Congress has about six weeks left of session before it leaves for the mid-term elections and a very full list of unfinished items on the agenda. Just on the tax front, there is possible action on:
- changes to the estate tax rules
- reform of our pension system
- extension of expiring tax provisions like the R&E tax credit
- a potential energy tax package
- and a possible increase in the minimum wage bill combined with small business tax provisions.
While we would never close the door on full consideration of each of these items, the closer we get to the election and a very probable lame-duck session of Congress, the greater the likelihood that some or all of these tax provisions will get rolled into a single, omnibus bill that includes spending and entitlement items as well. That’s the “read between the lines” take on yesterday’s CongressDaily report that Senator Frist is looking at attaching the estate tax compromise to the pension bill or other moving vehicle:
Senate Majority Leader Frist appears to have made little headway in securing 60 votes for a reduction of the estate tax, but talks are continuing with selected Democrats. If he cannot find a plan that can win enough Democrats to defeat cloture on a standalone bill, Frist is still holding out the possibility of inserting an estate tax reduction in the pension conference report or other unrelated legislation, sources said.
Here at S-CORP, we’re experts at turning lemons into lemonade. An omnibus bill means lots of opportunities for S CORP friends on the Hill to make sure S corporations and the policies they support are part of the package. With S-CORP supported provisions like the Sting Tax reforms and allowing IRAs to be S corporation shareholders still on the table, our goal is to get them into whatever piece of legislation is headed to the President’s desk.
Pension Reform Update
One bill that could head to the President’s desk is H.R. 2830, legislation to reform pension rules for private sector employees. This legislation has been stuck in conference between House and Senate negotiators since March, and the clock is ticking. Word is that if the conferees don’t resolve their differences by August, the bill may never get done. As CongressDaily reports:
Conferees have repeatedly missed deadlines for finishing the bill. They have been hung up over differences that include whether to give struggling airline carriers extra pension help and whether to allow employers to use the same firm to provide investment advice to their employees as they do to manage workers’ retirement assets.
Why is the pension bill of interest to S-CORP? By all accounts, it is viewed as the most likely vehicle for estate tax reforms and other tax provisions of interest to small and closely-held businesses. If the pension conferees come to an agreement in the next week, odds of a pre-August fix to estate tax rules rise accordingly.