Despite a number of votes in key Congressional committees and on the floor of both the Senate and House in the past few weeks, the near-term fate of the “extenders” package, the collection of nearly 60 expired tax provisions, including the IRA Charitable Rollover, remains uncertain.
As previously reported in this space, the Senate Finance Committee on April 3, 2014 approved the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act (S. 2260), legislation which would retroactively extend the roughly $85 billion worth of tax provisions that lapsed at the end of 2013 for a two-year period (i.e., January 1, 2014 through December 31, 2015). Notably, this bill includes the IRA Charitable Rollover provision which has long been a legislative priority of PPP. The IRA Charitable Rollover permits an Individual Retirement Account owner who is age 70½ or older generally to exclude from gross income up to $100,000 per year in distributions made directly from the IRA to certain public charities.
The Ways & Means Committee, which is the tax-writing committee over in the House, however, has taken a starkly different approach to extenders than has Senate Finance. Rather than agree to a straight-forward extension of virtually all of the lapsed provisions, House leadership has pledged to take up extenders provisions on a one-by-one basis. The result so far has been one formal hearing on only the business-related extender provisions, which were ultimately packaged together and passed by Ways & Means and then on May 9, 2014 by the full House. This House-passed bill (H.R. 4438) is the first of at latest six expected House bills that will deal with extenders.
These differing approaches by the Senate and House has set up a complicated standoff over extenders that may not be fully resolved until after the midterm elections in November. This also means the IRA Charitable Rollover will remain off the books until that point.
What’s more, dynamics in the Senate are further complicating progress on extenders. Yesterday, May 13, 2014, the Senate voted to cut off debate on taking up the legislative vehicle that will serve as the Senate Finance-approved extenders package (S. 2260). While that vote was overwhelmingly bipartisan, Senate Democrats are expected to sharply limit the number of amendments that can be considered by the chamber which might sufficiently anger Republicans into ultimately blocking the bill’s prospect for passage in the short-term.
And the drama does not end there. A related debate is unfolding in the Senate over whether the cost of the extenders package needs to be offset with revenue raising provisions. S. 2260, as currently drafted, does not include any offsets. Senate Democrats, by and large, maintain the package does not need to be offset because the tax provisions will pay for themselves while some Senate Republicans oppose the package on the grounds that it will add to the deficit in the same way new government spending would. Interestingly, the White House seems to be at odds with Senate Democrats on this issue. That is, when the House passed its first extenders bill last week, the White House threatened to veto the bill solely because the measure was not fully offset. Accordingly, the Senate, House and White House will need to come to some resolution on the issue of offsets before passage of extenders is assured.
As always, PPP will continue to monitor all developments related to an IRA Charitable Rollover extension as it moves through Congress.