Tax Extenders Limbo

Much of the year, there has been talk about Congress approving "tax extenders" legislation, though most lawmakers probably couldn't explain what's stuffed in it.


The basic way to describe this bill is that it is a package of tax breaks - both personal and business related - which are routinely extended each year by the Congress.

Why aren't they made permanent?  Well, that would cost money and impact the budgetary bottom line.  By doing it on an ad hoc/yearly basis, the cost is usually not an issue.

But this year, the cost has been an issue, one reason why all these tax breaks expired at the end of 2009, and have not been renewed as yet by lawmakers.

Let's review the provisions that average taxpayers might be interested in - remember - these are being extended for one year, through the end of 2010:

* Deduction for certain expenses of elementary and secondary school teachers
* Additional standard deduction for State and local real property taxes
* Deduction of State and local sales taxes
* Contributions of capital gain real property made for conservation purposes
* Above-the-line deduction for qualified tuition and related expenses
* Tax-free distributions from individual retirement plans for charitable purposes

The biggest impact comes from the ability of people who live in states with no income taxes to be able to deduct state and local sales taxes on their federal tax forms.

If that is not renewed, then taxes will basically go up for people who live in the eight states that have no income tax on wages: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming.

The first time this deduction was approved by Congress was in 2004 and has been extended several times since then.

The additional standard deduction for property taxes of $500 or $1,000 is meant for people who don't itemize their federal tax return.  It was approved for 2008 and then extended for 2009.

The deduction for college tuition (up to $4,000) is also part of this plan, as is the deduction for teachers who buy supplies for the classroom.

Most of the rest of the "extenders" are what's below in Subtitle C, "Business Tax Relief."

The other provisions in here are a variety of items that would extend provisions of the stimulus law.  Take a look, and you will see one reason why this tax extenders-plus bill has become stuck for months in Congress.

TITLE I--INFRASTRUCTURE INCENTIVES

Sec. 101. Extension of Build America Bonds.
Sec. 102. Exempt-facility bonds for sewage and water supply facilities.
Sec. 103. Extension of exemption from alternative minimum tax treatment for certain tax-exempt bonds.
Sec. 104. Extension and additional allocations of recovery zone bond authority.
Sec. 105. Allowance of new markets tax credit against alternative minimum tax.
Sec. 106. Extension of tax-exempt eligibility for loans guaranteed by Federal home loan banks.
Sec. 107. Extension of temporary small issuer rules for allocation of tax-exempt interest expense by financial institutions.

TITLE II--EXTENSION OF EXPIRING PROVISIONS

Subtitle A--Energy

Sec. 201. Alternative motor vehicle credit for new qualified hybrid motor vehicles other than passenger automobiles and light trucks.
Sec. 202. Incentives for biodiesel and renewable diesel.
Sec. 203. Credit for electricity produced at certain open-loop biomass facilities.
Sec. 204. Extension and modification of credit for steel industry fuel.
Sec. 205. Credit for producing fuel from coke or coke gas.
Sec. 206. New energy efficient home credit.
Sec. 207. Excise tax credits and outlay payments for alternative fuel and alternative fuel mixtures.
Sec. 208. Special rule for sales or dispositions to implement FERC or State electric restructuring policy for qualified electric utilities.
Sec. 209. Suspension of limitation on percentage depletion for oil and gas from marginal wells.
Sec. 210. Direct payment of energy efficient appliances tax credit.
Sec. 211. Modification of standards for windows, doors, and skylights with respect to the credit for nonbusiness energy property.

Subtitle B--Individual Tax Relief

PART I--Miscellaneous Provisions

Sec. 221. Deduction for certain expenses of elementary and secondary school teachers.
Sec. 222. Additional standard deduction for State and local real property taxes.
Sec. 223. Deduction of State and local sales taxes.
Sec. 224. Contributions of capital gain real property made for conservation purposes.
Sec. 225. Above-the-line deduction for qualified tuition and related expenses.
Sec. 226. Tax-free distributions from individual retirement plans for charitable purposes.
Sec. 227. Look-thru of certain regulated investment company stock in determining gross estate of nonresidents.

PART II--Low-income Housing Credits

Sec. 231. Election for direct payment of low-income housing credit for 2010.
Sec. 232. Low-income housing grant election.

