Tax News

CCH (cch.taxgroup.com) reports:

  House Ways and Means Chairman Charles B. Rangel, D-N.Y., introduced yet another tax extenders bill on September 25, but it failed to generate support from Senate Republicans who are sticking to their insistence that House lawmakers should accept the bipartisan, Senate-passed bill
HR 6049. The House took up the Renewable Energy and Job Creation Tax Bill of 2008 (HR 7060), but a drafting error caused lawmakers to pull the bill from House consideration.

  The Bush administration issued a veto threat against the Rangel bill, saying that the measure should be discarded in favor of the Senate tax bill, which combines alternative minimum tax relief, energy tax incentives and tax provisions for businesses and families. "The House is trying to play games with extenders and tax relief," said Senate Finance Committee ranking member Charles E. Grassley, R-Iowa. He said HR 6049 includes provisions that House members want and that the bill would definitely become law because the president supports it.

  The Rangel bill, which will likely reach the House floor on September 26, was modified from earlier House extender tax bills in hopes of winning support from Senate Republicans. "The Senate said they wanted two years; this bill gives them two years, paid for by offsets they have already blessed," said Rangel, who urged the Senate to accept a compromise, rather than insisting on their version of the legislation.

  According to a summary of HR 7060 provided by Rangel's office, the legislation would invest $15 billion in renewable energy, energy efficiency and conservation improvements, and carbon capture and sequestration demonstration projects. Another $42 billion would be invested in extending a group of expiring tax provisions through 2009. Those provisions include the research and development credit, special rules for active financing income, the state and local sales tax deduction, the deduction for out-of-pocket expenses for teachers, and the deduction for qualified tuition expenses. The bill also includes $3 billion for the refundable child tax credit.

  In order to pay for the bill, Rangel used tax offsets that already won support in the Senate. His bill would prevent the understatement of foreign oil and gas extraction income in calculating foreign tax credits and freeze the Code Sec. 199 deduction for oil and gas companies at six percent. According to the summary, the measure would also prevent hedge fund managers who work for offshore corporations from deferring tax on their compensation.

  The bill would also delay a tax benefit for multinational corporations operating overseas that has yet to take effect. HR 7060 would also provide for broker reporting of customer's basis in securities, extend the FUTA surtax for one year and extend and increase funding for the Oil Spill Liability Trust Fund.

  By Stephen K. Cooper and Paula Cruickshank, CCH News Staff

Ways and Means Release: Summary of Tax Provisions in HR 7060, the Renewable Energy and Job Creation Act of 2008

Statement of Administration Policy on HR 7060

JCT Technical Explanation of HR 7060, the Renewable Energy and Job Creation Tax Act of 2008, JCX-75-08

JCT Estimated Budget Effects of HR 7060, the Renewable Energy and Job Creation Tax Act of 2008, JCX-76-08