The United States Senate last evening passed a one-year extension of the so-called AMT patch – a higher AMT exemption to protect 20 million or so taxpayers from being subjected to the AMT on April 15th. This bill did not include any offsets and it did not include any additional extenders, either.
Senate Republicans, as well as some Democrats – including Finance Committee Chairman Max Baucus – have observed that, since much of the revenue collected by the AMT is accidental and was not intended by Congress, it is nonsensical to insist that protecting taxpayers from the tax should be offset at all. Apparently, those members prevailed in the Senate.
Leadership in the House, on the other hand, takes a very different view. They continue to insist that any change in the AMT be fully offset.
The expectation is the bill will now go back to the House, where the Ways and Means Committee staff are already at work trying to come up with new offsets that both are acceptable to the Senate and sufficient to cover the $50 billion revenue loss of the AMT patch. The most likely course of action is the House will attach those new offsets to the bill and send it back to the Senate.
What happens to the other tax items – the extender package, the energy tax package, and the technical corrections package also under consideration this fall – is very much up in the air.
What is clear is that if your business or industry has been targeted by a proposed tax increase in the past year, you should pay close attention to the activities in the House. They have to raise $50 billion in taxes on somebody. Just who will be the question.
IC-DISC Comments Posted by Ways and Means
For the second year in a row, the tax writers in the House and the Senate have proposed to raise taxes on small and closely held exporters as part of a technical corrections package. And, for the second year in a row, those exporters and the groups that represent them have sent a torrent of comments opposing that effort to both the Ways and Means and Finance Committees.
The Ways and Means Committee has posted their comments over the last couple of days, and while it does not appear that all the comments have actually been posted to the website (we are aware of many that do not appear), it is clear the IC-DISC issue still dominates the list, representing more than half of all the letters and statements received by the Committee.
If you submitted comments, please check the website to make sure they are posted. If you have an IC-DISC or are an exporter who would like to use an IC-DISC, make sure to contact your Representative and Senators and make them aware of this issue. It’s not too late.