179D & 45L – Tax Extender Update

Senators Grassley and Wyden have set up a task force to review all remaining extenders.  They clearly still support extensions for all extenders through 2019 and intend to provide a road map for moving forward beyond 2019. 179D & 45L.

May 16, 2019

Grassley on Launch of Bipartisan Taskforces to Resolve Temporary Tax Policy

Prepared Floor Remarks by U.S. Senator Chuck Grassley of Iowa

Chairman, U.S. Senate Finance Committee

On the Launch of the Senate Finance Committee Taskforces

To Resolve Temporary Tax Policy

Thursday, May 16, 2019

On February 28th, I came to the floor to talk about the more than two dozen tax provisions that have expired since the end of 2017. That same day, I joined with Finance Committee Ranking Member Wyden to introduce the Tax Extender and Disaster Relief Act of 2019 to extend those provisions through 2019.

Unfortunately, we’re still waiting on House Democrats to send us a tax bill that includes those provisions so taxpayers who’ve relied on an extension can finish their 2018 tax returns. I remind my colleagues in the House that taxpayers have all but run out of time.

Part of my purpose in introducing the Tax Extender and Disaster Relief Act in February was to provide additional certainty for the current year. I noted that in most cases, Congress enacted those provisions to provide an incentive for taxpayers to engage in certain actions like investment and job creation. I also reminded my colleagues that those incentives are most effective when taxpayers can rely on them during the tax year. Regrettably, we’re now a third of the way through 2019 with no certainty for affected taxpayers in sight.

I also said in my February remarks that my broader objective of including an extension through 2019 was so we could have some maneuvering room to examine the temporary provisions overall and try to identify longer-term solutions. 

Through efforts in the last Congress, we’ve identified potential long-term solutions for two of them – the short-line railroad tax credit and the biodiesel tax credit. But we have the opportunity to do more.

While we continue to try to help taxpayers who still need to resolve their 2018 tax returns, we need to press ahead on more permanent solutions so we can end Congress’ bad habit of waiting until the 11th hour – or months after – to extend temporary tax policy.

Accordingly, today I am announcing, along with Ranking Member Wyden, that the Finance Committee will form several bipartisan taskforces to examine the temporary tax policies. These taskforces will consist of members of the Finance Committee and focus on provisions that expired, or will expire, between December 31, 2017 and December 31st of this year – a total of 42 provisions. 

Each taskforce will be charged with examining temporary tax policies within one of five identified issues areas. These issues areas are: workforce and community development, health taxes, energy, business cost recovery, and a combined group consisting of individual, excise taxes and other temporary policies.

We’ll ask the taskforces to work with stakeholders, other Senate offices, and interested parties to consider the original purpose of the policy and whether the need for the provision continues today. If so, we’ll ask the taskforce to identify possible solutions that would provide long-term certainty in these areas. 

That may mean that the credit or deduction phases out over a period of years to provide an affected industry a glide path to self-sufficiency. 

In other cases, it may mean that the provision could be scaled back, while still providing a sufficient benefit for the affected industry or taxpayers, in exchange for long-term certainty. 

If there’s little or no case for continuing the temporary policy, the taskforce should consider whether the provision should be eliminated.

There may also be provisions that the taskforce identifies that should be extended without reform. For these provisions, the taskforce will have to consider whether a continued short-term extension is sufficient to achieve the policy goals, whether a longer-term extension is desirable to force a future Congress to reevaluate the provision down the road, or if permanency is warranted.

This is particularly relevant for the temporary tax policies relating to health care. For these, we’ll ask the taskforce to focus on whether the tax policy should be extended and for what duration. We’ll leave the evaluation of the underlying health care policy to the health experts. 

In all, the taskforces will work to identify reform proposals, like those identified for the short-line and biodiesel credits last year, so we can end the policy of Congress kicking the can a year at a time. Or, in light of our current predicament, the even worse policy of doing the kicking months after the year has ended. 

If Congress is going to use temporary tax policy, taxpayers should be able to count on it for the intended period. Moreover, the intended policy should be clear so taxpayers do not fall into the trap of relying on a provision simply because Congress has created the expectation that the provisions will be consistently extended, even well after the fact. 

Taxpayers relying on these provisions have been doing what Congress wanted them to do – investing in certain types of property, hiring new employees or taking other types of actions. We shouldn’t punish them now for doing so. 

Additionally, we’ll have a sixth taskforce to examine the related issue of temporary disaster tax relief. It will consider whether we should have a core set of permanent proposals so taxpayers who’ve suffered through devastating disasters, like the floods most recently in my home state of Iowa, don’t have to wait for Congress to act before they can start rebuilding their lives, small businesses or farms.

We have asked the taskforces to begin their work right away and complete their efforts by the end of June. This should provide adequate time to identify possible long-term solutions that can be enacted this year to end the annual extenders drama and provide certainty to the taxpayers who utilize those provisions. 

We’ll continue to work with the House to resolve the situation with respect to the 2018 temporary policies and to provide relief for all those affected by the disasters in 2018 and so far this year. But we shouldn’t wait any longer to start laying the groundwork to deal with all of these temporary tax policies as permanently as possible.