Congress Passes Tax Extender Legislation (with Mulcahy Comment)

The Senate passed legislation to extend tax breaks retroactively through 2014. The tax breaks had been set to expire on December 31, 2013.

Previously, the House passed H.R. 5771 ("The Tax Increase Prevention Act of 2014") on December 3, 2014. The extension, which will cost $41.6 billion dollars (without offsets), includes over 50 provisions, such as:

• bonus depreciation;
• research and development credits;
• production tax credits for producing electricity from wind, biomass and other renewable sources;
• the subpart F exception for active financing income;
• the exemption of certain interest-related dividends from Regulated Investment Companies ("RICs") from U.S. withholding tax; and
• the treatment of RICS as qualified investment entities under FIRPTA.

Mulcahy Comment: Senate Democrats sought to extend the provision through the end of 2015, while House Republicans intended to enact several provisions permanently. Instead, Congress did the bare minimum in order to avoid creating a major disruption of the 2015 tax filing season by hitting taxpayers with unexpected tax liabilities.

See: "The Tax Increase Prevention Act of 2014"; Estimated Revenue Effects of H.R. 5771, The "Tax Increase Prevention Act of 2014".