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December 26, 2016


Tax extenders: What happened with them this year?

In recent years, it’s almost become an annual ritual, waiting to find out at the end of the year whether Congress will continue various temporary tax breaks known as “tax extenders.”

It happened last year and the year before that. This year, however, things are a bit different. Congress adjourned its lame-duck session after the election without passing an extender package.

In this post, we will use a Q & A format to update you on what this means.

What is an example of the type of provision that is involved in tax extender legislation?

A good example is the tax credit for biodiesel fuels. This credit – so important to companies in the biodiesel industry, has previously lapsed four times, only to be renewed by Congress. Indeed, the credit was not only renewed, but made retroactive.

This scenario did not repeat itself this year. When Congress passed a continuing resolution in mid-December to fund the government until the end of April, tax extenders were not included.

There have been efforts, however, to include renewable energy credits as attachments to other legislation.

What about other expiring tax provisions?

Last year’s extender legislation addressed many tax provisions that were set to expire. The legislation was called the Protecting Americans From Tax Hikes (PATH) Act.

The PATH Act made many of these provisions permanent or extended them not merely for one year, but for five years. But there are also several provisions that will be expiring at the end of this year.

What about the new Congress?

One possibility in the new Congress is that extender legislation will become more difficult to pass because piecemeal consideration of particular provisions is at odds with the goal of tax code reform.

The code has not been comprehensively reformed since 1986, when Ronald Reagan was president. For years, politicians have called for the code to be reformed again. It remains to be seen, however, whether the incoming Trump administration and the new Congress will make make reform a priority.

Tax Controversy