Today, the House passed a $622 billion tax package that permanently renews a number of tax provisions following years of short-term extensions. Seventy-seven Democrats joined 241 Republicans to pass the measure in a 318 to 109 vote. Several tax breaks created under President Obama’s stimulus package are made permanent, including the American Opportunity Tax Credit, the child tax credit, and the earned income tax credit. For more in-depth information on the measure, please see this post on our blog.
Category: Legislation
Tax Extenders Bill Released
House Republicans unveiled a $650 billion permanent tax package early Wednesday morning. Key elements of the package were the permanent extensions of the research and experimentation tax credit and several charitable donation tax breaks.
Sections of note include:
Section 102. Enhanced American opportunity tax credit is made permanent. The Hope Scholarship Credit is a credit of $1,800 (indexed for inflation) for various tuition and related expenses for the first two years of post-secondary education. It phases out for AGI starting at $48,000 (if single) and $96,000 (if married filing jointly) – these amounts are also indexed for inflation. The American Opportunity Tax Credit (AOTC) takes those permanent provisions of the Hope Scholarship Credit and increases the credit to $2,500 for four years of post-secondary education, and increases the beginning of the phase-out amounts to $80,000 (single) and $160,000 (married filing jointly) for 2009 to 2017. The provision makes the AOTC permanent.
Section 112. Extension of tax-free distributions from individual retirement plans for charitable purposes. The provision permanently extends the ability of individuals at least 70½ years of age to exclude from gross income qualified charitable distributions from Individual Retirement Accounts (IRAs). The exclusion may not exceed $100,000 per taxpayer in any tax year.
Section 121. Extension and modification of research credit. The provision permanently extends the research and development (R&D) tax credit.
Section 153. Extension of above-the-line deduction for qualified tuition and related expenses. The provision extends through 2016 the above-the-line deduction for qualified tuition and related expenses for higher education. The deduction is capped at $4,000 for an individual whose AGI does not exceed $65,000 ($130,000 for joint filers) or $2,000 for an individual whose AGI does not exceed $80,000 ($160,000 for joint filers).
Section 211. Employer identification number required for American opportunity tax credit. The provision requires a taxpayer claiming the American opportunity tax credit to report the employer identification number (EIN) of the educational institution to which the taxpayer makes qualified payments under the credit. The provision applies to tax years beginning after December 31, 2015, and expenses paid after such date for education furnished in academic periods beginning after such date.
Section 212. Higher education information reporting only to include qualified tuition and related expenses actually paid. The provision reforms the reporting requirements for Form 1098-T so that educational institutions are required to report only qualified tuition and related expenses actually paid, rather than choosing between amounts paid and amounts billed, as under current law. The provision applies to expenses paid after December 31, 2015 for education furnished in academic periods beginning after such date.
Section 302. Improvements to section 529 accounts. The provision expands the definition of qualified higher education expenses for which tax-preferred distributions from 529 accounts are eligible to include computer equipment and technology. The provision modifies 529-account rules to treat any distribution from a 529 account as coming only from that account, even if the 11 individual making the distribution operates more than one account. The provision treats a refund of tuition paid with amounts distributed from a 529 account as a qualified expense if such amounts are re-contributed to a 529 account within 60 days. The provision is effective for distributions made or refunds after 2014, or in the case of refunds after 2014 and before the date of enactment, for refunds re-contributed not later than 60 days after date of enactment.
For more provisions, a section-by-section summary can be found here.
Omnibus Released
House Republican Leadership released the long-awaited FY 2016 omnibus appropriations and tax extenders package late last night. The $1.15 trillion, 2,009-page package was delayed until just after 1:30 a.m. Wednesday after party leaders spent Tuesday swapping final offers.
House Republican Leadership initially said they would adhere to the GOP’s “three-day rule,” releasing the package on Tuesday and scheduling a House final passage vote Thursday. However, with the delay in filing the measure until Wednesday morning, the House also unveiled a third short-term continuing resolution (CR) to extend federal spending authority until December 22nd as a precautionary measure. The third stop gap is expected to pass both chamber today as the second CR expires tonight at midnight.
At present, the House is expected to vote on the tax-extenders package on Thursday and the omnibus spending bill on Friday, the last business for Congress before the holidays.
House Democrats have not endorsed the legislation yet, but have stated they will go through the massive bill line-by-line.
The FY 2016 Omnibus abandons the most contentious policy riders that have highly contentious and held up recent negotiations, including language that would have penalized Planned Parenthood, blocked a major clean water rule from the EPA and Army Corps of Engineers, relaxed coordination restrictions on the national political parties, imposed new restrictions on refugees from the Middle East, and peeled back portions of the Dodd-Frank financial regulatory overhaul.
One of the biggest legislative add-ons to the omnibus is a repeal of the decades-old ban on crude oil exports, which is a priority for House Republicans.
The Senate is expected to consider the legislation later in the week.
Given the size of the bill, details are still forthcoming, but highlights include:
- The National Institutes of Health received $32 billion, $2 billion above current levels.
- The National Science Foundation is funded at $7.5 billion, an increase of $119 million, and directorates such as Social and Behavioral Sciences were funded at FY 2015 levels.
- NASA is funded at $19.3 billion, an increase of $1.3 billion above the fiscal year 2015 enacted level to advance America’s leadership in space and science. Within this total, $4 billion is provided for Exploration, including funding to keep the Orion Multi-Purpose Crew Vehicle and Space Launch System on schedule, and $5.6 billion is provided for science programs.
- Defense research was funded at $69.8 billion for research, development, testing, and evaluation of new defense technologies, which was minor increases.
- The maximum Pell Grant award is increased to $5,915.
- Title VI International Education programs were held at FY 2015 levels.
- NOAA received $5.8 billion, which is $325 million above the fiscal year 2015 enacted level. Funding was included for the National Weather Service to provide critical weather information to the public, and investments in new and existing weather satellites that are essential to maintain and improve weather forecasts, including the Polar Follow On program.
- Maximum Pell Grant award to $5,915, funded by a combination of discretionary and mandatory funds.
Federal Relations continues to review the legislation and will continue to provide updates.
Short Term CR through December 16
The House Appropriations Committee on Wednesday released a five-day continuing resolution (CR) that would keep federal agencies operative through midnight on December 16th. The stopgap would provide omnibus negotiators with additional time to strike a deal on a $1.1 trillion agreement to close out fiscal 2016. Both chambers must pass the resolution by the end of the day Friday (December 11th) to extend current budget authority and avoid government shutdown.
It appears that December 16th was the shortest possible extension needed to finish appropriations work that’s still left, but the tight turnaround time runs the risk of another stopgap being needed.
Congress is scheduled to adjourn for the year on December 18th. While lawmakers say funding levels for agencies have largely been settled, a tax extenders package and “40 to 42” policy riders are still being negotiated, including language related to campaign finance, labor regulations, abortion, treatment of Syrian refuges, and environmental regulations.
Members will be in session tomorrow, but not over the weekend. Depending on the progress of negotiations, members will convene on Monday or Tuesday.
Read more from The Hill and Roll Call.
McCarthy Announces Short-term CR
House Majority Leader Kevin McCarthy (R-CA) announced that the House will take up a short-term Continuing Resolution (CR), as expected previously, to fund the federal government beyond midnight Friday.
At this point, it is unclear how long the CR will last, but with the announcement McCarthy also said that Members should expect to work Friday and Saturday.
If the House works through the weekend, it is highly unlikely they will stay into next week, and there will be some resolution, whether that be an omnibus or a longer CR, soon.
Stay tuned…