In the words of that great American philosopher Yogi Berra, “It’s déjà vu all over again.” I’m talking about Congress reauthorizing tax extender legislation before the start of tax season. There were 57 different tax breaks, credits and deductions that expired on Dec. 31, 2013, and another six tax provisions will expire at the end of this year if Congress does not reauthorize them.
This hodgepodge of individual and business tax breaks has been on the books for years. But technically, these laws are temporary. Each has a specific end date, typically the conclusion of a tax year. For the most part, Congress has extended the provisions year after year. That's why they are referred to as "extenders."
Congress promised to deal with the extenders sometime after the recent elections, but there's no firm timetable for legislative action. And there's no guarantee that all the expired tax provisions will be renewed retroactively to the beginning of the 2014 tax year.
The Senate Finance Committee has approved most of the extenders as one package, but it has yet to be approved by that full chamber. The House Ways and Means Committee is addressing the various laws in smaller groups. Eventually, representatives and senators will have to agree on one set of extenders to send to the president for his signature. The question is can they get it done soon, so the IRS, taxpayers and tax preparers can get ready for the upcoming filing season? That fiasco occurred a few years ago when Congress did not pass legislation until very late in the process.
It’s not like Congress is unaware of the problems their inaction can cause. At an AICPA conference last week, IRS Commissioner John Koskinen said: “If the uncertainty over extenders continues into December, the IRS could be forced to postpone the opening of the 2015 filing season. Our hope is that lawmakers will provide a clear policy direction for the extenders legislation before the end of the month.” The commissioner has also made this point in testimony to Congress in recent months.
TSCPA has also communicated this point to members of Congress. In a letter last week to leaders of the U.S. Senate Finance and House Ways and Means Committees, TSCPA expressed that failure to act soon on tax extenders will likely delay 2014 tax filings. You can see the TSCPA letter here:
While many were hopeful that Congress would deal with this issue on an expeditious basis once the election was over, it now is not clear whether that will happen. It could be that the contentiousness of other issues like immigration and the Keystone pipeline will spill over and make the tax extenders issue controversial as well. Let’s hope not, as we have seen how this delay plays out before, and it is not good for taxpayers or the CPAs who serve them.