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Tax Extender Update – Keeping You Informed


ADP joined the Georgia Chamber of Commerce and the National Employment Opportunity Network in Washington DC during the week of September 11–13, 2012. The purpose of the meetings were to identify if the current congressional agenda would address the purported Tax Extenders, which include the Work Opportunity Tax Credit (WOTC), Empowerment Zones, Indian Employment Credit, New York Empire Zone and others, before congress adjourned for the presidential election.

Several members of Congress (House & Senate) attended the Chamber group sessions and provided an overview of what they called a brief congressional agenda before adjournment. Highlights were provided of positive developments in connection with the unfinished tax agenda and especially, with respect to the extenders; however, it appeared increasingly unlikely that any action will be taken on tax measures in the House or the Senate prior to the lame duck session in November. Our DC insiders elaborate further:

There appears to be growing support in the Senate for the extender package (Follow this link for the details –http://www.adp.com/pdf/Family-and-Business-Tax-Cut-Certainty-Act-of-2012.pdf ) approved by the Finance Committee on a bipartisan basis just prior to the August Congressional recess. The likelihood that the full Senate will take that measure up prior to the elections appears remote. Senate leaders expect to adjourn the session as early as September 21, and by September 25 at the latest; leaving very little time for floor debate on complex legislation (Congress will not be in session this coming Monday, 9/17, or Tuesday 9/18).

The highest priority for both chambers is the approval of a continuing resolution (CR) to fund the government for six months beyond September 30, the end of the current fiscal year. An agreement, in principle, by the bipartisan leadership ruled out adding tax measures to the CR, and neither party appears willing to agree to pass a tax bill without consuming considerable floor time for debate and amendments.

House Republican leaders have made clear their intention to defer tax measures until the lame duck session and the House is expected to adjourn as early as next Thursday, September 20. The only other major potential vote in the House could be on a one-year (rather than the traditional five) extension of farm programs, but even that measure could be delayed until after the election. With Congress not in session for the early part of next week, the House is coming back largely to be available to act on any measures sent back from the Senate and to act, if needed, on any changes the Senate might make to the CR.

On Thursday September 13, 2012, the Chairman of the Select Revenues Subcommittee of the Committee on Ways and Means, Pat Tiberi (R-Ohio) expressed his intention for the Committee to mark up an extenders bill in the lame duck session to match the recent actions of the Senate Finance Committee. While Chairman Tiberi did not indicate how the House package might differ from the Finance Committee Bill, his willingness to move forward with extenders is a positive sign.

Senior members of the tax-writing committees in both chambers expect the lame duck session to consider tax legislation, if for no other reason than to adopt an extension of the “patch” for 2012 to keep millions of middle class families from paying the alternative minimum tax (AMT). Congressional leaders expect that the AMT patch legislation will provide a vehicle for other tax initiatives.

In fact, when Congress returns from the elections, members will be under pressure to address the multiple tax increases and spending cuts, known as the “fiscal cliff”, that take effect in 2013. How quickly these issues will be addressed may vary depending on the outcome of the election. There is a growing “positive” sense among members on both sides of the aisle that the lame duck session must be productive, regardless of the outcome of the election.

Some senior Republicans in both chambers have recently suggested that given the tight timeframes and the fact that much still needs to be done to reach a consensus on fundamental tax and spending reforms, the best approach may be to extend most of the expired and expiring provisions and delay the spending sequester through 2013, without offsets.  In order to do so, this Congress would need to raise the federal debt ceiling.

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