Subtitle C--Business Tax Relief

Sec. 241. Research credit.
Sec. 242. Indian employment tax credit.
Sec. 243. New markets tax credit.
Sec. 244. Railroad track maintenance credit.
Sec. 245. Mine rescue team training credit.
Sec. 246. Employer wage credit for employees who are active duty members of the uniformed services.
Sec. 247. 5-year depreciation for farming business machinery and equipment.
Sec. 248. 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements.
Sec. 249. 7-year recovery period for motorsports entertainment complexes.
Sec. 250. Accelerated depreciation for business property on an Indian reservation.
Sec. 251. Enhanced charitable deduction for contributions of food inventory.
Sec. 252. Enhanced charitable deduction for contributions of book inventories to public schools.
Sec. 253. Enhanced charitable deduction for corporate contributions of computer inventory for educational purposes.
Sec. 254. Election to expense mine safety equipment.
Sec. 255. Special expensing rules for certain film and television productions.
Sec. 256. Expensing of environmental remediation costs.
Sec. 257. Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico.
Sec. 258. Modification of tax treatment of certain payments to controlling exempt organizations.
Sec. 259. Exclusion of gain or loss on sale or exchange of certain brownfield sites from unrelated business income.
Sec. 260. Timber REIT modernization.
Sec. 261. Treatment of certain dividends of regulated investment companies.
Sec. 262. RIC qualified investment entity treatment under FIRPTA.
Sec. 263. Exceptions for active financing income.
Sec. 264. Look-thru treatment of payments between related controlled foreign corporations under foreign personal holding company rules.
Sec. 265. Basis adjustment to stock of S corps making charitable contributions of property.
Sec. 266. Empowerment zone tax incentives.
Sec. 267. Tax incentives for investment in the District of Columbia.
Sec. 268. Renewal community tax incentives.
Sec. 269. Temporary increase in limit on cover over of rum excise taxes to Puerto Rico and the Virgin Islands.
Sec. 270. Payment to American Samoa in lieu of extension of economic development credit.
Sec. 271. Election to temporarily utilize unused AMT credits determined by domestic investment.
Sec. 272. Reduction in corporate rate for qualified timber gain.
Sec. 273. Study of extended tax expenditures.

Subtitle D--Temporary Disaster Relief Provisions

PART I--National Disaster Relief

Sec. 281. Waiver of certain mortgage revenue bond requirements.
Sec. 282. Losses attributable to federally declared disasters.
Sec. 283. Special depreciation allowance for qualified disaster property.
Sec. 284. Net operating losses attributable to federally declared disasters.
Sec. 285. Expensing of qualified disaster expenses.
PART II--Regional Provisions

subpart a--new york liberty zone

Sec. 291. Special depreciation allowance for nonresidential and residential real property.
Sec. 292. Tax-exempt bond financing.

subpart b--go zone

Sec. 295. Increase in rehabilitation credit.
Sec. 296. Work opportunity tax credit with respect to certain individuals affected by Hurricane Katrina for employers inside disaster areas.
Sec. 297. Extension of low-income housing credit rules for buildings in GO zones.

TITLE III--TECHNICAL CORRECTIONS TO PENSION FUNDING LEGISLATION

Sec. 301. Definition of eligible plan year.
Sec. 302. Eligible charity plans.
Sec. 303. Suspension of certain funding level limitations.
Sec. 304. Optional use of 30-year amortization periods.
Sec. 305. Transition rule for certifications of plan status.

TITLE IV--REVENUE OFFSETS

Subtitle A--Personal Service Income Earned in Pass-thru Entities

Sec. 401. Partnership interests transferred in connection with performance of services.
Sec. 402. Income of partners for performing investment management services treated as ordinary income received for performance of services.

Subtitle B--Corporate Provisions

Sec. 411. Treatment of securities of a controlled corporation exchanged for assets in certain reorganizations.
Sec. 412. Taxation of boot received in reorganizations.

Subtitle C--Other Provisions

Sec. 421. Modifications with respect to Oil Spill Liability Trust Fund.
Sec. 422. Denial of deduction for punitive damages.

TITLE V--HEALTH AND OTHER ASSISTANCE

Sec. 501. Extension of section 508 reclassifications.
Sec. 502. Repeal of delay of RUG-IV.
Sec. 503. Limitation on reasonable costs payments for certain clinical diagnostic laboratory tests furnished to hospital patients in certain rural areas.
Sec. 504. Funding for claims reprocessing.
Sec. 505. Medicaid and CHIP technical corrections.
Sec. 506. Addition of inpatient drug discount program to 340B drug discount program.
Sec. 507. Continued inclusion of orphan drugs in definition of covered outpatient drugs with respect to children's hospitals under the 340B drug discount program.
Sec. 508. Conforming amendment related to waiver of coinsurance for preventive services.
Sec. 509. Clarification of effective date of part B special enrollment period for disabled TRICARE beneficiaries.
Sec. 510. Adjustment to Medicare payment localities.
Sec. 511. Clarification for affiliated hospitals for distribution of additional residency positions.

