While the 2014 mid-term elections are decided (except for a few seats in the Senate and several in the House), there is little additional clarity at this point in regard to the extension of the many tax provisions that expired in 2013, including bonus depreciation, the research credit and many more. The Republicans have seized control of the Senate and augmented their control of the House of Representatives. Both the Obama Administration and current Republican leadership have signaled a willingness to address the tax extenders during the lame-duck period, but the first opening for work on the extenders bill will probably not occur until after Congress recesses for Thanksgiving, which means December 1.
The two parties appear to be poised to push through a bill extending at least some of the tax provisions that expired on December 31, 2013. Most of the business provisions – including bonus depreciation, the research credit, more generous expensing options and the rehabilitation tax credit – likely will be extended for at least two years, with an outside chance for the research credit to be extended permanently. The timing for the extenders bill is still uncertain, but there seems to be an acknowledgement that it would be better for action before the 2014 year-end and for the extensions to be retroactive to the start of 2014.
The Internal Revenue Service has recently publicized that we are approaching the time in which if the extensions are made, the timing could delay the start of the 2015 tax return filing season for 2014 tax returns.
There has also been discussion about the possibility of not extending expired provisions effective for 2014 and extending them for 2015.
Prospects for tax reform are still out there, but there is likely only a fairly small window during 2015. The Obama Administration has stated that tax reform is an area in which compromise is traditionally possible and tax reform remains a focus of Republican leadership, which has produced comprehensive tax reform plans. The ball is in the Administration’s court, as it has not produced a tax reform plan as of yet.
Watch for additional updates as the timing and content of the extenders bill becomes more definite and more signals are given in regard to tax reform.
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