White House was “open to supporting shorter-term alternatives” on the extenders.

Often criticized as emblematic of a loophole-riddled tax code, the wide-ranging extenders list affects corporate research, multinational tax avoidance strategies, teachers, commuters, green energy and dozens of other interests.

At a cost of tens of billions of dollars to taxpayers, the 55-item extenders package also includes some very narrow measures, such as tax breaks for NASCAR race tracks, Puerto Rican rum producers, racehorse owners and Hollywood studios.

House Republicans had been pushing to make some of the extenders permanent, but a tentative deal collapsed last week after the White House threatened a veto.

The Republican who will soon become the top tax writer in the House of Representatives said at a conference that the package would be renewed, setting aside restructuring for now.

“The president blew it up, so we’re just going to do a clean, one-year deal,” said Representative Paul Ryan, who will take over in January as chairman of the House’s tax panel.

An aide to Ryan said the lawmaker meant the extenders would be renewed through the end of 2014.

Since their last authorized extension expired at the end of 2013, the extenders have been in limbo. The Internal Revenue Service has warned that failure to address the situation this year could delay tax return processing in 2015.

Businesses have clamored for months for more tax-planning certainty, pressuring Congress to act.

“We’ve gone from being on the cusp of a deal … to a situation where probably our only recourse will be to pass a one-year retroactive extension of all tax extenders,” said Republican Senator Orrin Hatch at another conference. He will become chairman of the Senate’s tax panel in January.

Renewing the extenders through 2014 means Congress will have to deal with them again next year, perpetuating a long-standing routine of annual reconsideration of the package.

Republican Majority Leader Kevin McCarthy told reporters the House would approve a bill this week to renew the extenders.

(Additional reporting by David Lawder and Jason Lange; Editing by Lisa Von Ahn)

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