Daily Tax Update - April 3, 2014: Finance Committee Approves Package of Extenders

FINANCE COMMITTEE APPROVES PACKAGE OF “EXTENDERS”:  Today, the Senate Finance Committee approved the extension of dozens of expired or expiring tax provisions, known as “extenders,” through the end of 2015. The bill (The Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act) also contains a “sense of the Committee” provision expressing support for comprehensive tax reform.

Chairman Wyden said, “The very fact that the committee is marking up the EXPIRE Act today shows the urgency of tax reform. Now, I understand why Americans who flip on C-SPAN and watch this proceeding are skeptical about the prospect of improvement. There have been loads of promises in the past of tax reform. When I joined the Finance committee nearly a decade ago, I couldn’t possibly have imagined chairing Congress’ fifteenth time renewing the stop-and-go tax cuts called ‘extenders.’”  Wyden added, “By passing this bill, the Finance Committee has put an expiration date on the status quo. The stop and go nature of these tax extenders contributes to the lack of certainty and predictability America needs to create more family wage jobs. But it makes no sense to let these incentives disappear without a comprehensive reform proposal to replace them when jobs, innovation and research, and people’s homes are on the line.”

Among the provisions in the bill are:

  • Look-thru treatment of payments between related controlled foreign corporations under foreign personal holding company rules: The proposal extends for two years the application of the look-thru rule, to taxable years of foreign corporations beginning before January 1, 2016, and to taxable years of U.S. shareholders with or within which such taxable years of foreign corporations end. The proposal is effective for taxable years of foreign corporations beginning after December 31, 2013, and for taxable years of U.S. shareholders with or within which such taxable years of foreign corporations end.”
  • A sense of the Committee to express support for comprehensive tax reform:  The Chairman’s modification expresses the “sense of the Committee that comprehensive tax reform should commence next Congress and conclude before the current tax extenders have expired; that Congress should endeavor, as part of tax reform, to eliminate temporary provisions from the tax code, thus making permanent those provisions that merit such treatment and allowing others to expire; that a major focus of tax reform should be fostering economic growth and lowering tax rates by broadening the tax base; and that the Chairman and Ranking Member of the Finance Committee should consult with the Chairman and Ranking Member of the Budget Committee so as to ensure that the appropriate baseline is used during tax reform.”

The bill contains several revenue raisers including: 

  • Extending paid preparer EIC due diligence requirements to the child tax credit,
  • 100 percent continuous levy authority on payments to Medicare providers and suppliers (sec. 6331 of the Code), and
  • Exclusion from gross income of certain clean coal power grants.

Details on the EXPIRE Act, including the full description of the bill, summary, JCT estimate, and amendments can be found here.

Today, the House Budget Committee passed Chairman Paul Ryan’s Fiscal Year 2015 budget plan, which broadly supports tax reform.

MISCELLANEOUS GUIDANCE RELEASED:
Revenue Ruling 2014-9 provides simplified safe harbor due diligence procedures a plan administrator may use in order to be deemed to have reasonably concluded that an amount was a valid rollover contribution.  The revenue ruling provides two new streamlined safe harbor due diligence procedures that, in the absence of evidence to the contrary, will give rise to the presumption that the administrator of the receiving plan reasonably concluded that a rollover was valid.

TAX BILLS INTRODUCED APRIL 2ND:

1. [113rd] H.R.4365 : To amend the Internal Revenue Code of 1986 to permanently extend the new markets tax credit, and for other purposes. Sponsor: Rep Gerlach, Jim [PA-6] (introduced 4/2/2014)      Cosponsors (8) Committees: House Ways and Means Latest Major Action: 4/2/2014 Referred to House committee. Status: Referred to the House Committee on Ways and Means.


2. [113rd] H.R.4376 : To amend the Internal Revenue Code of 1986 to modify safe harbor requirements applicable to automatic contribution arrangements, and for other purposes. Sponsor: Rep Braley, Bruce L. [IA-1] (introduced 4/2/2014)      Cosponsors (None) Committees: House Ways and Means; House Education and the Workforce Latest Major Action: 4/2/2014 Referred to House committee. Status: Referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.