Back in February we were happy to tell you about the House passing a bill with several taxpayer friendly provisions. That blog post is here. Unfortunately, the prospects of Senate passage are dimming.
We’ll give you our reasoning and advice shortly, but first here’s a quick recap of what the bill included:
- An increase in the refundable child tax credit;
- An extension of 100% bonus depreciation;
- An extension of the deduction for research and experimental expenditures;
- An extension of the use EBITDA, not EBIT, when calculating the limit on business interest (larger interest deductions would be allowed);
- A small increase and inflation indexing for section 179 expenses; and,
- A few relatively minor disaster relief provisions.
This all sounds great. There’s something for everyone. And it was all going to be paid for by an early cutoff and aggressive auditing of the ERC program.
Dimming Prospects in the Senate: What’s Holding Up the Bill?
So, why are our hopes of passage dimming? The short answer is that time is passing. First, the value of an early ERC program cutoff is less apparent. Second, as we approach April 15th, Congress has been busy with passing continuing resolutions to keep the federal government running through the end of the fiscal year in September. And they now seem more focused on the election in November than on passing retroactive tax legislation. In addition, there are the publicly stated desires of some Senators to amend the House bill. While the amendments may not be intended to kill the bill, many in Washington, including the AICPA’s lobbyists, believe it would.
Moving Forward: The Importance of Filing Protective Extensions
Given all that, what are we to do? We move on. File our returns. And hope for next year.
There’s one more thing. If these provisions would have a substantial impact on your returns and they aren’t already extended, we should file a protective extension to facilitate the filing of corrected (superseding) returns should the legislation pass. This is not necessary in the case of the child tax credit. The Commissioner has stated that the IRS would apply that provision to all previously filed returns.
Please don’t hesitate to contact us if you have questions.
