Daily Tax Update - August 2, 2012: House Passes Bill to Expedite Tax Reform Process

HOUSE PASSES BILL TO EXPEDITE TAX REFORM PROCESS: Today, legislation to expedite tax reform procedural issues, (H.R. 6169, the Pathway to Job Creation through a Simpler, Fairer Tax Code Act), passed the House by a vote of 232-189.

  • H.R. 6169 would require a future tax reform bill to consolidate the current six individual tax brackets into not more than two brackets of 10 percent and up to 25 percent; reduce the corporate rate down to at least 25 percent; repeal the alternative minimum tax; broaden the base to specified levels; and change the international business tax system from a worldwide system of taxation to a territorial system.
  • The House would be required to consider a tax reform bill within 15 days after all committees with jurisdiction over the bill had completed a mark up.  Following House action, the Senate would have two weeks to take up the legislation, which would not be subject to a cloture vote on a motion to proceed or on individual amendments.
  • House Ways and Means Chairman Dave Camp said: "This bill forces Congress to do its job – something I think all Americans will support.  It provides a specific timeline for the House and the Senate to act next year on a comprehensive tax reform bill.  It also ensures an open process.  A bill is introduced and then the appropriate committees may amend it.  Democrats and Republicans alike will have an opportunity to debate and offer changes."  Camp continued: "Yesterday, the House voted to stop the tax hike.  Today, we voted to force Congress to act on tax reform next year so we can create up to 1 million new jobs by making the tax code simpler and fairer.  The process we laid out ensures public debate where all sides can offer amendments."  Camp added, "I urge the Senate to quickly take up this legislation, protect jobs and join us in making the tax code simpler and fairer for all Americans."

FINANCE COMMITTEE APPROVES MODIFIED "EXTENDERS" PACKAGE:  Today, the Senate Finance Committee passed a modified chairman’s mark of the "Family and Business Tax Cut Certainty Act of 2012."  The legislation extends dozens of tax cuts that have expired or are scheduled to expire at the end of this year. The legislation includes tax cuts for small businesses, working families, research and development, and renewable energy.  The proposal also includes a two-year AMT patch.

The modifications include:

  • Extend AMT relief to 2013. Currently, a taxpayer receives an exemption of $33,750 (individuals) and $45,000 (married filing jointly) under the AMT.  Current law also does not allow nonrefundable personal credits against the AMT.  The proposal increases the exemption amounts for 2012 to $50,600 (individuals) and $78,750 (married filing jointly).  The modified proposal would also increase the exemption amounts for 2013 to $51,150 (individuals) and $79,850 (married filing jointly).  The proposal also allows the nonrefundable personal credits against the AMT in both 2012 and 2013.  The proposal is effective for taxable years beginning after December 31, 2011.
  • Removal of provision regarding the definition of gross estate for RIC stock owned by nonresident not a citizen of the US.  Although stock issued by a domestic corporation generally is treated as property within the United States, stock of a RIC that was owned by a nonresident non-citizen is not deemed property within the United States in the proportion that, at the end of the quarter of the RIC’s taxable year immediately before a decedent’s date of death, the assets held by the RIC are debt obligations, deposits, or other property that would be treated as situated outside the United States if held directly by the estate (the "estate tax look-through rule for RIC stock").  The modified proposal removes the provision that would have permitted the look-through rule for RIC stock to apply to estates of decedents dying before January 1, 2014. 
  • Make permanent, modify and expand disclosure of prisoner return information to certain prison officials.
  • Removal of provision regarding the expensing of "brownfields" environmental remediation costs.
  • Modify increase in the maximum amount and phase-out threshold under section 179.  The modified proposal would increase the maximum amount and phase-out threshold under section 179 in 2012 and 2013 to the levels in effect in 2010 and 2011 ($500,000 and $2 million respectively).  Within those thresholds, the modified proposal would also allow a taxpayer to expense up to $250,000 of the cost of qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property.  This proposal expires at the end of 2013. 
  • Extension and Modification of Incentives for Renewable Electricity Property Wind Production Tax Credit and Modification of Other Renewable Energy Credits.  The bill extends through 2013 the production tax credit for wind.  The provision also modifies section 45 to allow renewable energy facilities that begin construction before the end of 2013 to claim the 10-year credit, and amends section 45 to clarify that commonly recycled paper is excluded from qualifying from the production tax credit.
  • Investment Tax Credit in Lieu of Production Tax Credit.  The bill would allow facilities qualifying for the production tax credit to elect to take the investment tax credit in lieu of the production tax credit for facilities that begin construction by the end of 2013. 
  • Seven-year recovery period for motorsports entertainment complexes.  The bill extends for two years, through 2013, the special seven year cost recovery period for property used for land improvement and support facilities at motorsports entertainment complexes. 
  • Modification of tax treatment of certain payments to controlling exempt organizations. The bill extends the provision two years, to the end of 2013. 
  • American Samoa economic development credit.  The bill extends the provision two years to the end of 2013 and modifies the credit to make it available to all qualifying manufacturing businesses operating in American Samoa. 
  • The bill also contains a provision expressing that it is the sense of the Committee that comprehensive tax reform is vital to economic growth, a major focus of tax reform should be broadening the base so long as it lowers tax rates, and when possible responsibly phase-out energy tax expenditures
  • A summary of the extenders bill can be accessed here:

