The renewal of dozens of tax breaks that expired earlier this year and which could help the clients of financial advisers could gain momentum this week in the Senate.
The chamber is expected to begin debate on a package of so-called “tax extenders” that was approved by a bipartisan voice vote in the Senate Finance Committee earlier this month.
The $85 billion bill contains about 50 provisions affecting small businesses, families and individuals. Among them are tax-free distributions from individual retirement plans for charitable donations and deductions for state and local sales taxes.
The breaks, which were not expected to be dealt with until after the midterm election or even into early 2015, gained new life with the action in the Senate Finance Committee, which has recently been taken over by Sen. Ron Wyden, D-Ore., after the previous chairman, Max Baucus, D-Mont., was confirmed as U.S. ambassador to China.
Mr. Wyden made a priority of the approval of the extenders package, which would continue the tax breaks for another two years. They have a history of expiring and requiring retroactive renewal.
“What's been a pleasant surprise is the strong bipartisan vote in the Senate Finance Committee,” said Dean Zerbe, national managing director of alliantgroup, a small-business tax services consulting firm. “I think you'll get a strong bipartisan vote in the Senate.”
Decisive action in the Senate may speed up the process in the House, where House Ways and Means Chairman Dave Camp, R-Mich., has been taking a more measured approach to extenders.
Mr. Camp, who has said he prefers to deal with the breaks as part of comprehensive tax reform, has scheduled a vote in his committee on Tuesday on several tax extenders that were part of the broad tax reform package he introduced in February.
After the Senate acts, House Republicans may also want to get in on the action and approve the tax break package rather than ceding the issue to Democrats in an election year, said Mr. Zerbe, former Republican tax counsel on the Senate Finance Committee.
“The ice is breaking in the House,” he said. “I can see a lot of Republicans in the House being upset about not joining the chorus. If you have a strong vote out of the Senate, it will have a stronger impact on the thinking in the House.”
The faster-than-anticipated pace helps investment advisers who are working with their clients on tax planning, according to Timothy Steffen, senior vice president and director of financial planning at Robert W. Baird & Co. Inc. He said his clients are especially interested in the fate of the IRA tax break for charitable contribution.
“This is a good sign,” Mr. Steffen said. “It's always nice to have these things settled earlier in the year rather than at the end of the year. It gives you more time to react.”
Although momentum is building, experts cautioned that there is no guarantee that the Senate vote — even if it's overwhelmingly bipartisan — will speed up the House.
Marc Gerson, a partner at Miller & Chevalier and a former Republican aide on the House Ways and Means Committee, said that there's little time left on the legislative calendar before lawmakers' thoughts will turn toward the midterm elections in the fall.
They may not get to the extenders package until a special congressional session after the general election.
“At this point, there is still the conventional view that this will come up in 'lame duck,'” Mr. Gerson said.
Mr. Steffen is maintaining his caution.
“We're hopeful but not optimistic,” Mr. Steffen said. “History has shown these things don't come together this quickly.”
As long as tax extenders are dealt with in stand-alone bills, they will keep coming up regularly for renewal.
“Getting extenders done outside of tax reform means it's a short-term exercise,” Mr. Gerson said.