In an effort to get out of town before Christmas and mollify taxpayers, the Internal Revenue Service and the White House, Congress reportedly is looking at splitting tax extender consideration.
The latest proposal under discussion is approving most of the expired tax breaks, essentially the Senate's EXPIRE Act, retroactively for the 2014 tax year. Outgoing Ways and Means Chairman Dave Camp (R-Mich.) has introduced H.R. 5771, the Tax Increase Prevention Act of 2014, to do just that.
H.R. 5771, according to the bill's summary, would extend through the end of this year "a number of tax relief provisions that expired either at the end of calendar year 2013 or during 2014, thus preventing tax increases on millions of families and businesses as the tax year 2014 filing season begins early next year."
With 2014 taken care of, argues Camp, Congress then can continue to pursue its efforts to make certain expiring tax provisions permanent when it meets next year.
The House Rules Committee is meeting this afternoon to set the parameters for debate of the bill, which is estimated by the Joint Committee on Taxation to cost $44.7 billion over the 10-year budget window, that is, fiscal years 2015 through 2024.
The more ambitious extenders plan attempted by Camp and Senate Majority Leader Harry Reid (D-Nev.) would have made some provisions permanent and cost around 10 times that amount.
Pros of a short-term extenders deal: If a 2014-specific extenders bill is passed, it would allow taxpayers to make some frantic last-minute tax planning, such as older traditional IRA owners directly rolling this year's required minimum distributions to a qualified charity.
The IRS would be able to tweak 2013 forms for the 2014 tax year and upcoming 2015 filing season (enough dates for you?) and make sure its computers can handle the data. That should be relatively easy and mean that any filing season -- and refund issuance -- delay next year would be minimal if at all.
And the Obama Administration says it could live with the extenders status quo in the short term, thereby taking the veto threat off the table.
Remember, the White House didn't object to the extenders per se when it announced the prez wouldn't sign a more wide-ranging tax package. Rather, Obama and many Democrats didn't like what they saw as a costly package that tended to offer more benefits to businesses than middle- and lower-income individual taxpayers.
Cons of a short-term extenders deal: So by simply dealing with the 2014 expiration date, a lot of tax issues would be settled.
The problem is that they would only be settled through the end of this year. When 2015 rolls around, the 55+ tax breaks would be dead again. That's a great movie, but very bad tax policy.
The Democrats are running a risk here. They'll be in the minority in both the House and Senate when the 114th Congress convenes in January. But Obama still holds the veto pen. So an eventual extenders deal for 2015 and beyond that appeases both sides still could be struck.
Possibilities of a short-term extenders deal: Some longer-term good, however, might just come from a short-term extenders deal.
When the new Congress takes up the issue again next year, it might just be, as Camp has long hoped, the starting point for larger overall tax reform.
We'll just have to wait to see how that plays out.
Right now, though, with time running out, Congress and taxpayers are living in the moment. So look for a short-term 2014 only extenders deal to be cut, perhaps as soon as this week.
You also might find these items of interest: