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Tax Legislation In the Near Future?
TAX LEGISLATION IN THE NEAR FUTURE?
Now that another tax filing season is behind us, is it possible that Congress will jumpstart reviewing the numerous expired tax provisions or the much talked about tax reform? Both the House and Senate agree that tax reform is needed, however, both agreed last year, and a one year "fix" was passed in mid-December 2014. While the Tax Increase Prevention Act of 2014 ("the Act") did not technically delay the start of the 2015 filing season, it did make tax planning for 2014 nearly impossible and chaotic as the year came to a close.
The Act retroactively extended nearly 60 individual and business tax deductions and credits from Jan. 1, 2014 through Dec. 31, 2014. As a result, many popular tax breaks and credits are already expired for the current year. The expired business provisions include 50 percent additional first-year depreciation, expanded Section 179 expensing limitations and the R&D credit. Expired individual provisions include an option to deduct sales tax and the above-the-line deductions for teaching expenses and qualified tuition expenses.
Since April 15th, the House has already passed a few, small tax bills. The passed bills permanently extend the deduction for sales taxes in lieu of state and local income taxes, codify the taxpayer rights before the IRS and repeal the estate tax. Despite some recent legislative action, none of the significant expired provisions have been addressed. In addition, it appears time is limited for a complete tax overhaul.
In an interview with Bloomberg on April 23, House Speaker John Boehner said that there was a "50/50 chance at best" that corporate tax reform would be passed in the upcoming year. Likewise, House Ways and Means Committee Chairman Paul Ryan stated "tax reform is a 2015 thing for sure", however time for a major bill is running short. Ryan stated tax reform has to be done by the end of summer. There are only a few more months to make progress before the focus shifts to the 2016 election.
So how does a taxpayer effectively plan for 2015 with the uncertainty of tax extenders and possible tax reform? Rely on the tax laws and provisions as they currently stand, and focus on your business and/or personal goals. More than likely, revised tax planning will again happen late in the year, as was the case for 2014. As always, UHY will keep you posted on any changes or developments. If you have any questions, please contact your professional at UHY LLP in Detroit 313 964 1040, Farmington Hills 248 355 1040 or Sterling Heights 586 254 1040.