Republicans Seek to Pass 297-Page Tax, IRS Package During Lame-Duck Session

The House is expected to vote this week on a 297-page tax and IRS oversight package. Generally, the broad legislative package addresses year-end tax extenders, retirement savings, disaster relief, IRS reform, and technical corrections to last year’s tax reform legislation, among other things.

Additionally, the package contains elements of Republicans’ “Tax Reform 2.0” package approved by the House in September. Notably, the most controversial measure of the Tax Reform 2.0 legislative effort, which would make permanent tax reform’s individual and small business tax cuts under the Tax Cuts and Jobs Act (TCJA) (P.L. 115-97), is not included. The new package would also provide tax relief for victims of the California wildfires and Hurricanes Florence and Michael.

House Vote

House Ways and Means Committee Chairman Kevin Brady, R-Tex., released the legislative package late in the evening on November 26. The Retirement, Savings, and Other Tax Relief Bill of 2018 was introduced as an amendment to an unrelated measure, HR 88, which has already been approved in both the House and Senate. The House Rules Committee is scheduled to consider the package on Wednesday, November 28. Thus, the measure could come to the House floor for a vote as early as Thursday, November 29, potentially reaching the Senate by the end of the week.

“This broad, bipartisan package builds on the economic successes we continue to see throughout our country,” Brady said in a November 26 press release. “The policy proposals in this package have support of Republicans and Democrats in both chambers,” he added.

IRS Reform

The nearly 300-page package contains various bipartisan as well as GOP tax and IRS oversight initiatives. Included within the packaged amendment to HR 88 is the House-approved, bipartisan Taxpayer First Bill (HR 5444). The House approved that bipartisan IRS reform package earlier this year. The administrative reform measure includes provisions that aim to modernize IRS information technology (IT) systems, enhance cybersecurity, prohibit the IRS from rehiring a previous employee separated from service for misconduct issues, improve taxpayer service, and establish an IRS Independent Office of Appeals, among other things.

Tax Extenders

Additionally, the broad tax package introduced on November 26 includes a number of tax extenders. Further, the package would make permanent the railroad track maintenance credit. The following expired tax breaks, as enumerated in the measure, would be extended for 2018:

– Sec. 121. Nonbusiness energy property.

– Sec. 122. Qualified fuel cell motor vehicles.

– Sec. 123. Alternative fuel refueling property credit.

– Sec. 124. 2-wheeled plug-in electric vehicle credit.

– Sec. 125. Second generation biofuel producer credit.

– Sec. 126. Credit for electricity produced from certain renewable resources.

– Sec. 127. Production credit for Indian coal facilities.

– Sec. 128. Energy efficient homes credit.

– Sec. 129. Classification of certain race horses as 3-year property.

– Sec. 130. Special allowance for second generation biofuel plant property.

– Sec. 131. Energy efficient commercial buildings deduction.

– Sec. 132. Election to expense advanced mine safety equipment.

– Sec. 133. Extension of special rule for sales or dispositions to implement FERC or State electric restructuring policy for qualified electric utilities.

– Sec. 134. Extension of excise tax credits relating to alternative fuels.

– Sec. 135. 7-year recovery period for motorsports entertainment complexes.

– Sec. 136. Accelerated depreciation for business property on Indian reservation.

– Sec. 137. Expensing rules for certain productions.

– Sec. 138. Indian employment credit.

– Sec. 139. Mine rescue team training credit.

– Sec. 140. Exclusion from gross income of discharge of qualified principal residence indebtedness.

– Sec. 141. Treatment of mortgage insurance premiums as qualified residence interest.

– Sec. 142. Deduction of qualified tuition and related expenses.

– Sec. 143. Extension of empowerment zone tax incentives.

– Sec. 144. American Samoa economic development credit.

Tax Reform

Brady’s tax and IRS oversight package also includes several technical corrections and clarifications to Republicans’ tax reform legislation, the TCJA, enacted last December. In addition to technical amendments to the TCJA, the measure would seek to clarify the treatment of veterans as a specified group for purposes of the low-income housing tax credit and clarify the general public use requirement for qualified residential rental projects.

Tax Reform 2.0

Additionally, the package includes bipartisan provisions of the Tax Reform 2.0 measure, which cleared the House in September. The provisions included, which focus on enhancing retirement savings and business innovation, are the least controversial elements of the House-approved Tax Reform 2.0 measure. However, the most controversial bill of Republicans’ second round of tax reform, Protecting Family and Small Business Tax Cuts (HR 6760), is not included in the new tax and IRS oversight package. HR 6760 would make permanent the TCJA’s individual and small business tax cuts set to expire in 2026. However, Democrats have largely remained opposed to the TCJA and extending its tax cuts, thus Democratic support of a package in which that measure was included would not have likely passed muster in the Senate.

Senate

How the tax and IRS oversight package will fare in the Senate still remains to be seen. Senate Finance Committee (SFC) Chairman Orrin G. Hatch, R-Utah, has expressed support for the measure. “Chairman Brady’s continued efforts to build on tax reforms success are welcome. I am pleased that the package includes policies I’ve championed, like the heart of the Retirement Enhancement Savings Act (RESA), which will improve access to flexible retirement plans for smaller businesses…and common sense policies to streamline and improve the IRS. I am currently reviewing the proposal in its entirety and look forward to consulting with Finance Committee members to determine next steps,” Hatch said in a November 27 statement.

However, a spokesperson for SFC ranking member Ron Wyden, D-Ore., said on November 27 that the package had not been directly shared with Senate Democrats. “The first time Finance Committee Dems saw Brady’s legislation was in his press release,” a spokesperson for Wyden said in a tweet. “There was no communication from his staff, including a heads up that something was coming. That is not how you negotiate.”

At this time, the package needs 60 votes to be approved in the Senate. Accordingly, Democratic support will be needed to reach that threshold.

By Jessica Jeane, Senior News Editor

Text of package can be located here.

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