The “Lame Duck” session of Congress convened this week to tackle a number of organizational and legislative priorities. The 109th Congress must wrap up the remaining 2007 fiscal year spending bills or at least pass a “continuing resolution” to fund the government through the rest of the fiscal year while also preparing for the 110th Congress with leadership elections and committee assignments.

Yesterday Senate Democrats voted for leadership positions electing Senator Harry Reid (D-NV) as the new Majority Leader and Senator Dick Durbin (D-IL) as Assistant Majority Leader. The Senate Democratic Steering Committee also tentatively announced which Democrats will serve on key committees. For S corps, new members on the critical Senate Finance Committee, which has oversight of the S corp tax structure and other tax matters, will be Senators Debbie Stabenow (D-MI), Ken Salazar (D-CO), and Maria Cantwell (D-WA).

Meanwhile, Senate Republicans today announced their new leadership team. As expected, Senator Mitch McConnell (R-KY) will be the new Republican Leader, while Senator Trent Lott (R-MS) survived a one-vote victory over Senator Lamar Alexander (R-TN) to be the Whip.

On the other side of the Capitol, House Democrats will elect new leaders on Thursday, while House Republicans are scheduled to do the same on Friday. No challenges are expected to Congresswoman Nancy Pelosi’s (D-CA) bid to be Speaker of the House. The Republican race for House Minority Leader is still led by current House Majority Leader John Boehner (R-OH), but he is being challenged by Reps. Mike Pence (R-IN) and Energy and Commerce Committee Chairman Joe Barton (R-TX). Once House leaders are named, new House committee assignments will be made.


Will a tax bill pass in the last weeks of the 109th Congress? That’s the question on the minds of many affected businesses right now. The news over the last couple of days is that Senators Grassley and Baucus would like to pursue a wrap-up package that includes tax extenders (like the R&D tax credit), some miscellaneious trade provisions, tax technical corrections, and some agreed-to extra items. While this list sounds a little long to squeak through in the waning days of this Congress, S-Corp readers know there is pent up demand to get some of these tax provisions done, so anything is possible.

Just to make things more complicated, we’re also hearing there may be an effort to pass a minimum wage increase coupled with small business tax provisions as well.

For S corps, we are presented with both a challenge and an opportunity. We’ve been assured that any tax package moving before the new year will NOT have any revenue raisers (like the S corp payroll tax hike or LIFO repeal, or higher taxes on exporters who use IC-DISCs), but we’re still planning to keep a close eye on any talks to make sure these unfair tax increases don’t sneak into a bill at the last minute. That’s the challenge. The opportunity is to get some of our priorities included, like built-in gains relief, sting tax relief, and allowing IRAs and non-resident aliens to be S corp shareholders. The larger the tax package, the better the odds we will succeed. We will keep you apprised of any new developments.