By Joel Bock
On Feb. 28, Senate Finance Committee Chairman Chuck Grassley and Senator Ron Wyden introduced the Tax Extender and Disaster Relief Act of 2019. The legislation includes 29 previously expired tax provisions (26 expiring at the end of 2017 and 3 expiring at the end of 2018).
The approach of extending tax provisions after the expiration of such provisions has recently become a common practice. The Bipartisan Budget Act of 2018, which included 33 tax provisions that expired at the end of 2016, was signed into law on Feb. 9, 2018. The Tax Extender and Disaster Relief Act of 2019 would attempt to somewhat remedy this recent trend of retroactively extending previously expired legislation by extending these provisions through the end of 2019.
Senator Grassley stated, “Congress needs to get out of this bad habit of regular retroactive extensions of these tax provisions. The whole point of these federal tax incentives is to encourage certain behaviors, especially investments in alternative energies, energy efficiency and transportation. The best way to do that is ahead of time, not retroactively. But it’s also the case that many of these industries made business decisions last year based on that reasonable expectation that they would be extended, since it’s what Congress has consistently done in the past. I hope the House of Representatives acts soon, since taxpayers affected by these expired provisions have to file their tax returns in the coming weeks. Thousands of jobs across the country depend on it.” Senator Wyden added, “It’s past time to kick the addiction to short-term tax policies, but until Congress is able to break this cycle for good, taxpayers deserve certainty about what they’ll owe. It’s important this is a two-year bill covering 2019, and it includes key renewable energy incentives I’m proud to fight for. Filing season for 2018 is already underway, so the Congress should act on this quickly.”
The proposed tax extender provisions include:
• Credit for nonbusiness energy property (IRC §25C).
• Credit for new qualified fuel cell motor vehicles [IRC §30B(b)].
• Credit for alternative fuel vehicle refueling property (IRC §30C).
• Credit for two-wheeled plug-in electric vehicles (IRC §30D).
• Second generation biofuel producer credit [IRC §40(b)(6)].
• Biodiesel and renewable diesel incentives [IRC §§ 40A, 6426©, and 6427(e)].
• Credits with respect to facilities producing energy from certain renewable resources [IRC §§45 and 48(a)(5)].
• Production credit for Indian coal facilities [IRC §45(e)(10)].
• Railroad track maintenance credit (IRC §45G).
• Credit for energy-efficient new homes (IRC §45L).
• Three-year depreciation for race horses two years old or younger [IRC §168(e)(3)(A)(i)].
• Special allowance for second generation biofuel plant property [IRC §168(I)].
• Energy-efficient commercial buildings deduction (IRC §179D).
• Election to expense mine safety equipment (IRC §179E).
• Special rule for sales or dispositions to implement FERC or State electric restructuring policy for qualified electric utilities [IRC §451(k)].
• Excise tax credits relating to alternative fuels [IRC §§ 6426(d), 6426(e), and 6427(e)].
• Seven-year recovery period for motorsports entertainment complexes [IRC §§ 168(i)(15) and 168(e)(3)(C)(ii)].
• Accelerated depreciation for business property on an Indian reservation [IRC §168(j)].
• Special expensing rules for certain film, television, and live theatrical productions (IRC §181).
• Indian employment tax credit [IRC §45A(f)].
• Mine rescue team training credit (IRC §45N).
• Exclusion from gross income of discharge of qualified principal residence indebtedness [IRC §108(a)(1)(E)].
• Mortgage insurance premiums treated as qualified residence interest [IRC §163(h)(3)].
• Above-the-line deduction for qualified tuition and related expenses (IRC §222).
• Empowerment zone tax incentives [IRC §§ 1391(d)(1)(A)(i), 1391(h)(2), 1394, 1396, 1397A, and 1397B].
• American Samoa economic development credit (IRC §119).
• Temporary reduction in medical expense deduction floor [IRC §213(f)].
• Extension of oil spill liability trust fund rate [IRC §4611(f)(2)].
• Black lung liability trust fund excise tax [IRC §4121(e)(2)(A)].
Please consult your tax advisor to determine how these tax extenders impact your specific situation.
Joel A. Bock, CPA, MST is a partner in Daniells Phillips Vaughan & Bock, a Bakersfield accounting firm.