Congress Creeping Along on Tax Extenders

With mid-term elections looming for Congress, few have high hopes for much action on Capitol Hill, but recent movement in both the House and Senate indicates a retroactive extension of a series of lapsed tax provisions-some of which are extremely important to farmers and ranchers-could be one of the few issues lawmakers address before the year is out.

 

The Senate as early as this week could take up a bill extending for two years more than 50 tax provisions that expired in 2013, including Section 179 expensing, which allows small businesses to write off immediately capital investments of as much as $500,000, instead of depreciating them over several years.

 

At a hearing earlier this spring American Farm Bureau Federation President Bob Stallman explained to lawmakers the importance of Section 179's immediate expensing to farming.

 

"Farming and ranching is a capital intensive business," he said. "In order to remain profitable and be competitive, farm equipment, buildings, and storage facilities must be continually upgraded and replaced. This provision allows agricultural producers to reduce maintenance costs, take advantage of labor-saving advances, become more energy efficient and adopt technology that is environmentally friendly."

 

The Senate bill, the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act (S. 2260), also includes bonus depreciation, which is an additional 50 percent bonus depreciation for the purchase of new capital assets, including agricultural equipment; the Cellulosic Biofuel Producer Tax Credit, a $1.01 per gallon income tax credit for cellulosic biofuel sold for fuel plus an additional first-year, 50-percent bonus depreciation for cellulosic biofuel production facilities; and a $1.00 per-gallon tax credit for production of biodiesel and renewable diesel fuels.

 

The Community and Distributed Wind Investment Tax Credit, which gives the option to take an investment tax credit in lieu of the Production Tax Credit, and a provision encouraging donations of conservations easements are also part of the measure.

 

For two reasons the House will not take up the Senate's bill. First, tax legislation must originate in the House. Second, there's much buzz in the Republican-led House about making some of these extenders permanent.

 

In late April, the House's tax writing panel, the Ways and Means Committee, approved five separate bills making permanent some of the provisions that expired at the end of last year, including Section 179. Last week, one of those bills-the research and development credit legislation-was passed on the House floor.

 

If Congress can't push the tax extenders through before the election, they could be taken up in a post-election lame-duck session. Although any lame-duck votes will be taken under the current Senate and House leadership, the outcome of the election-specifically whether the Democrats hold onto the Senate-could affect how the tax extenders are handled.

With mid-term elections looming for Congress, few have high hopes for much action on Capitol Hill, but recent movement in both the House and Senate indicates a retroactive extension of a series of lapsed tax provisions-some of which are extremely important to farmers and ranchers-could be one of the few issues lawmakers address before the year is out.

The Senate as early as this week could take up a bill extending for two years more than 50 tax provisions that expired in 2013, including Section 179 expensing, which allows small businesses to write off immediately capital investments of as much as $500,000, instead of depreciating them over several years. 

At a hearing earlier this spring American Farm Bureau Federation President Bob Stallman explained to lawmakers the importance of Section 179's immediate expensing to farming.

"Farming and ranching is a capital intensive business," he said. "In order to remain profitable and be competitive, farm equipment, buildings, and storage facilities must be continually upgraded and replaced. This provision allows agricultural producers to reduce maintenance costs, take advantage of labor-saving advances, become more energy efficient and adopt technology that is environmentally friendly."

The Senate bill, the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act  (S. 2260), also includes bonus depreciation, which is an additional 50 percent bonus depreciation for the purchase of new capital assets, including agricultural equipment; the Cellulosic Biofuel Producer Tax Credit, a $1.01 per gallon income tax credit for cellulosic biofuel sold for fuel plus an additional first-year, 50-percent bonus depreciation for cellulosic biofuel production facilities; and a $1.00 per-gallon tax credit for production of biodiesel and renewable diesel fuels.

The Community and Distributed Wind Investment Tax Credit, which gives the option to take an investment tax credit in lieu of the Production Tax Credit, and a provision encouraging donations of conservations easements are also part of the measure. 

For two reasons the House will not take up the Senate's bill.  First, tax legislation must originate in the House.  Second, there's much buzz in the Republican-led House about making some of these extenders permanent. 

In late April, the House's tax writing panel, the Ways and Means Committee, approved five separate bills making permanent some of the provisions that expired at the end of last year, including Section 179. Last week, one of those bills-the research and development credit legislation-was passed on the House floor. 

If Congress can't push the tax extenders through before the election, they could be taken up in a post-election lame-duck session.  Although any lame-duck votes will be taken under the current Senate and House leadership, the outcome of the election-specifically whether the Democrats hold onto the Senate-could affect how the tax extenders are handled.

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