WASHINGTON (AP) – The U.S. Senate passed a series of temporary tax breaks on Tuesday, which will impact millions of businesses and individuals. President Obama is expected to sign it into law.
But, the last minute bill will only extend the tax breaks that expired on December 31, 2013 through the end of this year. Beyond this year, their fate will once again be uncertain.
For NAED members, that means only about two weeks of tax breaks for 2014. The Commercial Building Tax Deduction, also known as 179d, will go into effect when the President signs the bill, and then expire on December 31, 2014.
“NAED members have been waiting patiently throughout 2014 for Congress to act on so-called ‘tax extenders’, an omnibus piece of legislation that encompasses around 50 tax provisions that have expired or are about to expire at the end of 2014. The US Senate has passed HR 5771, The Tax Increase Prevention Act of 2014. The bill now moves to the president’s desk where his expected signature will make it law,” said NAED Vice President of Government Affairs Ed Orlet.
“The tax provisions most important to NAED members are the expanded allowances for section 179 expensing, bonus depreciation and the 179D commercial buildings tax deduction. However, the bill only retroactively extended these provisions to the end of 2014. We will be right back to fighting the same battle for a longer term extension of these tax provisions in the next session of Congress that kicks off in early January,” Orlet added.
“NAED will continue to impress upon policymakers the importance of longer term extension of these provisions. Businesspeople need longer term certainty in tax policy if it is to be effective in incentivizing investment.
The Senate voted 76-16 to approve the package Tuesday evening as lawmakers rushed to finish their work before heading home for the holidays. The House passed the bill earlier this month.
Lawmakers from both political parties said they were disappointed that they were unable to extend the tax breaks beyond this year.
“This package of incentives – which applies only to 2014 – will last two more weeks before families and businesses will be thrown back into the dark about what taxes they owe,” said Sen. Ron Wyden, D-Ore., chairman of the Senate Finance Committee. “This tax bill doesn’t have the shelf life of a carton of eggs.”
Congress routinely extends the package of tax breaks every year or two. But they were allowed to expire in January.
Technically, the bill is a one-year, retroactive extension of the tax breaks, even though it only lasts through the end of the month.
“This bill represents the worst habits in Washington,” said Sen Tom Coburn, R-Okla. “Politicians in a lame duck, end-of-the-year session, passing out goodies to well-connected industries instead of lowering tax rates for all Americans.”
Business groups have complained for years that the patchwork of temporary tax breaks makes it difficult for them to plan. Still, in a letter to senators, the National Association of Manufacturers supported the bill because it would “prevent immediate tax increases on thousands of manufacturers that benefit from these temporary provisions.”
House Republicans and Senate Democrats negotiated to make some of the tax breaks permanent. But talks faltered after the White House threatened to veto an emerging package, saying it too heavily favored big corporations over families.
House Republicans responded by passing a one-year bill, figuring they will have more influence over the package next year, when Republicans take control of the Senate.
“My only hope is that in the new Congress we can make strides toward putting some certainty back in the tax code,” said Sen. Chuck Grassley, R-Iowa.
Among the biggest breaks for businesses are a tax credit for research and development, an exemption that allows financial companies such as banks and investment firms to shield foreign profits from being taxed by the U.S., and several provisions that allow businesses to write off capital investments more quickly.
There is also a generous tax credit for using wind farms and other renewable energy sources to produce electricity.
The biggest tax break for individuals allows people who live in states without an income tax to deduct state and local sales taxes on their federal returns. Another protects struggling homeowners who get their mortgages reduced from paying income taxes on the amount of debt that was forgiven. Other provisions benefit commuters who use public transportation and teachers who spend their own money on classroom supplies.
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