Dec. 1 (Bloomberg) -- The U.S. House of Representatives will probably vote this week to revive dozens of lapsed tax breaks and extend them only through the end of this year, said two Republican congressional aides.
The move reflects Republicans’ calculation that a $400 billion-plus bipartisan proposal that collapsed last week probably can’t be resurrected. That tentative agreement would have made permanent some major business tax breaks, including the research and development tax credit and expanded capital write-offs for small businesses.
Instead, the House’s move toward a temporary patch that would expire on Dec. 31 shows lawmakers’ desire to wrap up the congressional session as quickly as possible and minimize disruption to the beginning of the tax-filing season in January. All or almost all the breaks would be extended, the aides said.
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The aides spoke on condition of anonymity before an official announcement. The House isn’t scheduled to hold votes on Dec. 5, and lawmakers are planning to adjourn for the year by Dec. 11.
The Senate Finance Committee approved a bill earlier this year that would extend the lapsed tax breaks through 2015. Such a two-year bill couldn’t win enough support in the House, one of the aides said, because Republicans who oppose some of the provisions would accept them to prevent filing season delays but are unwilling to extend them into 2015.
Multinational Corporations
Most of the breaks in the package expired on Dec. 31, 2013. They include the ability for multinational corporations such as Citigroup Inc. to defer U.S. taxes on certain overseas financing income. Other lapsed breaks include the production tax credit for wind energy and a provision that lets individuals exclude forgiven debt from income on short sales of houses.
As many as one in six taxpayers could be affected if the breaks aren’t extended, according to H&R Block Inc., the largest U.S. tax-preparation company.
The bigger deal under discussion last week would have extended most of the lapsed breaks through 2015 and locked in others permanently.
Senate Democratic leaders, including Majority Leader Harry Reid, were able to secure some of their priorities, including a permanent deduction for state sales taxes and an extension of a tuition tax credit that expires at the end of 2017.
President Barack Obama objected to the emerging deal and threatened to veto it because it didn’t extend expansions of the child tax credit and earned income tax credit that lapse at the end of 2017. Administration officials such as Treasury Secretary Jacob J. Lew contended that the package was tilted too heavily toward corporations and not low-income families.
The credits Obama wanted to extend have high error and fraud rates, said one of the Republican aides. Obama’s recent immigration policy change made the issue even more complicated, the aide said.
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