NAICU Washington Update

House Passes 2009 Tax Extenders

June 03, 2010

The House has approved a bill to extend dozens of tax provisions that expired Dec. 31, 2009, including the charitable IRA rollover and tuition deduction.  All of the expired provisions would be retroactively extended for one year and would expire at the end of 2010.  The measure, passed May 28 by a 215-204 vote, also extends unemployment insurance (UI) benefits.

The Senate adjourned for the Memorial Day recess without considering the bill. 

Controversy over revenue raisers, and the fact that the bill would add billions to the budget deficit, created enough opposition that House Democratic leaders repeatedly delayed floor consideration of the bill.  Then House leaders decided to split the larger package into three separate bills:

  1. the UI and tax extenders bill, called the American Jobs and Closing Tax Loopholes Act of 2010; 
  2. a separate vote on the Medicare physicians payment update; and 
  3. a third bill addressing increased spending for COBRA subsidies and federal medical assistance subsidies that will be considered by the House in June.

House Ways and Means Chairman Sander Levin (D-Mich.) made several last minute changes to the bill in an attempt to trim costs and increase support.  Among the changes was a modification to the tuition deduction.  The House bill would eliminate eligibility for the tuition deduction for individuals who get a larger tax benefit from the Hope and Lifetime Learning Credits.  It's unclear what the revenue impact of this modification will be.

The Senate is expected to take up its version of the extenders bill the week of June 7.  Reports indicate the Senate bill could be substantially different from the House bill.  If so, that will further prolong reaching any final agreement until further into the summer.

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