Expect plenty of brave talk about not extending all 55 expired provisions . But that’s mostly hot air. For instance, the first draft of the bill that was OK’d by the Senate Finance Com. left out a bunch of industry-specific breaks. However, Chm. Ron Wyden (D-OR) caved on many he had first nixed, and the full committee voted back several others. In the end, only two provisions were left out in the cold… expensing for refinery assets and a credit for manufacturing energy-saving appliances. Some of the reinstated provisions will be tweaked a bit . For example, more energy savings will be required to get the deduction for energy-efficient buildings. And small start-up companies that have no income tax liability will be permitted to claim a credit for their R&D costs. The credit will offset their payroll tax liability.
A couple of enforcement-related tightenings will make the final cut, too. Preparers of returns claiming the child tax credit will have extra work to do. They will have to supply IRS with documentation of the efforts they took to determine that their clients’ claims for the child credit were valid or they’ll owe a $500 penalty, similar to the rules on earned income credit returns. This requirement will take effect for 2015 tax returns. The Revenue Service will revise Form 8867 for preparers to use. And IRS will get to grab 100% of Medicare payments to doctors who owe tax. The Senate wants to revive the expired tax breaks soon…within a few weeks. But the House is on a much slower track.
Taxwriters there continue to talk about debating the merits of each provision. That will slow the process considerably. As a result, we still think the breaks won’t be reinstated until late this year, retroactive to Jan. 1, of course. And we expect they’ll be given a two-year lease on life, until the end of 2015, throwing their next expiration into the lap of a future Congress.