Congress Takes First Step Towards Reviving Expired Tax Breaks

Now that we’re more than halfway through 2012, Congress has decided it’s an appropriate time to make some serious inroads towards extending the 55 tax provisions that expired as of December 31, 2011. From Bloomberg:

The U.S. Senate Finance Committee has reached a bipartisan agreement to revive lapsed tax breaks, including the credit for corporate research. The committee will vote on the proposal in Washington tomorrow, according to a statement by Chairman Max Baucus, a Montana Democrat, and by Orrin Hatch of Utah, the top Republican on the panel. [Ed note: No work on whether the committee took Donald Marron’s sage advice, discussed here.]

Chief among the expired provisions are the R&D credit, theoptional deduction for state sales taxes, accelerated depreciation for certain restaurants and the ability for financial-services companies to defer U.S. taxation on overseas income. (for a complete list, see here) Details of the bill — including the list of provisions being extended and the length of the extensions — have not been released, but Bloomberg is reporting that 25% of the “extenders package” will not be given new life.

Importantly, the bill is also expected to include an AMT patch that would increase the exemption for 2012, sparing millions of Americans from being forced to pay an additional minimum tax on their 2012 tax returns.

Exhausted from a summer of mud-slinging,bickering, and running in place,Congress is slated to takea well-deserved recess for the next month, so no further action will take place on the bill until September at the earliest, though in all likelihood, no new legislation of any kind will be passed until after the November election.

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