CRS report highlights expired and expiring tax “extender” provisions

Congressional Research Service report—Tax Provisions That Expired in 2017

The Congressional Research Service (CRS) has updated a report on the 28 temporary tax provisions that, despite being routinely extended on a 1- or 2-year basis, were allowed to expire at the end of 2017. Two additional provisions are scheduled to expire at the end of 2018. It is presently unclear whether these provisions will be extended again, made permanent, or simply be allowed to expire or remain expired, although the CRS noted that certain provisions are unlikely to be extended beyond 2017 in light of changes made by the Tax Cuts and Jobs Act (P.L. 115-97).

The CRS also noted that certain disaster-related tax provisions were available for 2017 disasters, and it’s possible that these provisions could be extended or expanded to be made available for 2018 disasters as well.

Background. The Code contains dozens of temporary tax provisions—i.e., provisions with a fixed termination date. Often, these expiring provisions are temporarily extended for a short period of time (e.g., one or two years).

In December 2015, Congress addressed some 50 or so tax extenders hat had expired at the end of 2014 in the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), enacted as Division Q of the Consolidated Appropriations Act, 2016 (P.L. 114-113). Many provisions (around 34 or so) were temporarily extended for two years, through 2016, some were extended through 2019, and others were made permanent. (For more details, see “Checkpoint Special Study: President signs into law Consolidated Appropriations and Tax Extender Bills Affecting Wide Range of Tax Provisions.”)

Then, in February 2018, Congress passed the “Bipartisan Budget Act of 2018” (P.L. 115-123), which retroactively extended through 2017 over 30 extender provisions and also included tax relief to victims of the California wildfires and Hurricanes Harvey, Irma, and Maria. (For more details, see “Thomson Reuters Checkpoint Special Study: Tax “extender” provisions in the Bipartisan Budget Act of 2018.”)

Provisions that expired in 2017. 28 temporary tax provisions expired at the end of 2017. These provisions can be categorized as primarily affecting individuals, primarily affecting businesses, or being energy-related.

The expired individual provisions are:

• . . . the above-the-line deduction for certain higher-education expenses, including qualified tuition and related expenses, under Code Sec. 222;
• . . . the treatment of mortgage insurance premiums as qualified residence interest under Code Sec. 163(h)(3)(E); and
• . . . the exclusion from income of qualified canceled mortgage debt income associated with a primary residence under Code Sec. 108(a)(1)(E).

The expired business provisions are:

• . . . the Indian employment tax credit under Code Sec. 45A(f);
• . . . accelerated depreciation for business property on Indian reservations under Code Sec. 168(j)(9);
• . . . the American Samoa economic development credit;
• . . . the railroad track maintenance credit under Code Sec. 45G(f);
• . . . 7-year recovery for motorsport racing facilities under Code Sec. 168(i)(15);
• . . . the  special domestic production activities rules for Puerto Rico under former Sec. 199(d)(8);
• . . . the mine rescue team training credit under Code Sec. 45N(e);
• . . . the election to expense advanced mine safety equipment under Code Sec. 179E(g);
• . . . special expensing rules for film, television, and live theatrical production under Code Sec. 181;
• . . . empowerment zone tax incentives under Code Sec. 1391(d)(1)(A);
• . . . 3-year depreciation for race horses two years or younger under Code Sec. 168(e)(3)(A)(i); and
• . . . the special rate for qualified timber gains under Code Sec. 631.

The expired energy provisions are:

• . . . the beginning-of-construction date for nonwind facilities to claim the production tax credit (PTC) or the investment tax credit (ITC) in lieu of the PTC under Code Sec. 45(d) and Code Sec. 48(a)(5);
• . . . the special rule to implement electric transmission restructuring under Code Sec. 451(k);
• . . . the credit for construction of energy efficient new homes under Code Sec. 45L;
• . . . the energy efficient commercial building deduction under Code Sec. 179D;
• . . . the nonbusiness energy property credit under Code Sec. 25C;
• . . . the alternative fuel vehicle refueling property credit under Code Sec. 30C(g);
• . . . incentives for alternative fuel and alternative fuel mixtures under Code Sec. 6426(d)(5) and Code Sec. 6427(e)(6)(C);
• . . . incentives for biodiesel and renewable diesel under Code Sec. 40A(a), Code Sec. 6426(c)(6), and Code Sec. 6427(e)(6)(B);
• . . . second generation (cellulosic) biofuel producer credit under Code Sec. 40(b)(6)(J);
• . . . credit for production of Indian coal under Code Sec. 45(e)(10)(A);
• . . . special depreciation allowance for second generation (cellulosic) biofuel plant property under Code Sec. 168(l);
• . . . the credit for qualified fuel cell vehicles under Code Sec. 30B; and
• . . . the credit for 2-wheeled plug-in electric vehicles under Code Sec. 30D(g)(3)(E)(ii).

Provisions scheduled to expire at the end of 2018. The following two provisions are currently scheduled to expire at the end of 2018:

• . . . the increased amount of the excise tax on coal used to finance the Black Lung Disability Trust Fund; and
• . . . the 7.5% “floor” for medical expense deductions under Code Sec. 213(f) (set to increase to 10% in 2019).

Disaster-related tax provisions. The CRS noted that certain tax extender legislation in the past has also included extensions of temporary disaster-related tax benefits, and that Congress may choose to extend or expand the disaster-related tax relief for 2017 disasters (below) to be available for 2018 disasters as well.

Disaster relief for Hurricanes Harvey, Maria, and Irma was part of the Disaster Tax Relief and Airport and Airway Extension Act of 2017 (P.L. 115-63; see “Checkpoint Special Study: Tax Provisions in the 2017 Disaster Tax Relief Bill“). This relief included:

• . . . an enhanced casualty loss deduction for “hurricane-related disaster losses”;
• . . . eased access to retirement funds;
• . . . suspended limits on charitable contributions for hurricane-related disaster relief;
• . . . an employee retention tax credit for employers; and
• . . . special rules on “earned income” for earned income credit and child tax credit purposes.

The Bipartisan Budget Act of 2018 later expanded the scope of the hurricane-related disaster provisions to provide similar relief for 2017 California wildfires. (For more details, see “Thomson Reuters Checkpoint Special Study: Disaster relief provisions in the Bipartisan Budget Act of 2018.”)