Tax News

Tax Analysts report:

House Ways and Means Committee Chair William M. Thomas, R-Calif., told reporters late April 26 that conferees to the $70 billion tax reconciliation package (H.R. 4297) are committed to reaching a deal on the makeup of the final package by the end of the day April 27. That could set up a vote on the conference report in both chambers as early as the week of May 1, which Thomas said would be desirable.

The commitment to complete the bill by April 27 only applies to the tax cut provisions that will enjoy reconciliation protections, Thomas said after a meeting with Senate Finance Committee Chair Chuck Grassley, R-Iowa, Senate Majority Leader William H. Frist, R-Tenn., and House Speaker J. Dennis Hastert, R-Ill. The final contents of a separate package of tax cut extensions, which is expected to include several provisions from the previously approved House and Senate reconciliation bills, will not be decided until a final decision on the reconciliation legislation is made, he added.

If we can resolve [tax reconciliation], we can talk about what isnt in the tax reconciliation package and then there will be options on how you might deal with those items that arent in the tax reconciliation package, Thomas said. But since we dont have a tax reconciliation package yet, we cant talk about that.

Although Thomas did not go into any detail on which provisions will make up the reconciliation conference report, congressional GOP leaders and the White House have insisted on the inclusion of a two-year extension of the reduced tax rates on capital gains and dividends. That provision is expected to be combined with a one-year extension of alternative minimum tax relief, a two-year extension of increased small business expensing under section 179, and an extension of the subpart F exemption for active financing.

Disagreement over the scope of the AMT provision has been one factor delaying an agreement on the tax cut package. While Grassley has continually insisted on including the Senates broad hold harmless AMT provision, House conferees have instead pushed for a less generous version of AMT relief like that passed by the House late last year (H.R. 4096). Thomas suggested that the scales were tipping more in favor of the House position.

I have a majority leader in the Senate who wrote a letter to the chairman of the Finance Committee about stuff that was in the House bill, Thomas said, referring to a February letter sent by Frist to Grassley insisting that the investment tax cuts be included in a conference report. The chairman of the Finance Committee doesn't have a letter from the Speaker writing about what was in the Senate version of the reconciliation package. And that creates a dynamic slightly different from our usual conference.