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October 7, 2019

Fate of Tax Extenders, Retirement Savings Bills Remains Uncertain

Stopgap Spending Bill

The fate of over 30 temporary tax provisions known as "tax extenders" and a sweeping retirement savings bill remains uncertain as Congress takes a two-week recess. Lawmakers are expected to return to Washington, D.C. on October 15.

Stopgap Spending Bill

The Senate on September 26 passed a House-approved stopgap spending bill by an 82-to-15 vote. This will keep the government open, including Treasury and the IRS, through November 21. As this Issue went to press, the president was expected to sign the measure, according to a senior White House official.

While the short term funding bill does contain certain heath care-related extenders, the bulk of expired or soon to be expired tax breaks are expected to be addressed in November during the next round of lawmaker negotiations. Although tax extenders have traditionally been a bipartisan issue, given the current political climate, it is unlikely that a stand-alone tax extenders bill could successfully make its way through the Democratic-controlled House and Republican-majority Senate before the end of the year. It is anticipated on Capitol Hill that any tax extenders package that may soon surface will likely hitch a ride on a larger legislative vehicle, like a year-end government funding bill.

Extenders Package

"I would expect that as of right now, if there’s an extenders package, that there won’t be anything left out," Senate Finance Committee (SFC) Chairman Chuck Grassley, R-Iowa, told reporters. Although few details have been released publicly on the contents of such a package, Grassley has said that a legislative package based on the findings of several bipartisan SFC taskforces is in the works.

Additionally, Grassley told reporters that Republicans are not hearing much "talk" from Democrats about getting a tax extenders measure moving through Congress. Grassley has consistently expressed frustration with Democrats in the House (where movement on legislation must be initiated) for not making tax extenders a priority.

Notably, Grassley and SFC ranking member Ron Wyden, D-Ore., introduced their bipartisan tax extenders bill, Sen. 617, earlier this year. House Ways and Means Committee Chairman Richard Neal, D-Mass., also introduced a tax extenders bill, HR 3301, to renew certain expiring or soon to be expired tax breaks. However, Neal’s bill, which proposes undoing certain provisions under the Tax Cuts and Jobs Act of 2017 related to estate taxes, was considered a nonstarter by Senate Republicans.

Retirement Savings Bill Stalled

Meanwhile, the House-approved bipartisan Setting Every Community Up for Retirement Enhancement (SECURE) Bill of 2019 (HR 1994) remains stalled in the Senate. The bill cleared the House on May 23 by a 417-to-3 vote.

The bipartisan retirement package, which proposes sweeping tax-related changes to retirement savings policy, was originally expected to quickly clear the Senate after its approval in the House. However, Sen. Ted Cruz, R-Tex., blocked the bill from reaching the Senate floor, in protest of House Democrats’ removal of a provision from the original bill which would have expanded tax-advantaged Section 529 education savings plans to include home schooling and certain elementary and secondary expenses.

Although Senate Majority Leader Mitch McConnell, R-Ky., reportedly tried to bring the bill to the Senate floor on September 26, Cruz continued to hold up the bill along with Sen. Patty Murray, D-Wash. However, there is speculation on Capitol Hill that, as a result of the delay, a new, larger year-end tax package may emerge.

2019 Individual Tax Planning Supplement

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