Funeral Details for President George H.W. Bush

We join with the nation in mourning the death of President George H.W. Bush. The body of the former president will lie in state in the Capitol Rotunda beginning Monday evening. A state funeral will be held at Washington National Cathedral on Wednesday. Learn more here.

Trump Threatens Government Shutdown

President Trump said this week he would “totally be willing” to shut down the government if Congress does not approve at least $5 billion for his wall on the U.S.-Mexico border as part of a year-end spending deal. Learn more.

TCJA Regulations

The Treasury Department, on Monday, published draft regulations to implement the new 163(j) interest expense limitation enacted as part of last year’s Tax Cuts and Jobs Act. The proposed regulations are over 400 pages. So, for those who would like the highlights and the possible implications, Treasury also released a series of questions and answers covering the new potential regulation. There is a 60-day comment period and a public hearing scheduled for February 25, 2019.

Campaign Reform Tops Democrats’ Agenda

Democratic leaders say their first legislative proposal when they take control of the House in January will center on campaign finance reform, closing loopholes in government ethics laws and reducing the influence of outside money in politics. Read more.

Year-end Tax Bill

Last week, House Republicans proposed a year-end tax bill. The bill contains tax extenders, a few technical corrections, IRS reform and bipartisan retirement/savings legislation.

Tax Extenders: The bill would provide an extension through 2018 only of the expired/expiring tax provisions including:

• The Alternative Fuels Refueling property tax credit
• Qualified fuel cell motor vehicles
• The Alternative Fuel Tax Credit with 30 days for IRS to publish guidance and a 180-day filing extension measured from 30 days after the issuance of IRS guidance
• 179(d) Energy Efficient Commercial Buildings deduction
• Excise tax credits relating to alternative fuels
• Three-year treatment for race horses
• Seven-year treatment for motorsports complexes
• Mine rescue team training credit
• Deduction of qualified tuition and related expenses
• Makes the railroad track maintenance tax credit permanent
• Extends and provides a three-year phases out the biodiesel and renewable diesel tax credit beginning in 2022
  
  

Technical Corrections: The bill contains only a few technical corrections, including an efficiently drafted provision that restores the 15-year depreciation for qualified restaurant and retail property improvements.

Disaster Assistance: There are also provisions for the tax treatment for payments and repayments to individuals as a result of eligible natural disasters and allowing use of individual IRAs for disaster recovery. This list includes hurricanes Florence and Michael and typhoons Yutu and Mangkhut; the Hawaii volcano eruption and California fires are also included. This is not the supplemental appropriations action that we expect to address additional funding for these disasters but addresses individual tax payer responsibilities for payments received.

Retirement Savings: The bill contains the “Retirement Enhancement and Savings Act” supported by Senate Finance Committee Chairman Orrin Hatch (R-UT). The bill would allow more small businesses the opportunity to offer IRA’s to their employees. This legislation has a bipartisan legacy.

IRS Reforms: The bill contains bipartisan IRS reform legislation which passed the House overwhelmingly earlier this year.

The bill would also extend two trust fund excise taxes for 2019 for the Oil Spill Liability Trust Fund and the Black Lung Liability Trust Fund.

Outlook: At this time, it appears likely that the House will consider the legislation without a markup at Ways and Means as a means to get the bill to the Senate as fast as possible. This package was proposed without any involvement or input from Democrats. It is noted, however, that many of these provisions have bipartisan and bi-cameral support. Once the House passes this, probably on a party-line vote, then the Senate, its tax writers and leadership will have the control.

Also, it is worth noting what is not in the bill. Chairman Brady did not put some of the most controversial provisions into the bill that would draw Democratic ire immediately. For example, making the individual tax rates permanent from last year’s tax law. So, whether the proposal has enough merit in it to attract Democratic votes remains to be seen.

At least two issues are important to the prospects of passage of any tax bill: how Minority Leader Chuck Schumer (D-NY) and Finance Committee Ranking Member Ron Wyden (D-OR) respond to this proposal will be critical to whether the proposal moves much further this year. It also matters greatly what incoming Speaker Nancy Pelosi (D-CA) and incoming Ways and Means Chairman Richard Neal (D-MA) think of this proposal. There may need to be more “sweeteners” added to the bill to attract enough Democratic support to achieve 60 votes in the Senate.

Another important variable is how the year-end budget negotiations proceed. If Congress and the President need additional time beyond the current continuing resolution deadline of December 7 – which is likely – then this will provide more time for a tax bill to gestate. Otherwise the window for action is very limited – by the end of next week.