TAX BILLS INTRODUCED AUGUST 1:

1. [112th] H.R.6250 : To amend the Internal Revenue Code of 1986 to exclude from gross income any prizes or awards won in competition in the Olympic Games.
Sponsor: Rep Farenthold, Blake [TX-27] (introduced 8/1/2012)   Cosponsors (None)Committees: House Ways and Means
Latest Major Action: 8/1/2012 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

2. [112th] H.R.6252 : To amend the Internal Revenue Code of 1986 to exclude from gross income any prizes or awards won in competition in the Olympic Games.
Sponsor: Rep Bono Mack, Mary [CA-45] (introduced 8/1/2012)   Cosponsors (1)Committees: House Ways and Means
Latest Major Action: 8/1/2012 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

3. [112th] H.R.6262 : To amend the Internal Revenue Code of 1986 to provide tax relief to middle-class families, small businesses, and family farms.
Sponsor: Rep Loebsack, David [IA-2] (introduced 8/1/2012)   Cosponsors (2)Committees: House Ways and Means
Latest Major Action: 8/1/2012 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

4. [112th] H.R.6267 : To amend the Internal Revenue Code of 1986 to eliminate the tax on Olympic medals won by United States athletes.
Sponsor: Rep Schock, Aaron [IL-18] (introduced 8/1/2012)   Cosponsors (2)Committees: House Ways and Means
Latest Major Action: 8/1/2012 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

5. [112th] H.R.6268 : To amend the Internal Revenue Code of 1986 to repeal the phasedown of the credit percentage for the dependent care tax credit.
Sponsor: Rep Schwartz, Allyson Y. [PA-13] (introduced 8/1/2012)   Cosponsors (None)Committees: House Ways and Means
Latest Major Action: 8/1/2012 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

6. [112th] H.R.6271 : To amend the Internal Revenue Code of 1986 to exclude certain farmland and family-owned business interests from the value of the gross estate of decedents.
Sponsor: Rep Tipton, Scott [CO-3] (introduced 8/1/2012)   Cosponsors (None)Committees: House Ways and Means
Latest Major Action: 8/1/2012 Referred to House committee. Status: Referred to the House Committee on Ways and Means.

7. [112th] S.3466 : A bill to amend the Internal Revenue Code of 1986 to provide a credit for employer-provided job training, and for other purposes.
Sponsor: Sen Menendez, Robert [NJ] (introduced 8/1/2012)   Cosponsors (None)Committees: Senate Finance
Latest Major Action: 8/1/2012 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.

8. [112th] S.3471 : A bill to amend the Internal Revenue Code of 1986 to eliminate the tax on Olympic medals won by United States athletes.
Sponsor: Sen Rubio, Marco [FL] (introduced 8/1/2012)   Cosponsors (None)Committees: Senate Finance
Latest Major Action: 8/1/2012 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance.

INTERNAL REVENUE SERVICE - CIRCULAR 230 DISCLOSURE: 
As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

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