Brady Assembles Two-Year Tax Extenders Bill as Backup

House Ways and Means Chairman Kevin Brady, R-Tex., has released legislation, The Tax Prevention and Real Estate Investment Act of 2015 (HR 34) that would extend some 50 tax provisions for two years. Brady said it was intended as a backup should negotiators currently working on a bigger bill fail to reach an accord.

For their part, lawmakers are uncertain what kind of bill they will be facing in the next week or two. “It’s either going to be a bigger deal or it’s probably going to be a fallback to a two-year extension,” said Senate Finance Committee member John Thune, R-S.D. “The House is probably going to send us something and we’ll see what they send us and what we might be able to add to it.”

Several of the provisions in the Brady bill are modified to make them more effective, according to a summary of the legislation provided by his office. In those cases, the modifications generally become effective in 2016. In addition, the proposal includes a number of additional tax policy changes and reforms to the IRS. The bill also addresses real estate investment trusts and certain energy-related tax proposals.

While negotiations are ongoing for a larger extenders bill, which includes making some of the provisions permanent, Brady decided to prepare legislation in the event that negotiators fail to reach an agreement. The Finance Committee on July 21 approved a two-year, $95-billion package of tax extenders that Chairman Orrin G. Hatch, R-Utah, modified to include three revenue provisions totaling $1.843 billion (TAXDAY, 2015/07/22, C.1).

According to Senate Finance Committee ranking member Ron Wyden, D-Ore, negotiations are going nonstop. “I think it would be a great mistake to have a repeat of 2014 when the Congress passed a bill with the shelf life of a carton of eggs,” he said. But roadblocks remain, according to Hatch. The senior tax writer said he has heard that House Minority Leader Nancy Pelosi, D-Calif. is not that enthusiastic about it. “I think she will be in the end. I hope she’ll look at what we’re doing and say, that’s pretty good.”

Hatch also raised the possibility of continuing talks well into the weekend in order to reach an agreement. “We’re trying to see if we can put this together,” he said. “We all know it’s coming pretty close to the end so we have got to finish before the end here, which is probably going to go into the weekend.”

Pressure is mounting to get it done as lawmakers are scheduled to leave town for the remainder of the year on December 11. But if all does not go well, they acknowledge that their work may need to spill into the week beginning December 14.

One of the major sticking points is indexing the child care tax credit to inflation, which Democrats want in the bill and Republicans oppose. Hatch said such a provision was a “nonstarter.” “We cannot do that in a bill this large. We just can’t do it.”

Thune also does not believe that indexing will be accepted by Republicans. “I think that takes you to whole different kind of level that makes the package a lot bigger and I think that’s problematic for a lot of people to get passage in the House.”

The other big hang-ups, Thune said, include the size of the package and the willingness of Democrats to entertain putting some safeguards in place or some provisions that would ensure the earned income tax credit program is operating with integrity. Democrats are pushing to make the earned income tax credit permanent but Republicans remain concerned about preventing fraud and abuse of the program.

Hatch did not dismiss the possibility that if the talks appear to be getting nowhere, then lawmakers would likely consider the Brady bill. “If we can’t get the larger bill, well then yeah, we would certainly try to see what we can do with the House bill. But I’m hoping that we can do a major piece of legislation that both sides will feel good about. And both sides would accept and support. I would prefer that,” he said.

Tax Increase Prevention and Real Estate Investment Act of 2015

Section-by-Section Summary of the Proposed House Amendment to the Senate Amendment to H.R. 34



Wolters Kluwer TAA

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