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Tax Provision

Tax Extenders Bill Near, But Fate Hinges on Midterms, House Aide Says

Joseph Boris  

Joseph Boris  

Congress by the end of September could agree to extend Code provisions that are expiring this year, but the outcome of November’s midterm elections will determine whether the extensions become law, a key Democratic aide predicted on September 8.

With control of both the Senate and the House of Representatives at stake, the fate of so-called tax extenders is likely to depend on which party wins in two months, said Andrew Grossman, chief tax counsel for the majority Democrats on the House Ways and Means Committee. He spoke at a symposium on tax-exempt organizations hosted by the American Bar Association’s Tax Section.

“By all accounts, at the end of September we’re going to see a continuing resolution in our budget process,” Grossman said. “That’s essentially Congress kicking the can a little bit on a government funding bill” while both appropriations committees “get their ducks in a row.”

Inserting extenders into a continuing resolution to fund federal programs into fiscal year 2023, which begins October 1, at the same levels appropriated for 2022 would fit a recent pattern for lawmakers, Grossman said. Congress could also decide to attach time-sensitive tax provisions to another type of must-pass legislation tied to federal spending or possibly to the Enhancing American Retirement Now (EARN) Act and the Securing a Strong Retirement (SECURE) Act 2.0, he added.

“A bill like tax extenders has to ride on a much larger legislative vehicle. It is not something that generally will be processed in the House and processed in the Senate in regular order, then be passed on to the president,” Grossman explained.

“Most press reports sort of agree that that a CR would probably go to mid-December—that’s sort of comfortably after the November elections, ahead of the holidays,” he said.

“But the real question is whether or not there would be any tax legislation at all in such a package,” the Ways and Means counsel cautioned. “And a lot of that will almost no doubt rest on what happens in the elections in November.”

Such provisions, he pointed out, generally have bipartisan support in both the House and the Senate as a result of lengthy negotiations over crucial government spending bills. Language to extend tax measures, such as those from the Republican-passed Tax Cuts and Jobs Act of 2017 (PL 115-97), are unlikely to be allowed to sink an entire spending bill, Grossman said.

“That means that all corners really need to want to play ball. I obviously don’t want the House to flip” from Democratic to Republican control, “but what happens if in November, the House does flip, and the Republicans are set to take over in 2023? Do the Republicans in that case, say, ‘Well, why are we passing legislation now, when maybe we could get a better deal in 2023, when we control one chamber of Congress?'”

On the other hand, the Democratic aide said, victorious Republicans could decide it would be better for their party to enter the majority next year having cleared away extenders from the previous session of Congress.

Many provisions, Grossman said, aren’t “traditional extenders, in the sense that they haven’t been extended for 20-odd years. Frankly, we kind of jettisoned a lot of those in the Inflation Reduction Act. A lot of those extenders are of the green-energy type, and many were extended for five, if not 10, years” through the Inflation Reduction Act of 2022 (PL 117-169). An exception, he said, is the TCJA’s provision to let large corporations amortize research-and-development expenses over five years rather than being immediately deducted, though it’s already in effect for tax year 2022.

 

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