Negotiations on Big Extenders Deal Continue, Chairman Brady Files Two-Year ‘Fallback’ Bill

Published by Peter Lawrence on Tuesday, December 8, 2015 - 12:00am

As Congress continues to negotiate on a $500 billion to $800 billion extenders bill that would make some temporary tax provisions permanent, House Ways and Means Committee Chairman Kevin Brady, R-Texas, filed Dec. 7 a “fallback” two-year extenders bill–one year retroactive for 2015 and one year prospective through the end of 2016–that would extend more than 50 expiring provisions. A section-by-section summary released today includes the following provisions:

An extension of the minimum 9 percent low-income housing tax credit (LIHTC) for allocations made before Jan, 1, 2017.

An extension of the military housing allowance exclusion for LIHTC income qualification for personnel stationed at or near certain military bases for determinations made before Jan. 1, 2017.

An extension of the new markets tax credit (NMTC) at $3.5 billion each year for 2015 and 2016.

An extension of the renewable energy production tax credit (PTC) to facilities for which construction has commenced before Jan. 1, 2017.

An extension of the section 45L credit for energy-efficient new homes for homes in buildings of three stories or less acquired before Jan. 1, 2017.

An extension of the section 179D energy-efficient commercial and multifamily buildings deduction for buildings of four stories or more for improvements based on updated Standard 90.1-2007 of the American Society of Heating, Refrigeration and Air Conditioning Engineers (ASHRAE) and placed in service before Jan, 1, 2017.

An extension of 50 percent bonus depreciation for property acquired and placed in service before Jan. 1, 2017 and allowing taxpayers to elect to accelerate the use of alternative minimum tax (AMT) credit in lieu of bonus depreciation under special rules for property placed in service during 2015.

The bill does not include a provision to establish a minimum 4 percent for LIHTC used to finance the acquisition of existing property, nor an inflation adjustment to the amount of NMTC allocation authority, as included in the extenders bill passed by the Senate Finance Committee in July.

Furthermore, the bill does not include a provision to change the eligibility of the investment tax credit (ITC) from energy property placed in service to facilities for which construction has commenced before Jan. 1, 2017, as provided for the PTC and several members of the Senate Finance Committee urged Chairman Orrin Hatch, R-Utah, to consider in a final extenders bill.

It is unclear at the time of this writing if or when the two-year, fallback bill will be considered by the House Ways and Means Committee or full House. It is also uncertain what legislative vehicle would be used to consider the final extenders bill. Some have suggested the final extenders package would be combined with the fiscal year (FY) 2016 omnibus appropriations bill to keep the government running for final congressional consideration. Others have suggested that a customs reform bill might serve as the vehicle.

Chairman Brady has made clear that he is continuing to work on the larger extenders bill with permanent provisions and this bill represents only a fallback in case those negotiations ultimately fall apart.