December 17, 2019
by Dean Zerbe for alliantgroup
Published in Forbes
So nothing, nothing, nothing – and then bang! Like the parent who waits to the last minute to get to the toy store – Congress suddenly decided to move on taxes in a big way – repealing some unpopular taxes as well as extending a number of popular tax provisions – including Section 179D Energy Efficient Commercial Buildings (big news for designers of government buildings) and Work Opportunity Tax Credit (WOTC).
First in Santa’s bag were the permanent (!) elimination of three tax provisions from the Affordable Care Act – the excise tax on medical devices; the tax on high-end health insurance (“Cadillac Tax”); and finally, the Health Insurance Tax – excise on tax on health insurance providers.
Next, Congress added in the SECURE Act – which includes a number of commonsense reforms to retirement planning which enjoyed broad bipartisan support – a useful overview here.
Then it was a fight over technical corrections of the tax reform bill (especially bonus depreciation for retailers/restaurants, expansion of refundable credits for working families/children and tax extenders (with a special side scrum on electric vehicles).Today In: Money
When the dust settled (at about 3 am) there was no deal on technical corrections or expansion of refundable credits. However, a lovely gift-wrapped package did emerge — a clean extenders bill (essentially a date change – for most provisions to December 31, 2020 – and seemless, no break in coverage). However, the biodiesel credit was extended to 2022 (thanks to the unrelenting efforts of my old boss Chairman Grassley – R-IA) as well as the short-line railroad credit was extended to 2023 (I’m told thanks to Senator Crapo – R-ID).
Other extenders (as well as Section 179D – thanks greatly to Senator Cardin – D-MD — and WOTC) include provisions related to beer, wine and distiller spirits (my new Bourbon-making friends in Louisville will be happy); deduction of qualified tuition and related expenses; reduction in medical expense deduction floor; new market tax credits; etc. Essentially, almost all the tax extenders were extended. But no love for electric cars. Finally, the look-through rule for controlled foreign corporations was also extended. The actual language for extenders is here.
Two stocking stuffers of note — there is a modification of private foundation excise taxes – with a flat 1.39% rate replacing the 2%/1% rate. The private foundations claim this will lead to significantly higher payout – we will see. Also, the tax on nonprofit parking (from the tax reform bill) was eliminated.
So – all in all a big night for taxes. Big credit to Chairman Neal (D-MA) for threading the needle of his caucus to get this through the House, and as always, a thank you to Ranking Member Brady R-TX) for his good work. While some things didn’t get on the sled – notably expansion of refundable credits, accelerated deprecation for retailers/restaurants as well as electric vehicles — many, many tax provisions did make it – making it a very nice Christmas for many in tax land.
Dean Zerbe is alliantgroup’s National Managing Director based in the firm’s Washington, D.C. office. Prior to joining alliantgroup, Zerbe was Senior Counsel and Tax Counsel to the U.S. Senate Committee on Finance. He worked closely with then-Chairman of the Finance Committee, Senator Charles Grassley, on tax legislation. During his tenure on the Finance Committee, Zerbe was intimately involved with nearly every major piece of tax legislation that was signed into law, including the 2001 and 2003 tax reconciliation bills, the JOBS bill in 2004 (corporate tax reform) and the Pension Protection Act. Zerbe is a frequent speaker and author on the outlook for short-term and long-term changes in tax policy, as well as ways accounting firms can help their clients lower their tax bill.
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