LegiStorm

Summary:

In the past, Congress has regularly acted to extend expired or expiring temporary tax provisions. Collectively, these temporary tax provisions are often referred to as “tax extenders.” Fifty-two temporary tax provisions expired at the end of 2014. All of these provisions were either temporarily or permanently extended as part of the Consolidated Appropriations Act, 2016 (P.L. 114-113), signed into law on December 18, 2015. Unlike previous tax extenders legislation, P.L. 114-113 made a number of provisions permanent, and provided longer-term extensions for other provisions. This report provides a broad overview of the tax extenders. Congress had previously addressed tax extenders toward the end of the 113th Congress. The Tax Increase Prevention Act of 2014 (P.L. 113-295), signed into law on December 19, 2014, made tax provisions that had expired at the end of 2013 available to taxpayers for the 2014 tax year. The law extended most (but not all) provisions that had expired at the end of 2013. Most of the provisions in P.L. 113-295 had been included in previous “tax extender” packages. There are several reasons why Congress may choose to enact tax provisions on a temporary basis. Enacting provisions on a temporary basis provides legislators with an opportunity to evaluate the effectiveness of tax policies prior to expiration or extension. Temporary tax provisions may also be used to provide temporary economic stimulus or disaster relief. Congress may also choose to enact tax provisions on a temporary rather than permanent basis due to budgetary considerations, as the foregone revenue from a temporary provision will generally be less than if it were permanent. The provisions that expired at the end of 2014 are diverse in purpose, including provisions for individuals, businesses, the charitable sector, and energy-related activities. Among the individual provisions that expired are deductions for teachers’ out-of-pocket expenses, state and local sales taxes, qualified tuition and related expenses, and mortgage insurance premiums. On the business side, under current law, the research and development (R&D) tax credit, the work opportunity tax credit (WOTC), the active financing exceptions under Subpart F, the new markets tax credit, and increased expensing and bonus depreciation allowances will not be available for taxpayers after 2014. Expired charitable provisions include the enhanced deduction for contributions of food inventory and provisions allowing for tax-free distributions from retirement accounts for charitable purposes. The renewable energy production tax credit (PTC) expired at the end of 2014, along with a number of other incentives for energy efficiency and renewable and alternative fuels. As discussed in this report, many of these provisions were made permanent in P.L. 114-113. Additional information on specific extender provisions may be found in other CRS reports, including the following:  CRS Report R43510, Selected Recently Expired Business Tax Provisions (“Tax Extenders”), by Jane G. Gravelle, Donald J. Marples, and Molly F. Sherlock;  CRS Report R43688, Selected Recently Expired Individual Tax Provisions (“Tax Extenders”): In Brief, by Grant A. Driessen and Jane G. Gravelle;  CRS Report R43517, Recently Expired Charitable Tax Provisions (“Tax Extenders”): In Brief, by Jane G. Gravelle and Molly F. Sherlock;  CRS Report R43541, Recently Expired Community Assistance-Related Tax Provisions (“Tax Extenders”): In Brief, by Sean Lowry; and  CRS Report R43449, Recently Expired Housing Related Tax Provisions (“Tax Extenders”): In Brief, by Mark P. Keightley