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TAX TAKE: Lame Duck and Cover – Top 10 Potential Items for a Year-End Tax Bill

Tax Alert

The real work in the lame duck Congressional session begins today, and Tax Take is focused on what tax legislation could be enacted before year-end. Assuming an omnibus appropriations bill becomes a vehicle for a tax title, here are the top 10 items that may be considered for inclusion. 

  1. Retirement Security. Advanced negotiations reconciling the bills passed by the House and the Senate Finance and HELP Committees should position Secure 2.0 for inclusion in any year-end package.
  2. Section 174 R&D Amortization Fix. Strong support for bipartisan bills in the House and Senate, combined with the House's passage of a fix in the Build Back Better Act (BBBA) suggest that the research and development (R&D) amortization issue will be addressed (and on a retroactive basis).
  3. Child Tax Credit. Democrats may condition any tax bill on the inclusion of an extension of the expanded child tax credit, which would add a significant political and revenue component to the negotiations.
  4. Tax Extenders. Although some expiring provisions were addressed in the Inflation Reduction Act (IRA), there are a significant number of provisions that expired at the end of 2021 or are set to expire at the end of this year that need to be extended.
  5. 100% Bonus Depreciation. Congress will consider addressing the scheduled phase-out of 100% bonus depreciation, which begins in 2023.
  6. Section 163(j) – Save the DA. The interest expense deduction earnings before interest, taxes, depreciation, and amortization (EBITDA) limitation fix may be addressed, retroactive to the beginning of this year.
  7. SALT Deduction Cap Relief. Relief from the state and local tax (SALT) deduction cap is a priority for members from high-tax states, although the politics and revenue costs associated with providing relief may prevent it from being considered at the end of the year.
  8. BBBA Tax Relief. Although the BBBA utilized tax proposals primarily as a revenue source, it did include some tax relief provisions that enjoy bipartisan support. A package of low-income housing tax credit provisions, as well as a necessary clarification of the passive foreign investment company rules, are items that should be considered for inclusion in any year-end package.
  9. Russia Tax Sanctions. Bipartisan legislation that would disallow foreign tax credits and other tax benefits associated with business operations in Russia could be considered.
  10. Technical Corrections. There has not been a significant technical corrections bill enacted in some time. Although corrections to the Tax Cuts and Jobs Act (TCJA), the recently enacted IRA, and other legislation are needed, the politics associated with technical corrections likely prevent consideration at the end of the term.

It will be interesting to see how the lame duck session plays out and how tax legislation fits in the overall picture. While there is hope for a robust tax title, keep in mind that most of the items discussed above enjoy enough bipartisan support to return as priorities in the next Congress even if left out by tax-writers at the end of 2022. #TaxTake

Upcoming Speaking Engagements and Events 

On December 1, Marc will speak at the 2022 BCBS National Tax Conference. His panel will discuss federal and state tax policy developments.

In the News

Marc was named a 2022 Top Lobbyist by the National Institute for Lobbying & Ethics. Congrats, Marc!

In Law360, Jorge said the nomination of Daniel Werfel to lead the IRS sends a clear message the Biden Administration wants an effective manager with significant budget and fiscal expertise. Jorge said "they need someone with credibility that can properly implement IRA funding. His OMB experience clearly is going to be beneficial."

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