Leading Republican lawmakers said Congress will renew dozens of tax breaks near the end of the year, some of which are popular with clients of financial advisers.
The package of so-called tax extenders, which expired in January for the 2014 tax year and beyond, includes a tax deduction for contributions to charitable organizations directly from an individual retirement account. Others involve deductions for mortgage interest premiums, state and local sales taxes, and for some higher-education expenses.
There was hope earlier this year that extenders had gained political momentum after the Senate Finance Committee approved an extenders bill on a bipartisan vote. But a dispute over amendments on the Senate floor put the bill on hold.
Sen. Orrin Hatch, R-Utah, ranking member of the panel, forecast on Thursday that the Senate would take up an extenders package after the Nov. 4 elections.
“We're going to get it done,” Mr. Hatch said in an appearance at the U.S. Chamber of Commerce. “I'm confident it will pass, likely during the lame-duck session after the midterms.”
A similar GOP message came from the other side of Capitol Hill on Wednesday, when House Ways and Means Committee Chairman Dave Camp, R-Mich., also predicted congressional approval in a lame-duck session.
“I believe we will have an extenders package,” Mr. Camp said at an event sponsored by the Business Roundtable.
Sen. Ron Wyden, D-Ore., chairman of the Senate Finance Committee, made tax extenders a priority earlier in the year and pushed the Senate bill, which would have renewed them for two years. Mr. Wyden's staff did not respond to a request for comment.
It's not clear how long the tax breaks — which number about 60 and
include personal, business and family provisions — would be renewed in a lame-duck package. They were last extended in the fiscal-cliff bill in 2013. In that measure, the IRA charitable deduction was renewed retroactively for December 2012 and for all of 2013.
Advisers and clients are watching the developments in Washington on the charitable deduction, said Tim Steffen, director of
financial planning at Robert W.
Baird & Co.
“That one has people on edge right now,” Mr. Steffen said. “They're holding off on taking their required minimum distributions to find out what happens with this law.”
Although he expects Congress to put off the extenders until a lame-duck session, it doesn't make dealing with the uncertainty any easier.
“It's frustrating not being able to give a client the right advice because we don't know what the rules are going to be,” he said. “Nobody wants to wait until the end of the year to do their tax planning.”
It's unlikely advisers and clients will know how long the tax breaks will be extended until just before the measure is finalized in November or December. Mr. Camp and Mr. Wyden are considering a one-year extension, according to a story Wednesday in Congressional Quarterly.
Earlier this summer, the House passed bills that would make the IRA charitable contribution and several other extenders permanent. The White House threatened to veto those bills because no tax revenue was provided to pay for the extensions.
“My view is that we should get as much permanent as we can,” Mr. Camp said. “That will have to be negotiated after the election.”
Mr. Hatch also is going to push for permanency, but he acknowledged that effort may have to wait for broad tax reform.
“Trying to find the economic back up to do that is very, very difficult,” he said. “I will do my best to see that we do as much as we can for as long as we can.”