TITLE VI--OTHER PROVISIONS

Subtitle A--General Provisions

Sec. 601. Allocation of geothermal receipts.
Sec. 602. Employment for youth.
Sec. 603. Housing Trust Fund.
Sec. 604. The Individual Indian Money Account Litigation Settlement Act of 2010.
Sec. 605. Appropriation of funds for final settlement of claims from In re Black Farmers Discrimination Litigation.
Sec. 606. Expansion of eligibility for concurrent receipt of military retired pay and veterans' disability compensation to include all chapter 61 disability retirees regardless of disability rating percentage or years of service.
Sec. 607. Refunds disregarded in the administration of Federal programs and federally assisted programs.
Sec. 608. Qualifying timber contract options.
Sec. 609. Extension and flexibility for certain allocated surface transportation programs.
Sec. 610. Community College and Career Training Grant Program.
Sec. 611. Extensions of duty suspensions on cotton shirting fabrics and related provisions.
Sec. 612. Modification of Wool Apparel Manufacturers Trust Fund.
Sec. 613. Department of Commerce Study.
Sec. 614. ARRA planning and reporting.
Sec. 615. Surety bonds.
Sec. 616. Funding for Deployment of Renewable Energy, Energy Efficiency, and Electric Power Transmission Projects.

Subtitle B--Extension of Trade Adjustment Assistance

Sec. 621. Short title.
Sec. 622. Extension of Trade Adjustment Assistance.

Subtitle C--Extension of Health Coverage Improvement

Sec. 631. Improvement of the affordability of the credit.
Sec. 632. Payment for the monthly premiums paid prior to commencement of the advance payments of credit.
Sec. 633. TAA recipients not enrolled in training programs eligible for credit.
Sec. 634. TAA pre-certification period rule for purposes of determining whether there is a 63-day lapse in creditable coverage.
Sec. 635. Continued qualification of family members after certain events.
Sec. 636. Extension of COBRA benefits for certain TAA-eligible individuals and PBGC recipients.
Sec. 637. Addition of coverage through voluntary employees' beneficiary associations.
Sec. 638. Notice requirements.

Subtitle D--TANF Provisions

Sec. 641. Extension of Temporary Assistance for Needy Families and related programs.
Sec. 642. Reinstatement of Federal matching of State spending of child support incentive payments.
Sec. 643. Extension and modification of the TANF Emergency Fund.
Sec. 644. Modifications to TANF data reporting.
Sec. 645. State court improvement program.

Subtitle E--Unemployment Compensation Program Integrity

Sec. 651. Permissible uses of unemployment fund moneys for program integrity purposes.
Sec. 652. Mandatory penalty assessment on fraud claims.
Sec. 653. Prohibition on noncharging due to employer fault.
Sec. 654. Collection of past-due, legally enforceable State debts.
Sec. 655. Treatment of short-time compensation programs.
Sec. 656. State use of compensating balances and interest earned on clearing account to pay associated banking costs.
Sec. 657. Reporting of first day of earnings to directory of new hires.
Sec. 658. Deduction of obligations for custodial parents.
Sec. 659. Advisory Council on unemployment compensation.
Sec. 660. Amendment to the Federal-State extended benefits program.
Sec. 661. Operating instructions and regulations.

Subtitle F--Custom User Fees

Sec. 665. Customs user fees.

TITLE VII--TRANSPARENCY REQUIREMENTS FOR FOREIGN-HELD DEBT

Sec. 701. Short title.
Sec. 702. Definitions.
Sec. 703. Sense of Congress.
Sec. 704. Quarterly report on risks posed by foreign holdings of debt instruments of the United States.
Sec. 705. Annual report on risks posed by the Federal debt of the United States.
Sec. 706. Corrective action to address unacceptable and unsustainable risks to United States national security and economic stability.

TITLE VIII--TRANSPARENCY REQUIREMENTS FOR FOREIGN-HELD DEBT

Sec. 801. Short title.
Sec. 802. Definitions.
Sec. 803. Sense of Congress.
Sec. 804. Annual report on risks posed by foreign holdings of debt instruments of the United States.
Sec. 805. Annual report on risks posed by the Federal debt of the United States.
Sec. 806. Corrective action to address unacceptable risks to United States national security and economic stability.

TITLE IX--OFFICE OF THE HOMEOWNER ADVOCATE

Sec. 901. Office of the Homeowner Advocate.
Sec. 902. Functions of the Office.
Sec. 903. Relationship with existing entities.
Sec. 904. Rule of construction.
Sec. 905. Reports to Congress.
Sec. 906. Funding.
Sec. 907. Prohibition on participation in Making Home Affordable for borrowers who strategically default.
Sec. 908. Public availability of information.


Much of the year, there has been talk about Congress approving "tax extenders" legislation, though most lawmakers probably couldn't explain what's stuffed in it. The basic way to describe this bill is that it is a package of tax breaks - both personal and business related - which are routinely ...