WASHINGTON — The House passed a bill on Wednesday that would extend through the end of the year expired tax provisions known as "extenders," several of which relate to bonds, state and local taxes and Puerto Rico.
The bill passed by an overwhelming majority, with 378 Congress members voting for it and only 46 against it. The measure, H.R. 5771, would extend through 2014 provisions that expired at the end of 2013.
It still would have to be passed by the Senate and signed by President Obama before becoming law. The top Republican on the Senate Finance Committee, Orrin Hatch of Utah, has said he will vote for the bill unless there's an agreement on something broader. A spokeswoman for Senate Finance Committee Chairman Ron Wyden, D-Ore., said that a different extenders deal Wyden proposed doesn't look likely to move forward, according to media reports.
Senate Majority Whip Dick Durbin, D-Ill. reportedly said he thinks the Senate will have to accept the House-passed bill.
In his prepared floor statement, House Ways and Means Committee Chairman Dave Camp, R-Mich., said that the legislation "will address the concerns raised by the [Internal Revenue Service] and ensure the tax filing season can open on time." The IRS had said that it would be forced to delay the start of the tax filing season if Congress did not act promptly on extenders.
"American families are struggling to make ends meet as wages remain flat even as expenses rise," Camp said." These families cannot and should not face a delay in getting their tax refunds."
The top Democrat on the Ways and Means Committee, Sander Levin of Michigan, also said he supports the bill because failing to pass it would disrupt the tax filing season. He also said the measure is better than proposals to make some provisions permanent.
The House bill would provide a $400 million national volume limitation for qualified zone academy bonds in 2014. These bonds are tax-credit bonds whose proceeds can be used to finance renovations, equipment, course materials and teacher training at public schools or academic programs in them that meet certain requirements. The volume cap is allocated to states, which can carry forward unused capacity under the limitation for up to two years.
The legislation would also extend empowerment zone designations through the end of 2014. By extending the designations, certain distressed communities would remain eligible for tax incentives. The incentives include empowerment zone facility bonds, though issuers would only be able to issue the bonds if the empowerment zones have remaining volume cap. Additionally, public schools in empowerment zones can be eligible to have projects financed with QZAB proceeds.
The bill would allow taxpayers on their 2014 taxes to deduct state and local general sales taxes instead of state and local income taxes. This is particularly beneficial for taxpayers in states without income taxes for individuals, including Texas, Florida and Washington.
In addition, the bill would extend through the end of the year two Puerto Rico-related tax provisions.
One provision would temporarily increase in the limit on the payment of rum excise tax revenues to Puerto Rico and the U.S. Virgin Islands. The territories would be able to receive $13.25 per proof gallon, rather than $10.50 per proof gallon. The other provision would allow domestic gross receipts from the commonwealth to be eligible for the domestic production deduction.
The Joint Committee on Taxation estimates that in total, the extenders package would reduce revenue by $41.6 billion from fiscal 2015 to fiscal 2024. This estimate is lower than an earlier one of $44.7 billion over ten years because JCT staff discovered a computational error.
