TAX TAKE: Louisiana Two Step: How a "Laddered" Continuing Resolution Impacts a Potential Tax Package
Congress once again avoided a looming government shutdown late last week with the passage of H.R. 6363, the Further Continuing Appropriations and Other Extensions Act, 2024. House Speaker Mike Johnson's (R-LA) unique "laddered" continuing resolution (CR) bifurcates the process for advancing the 12 appropriations bills, with four federal agencies and programs funded through January 19, 2024, and the remaining eight federal agencies and programs funded through February 2, 2024.
Given that the fate of a year-end tax package has been presumably tied to the appropriations process, pushing that process into next year can be viewed as a negative development. That being said, assuming an agreement can be reached on the contents of a tax package and an appropriate revenue offset, several paths forward are possible.
After Thanksgiving, Congress will likely work through December 22 before adjourning for the year. Much of the agenda will be consumed with what has become regular order: the Senate focusing on judicial and executive branch confirmations and attempting to pass "mini-bus" appropriations packages while the House continues to attempt to pass individual appropriations bills. Other legislative initiatives Congress must address include the National Defense Authorization Act (NDAA) and the extension of Federal Aviation Administration (FAA) excise taxes. The United States-Taiwan Expedited Double-Tax Relief Act is another priority. Any of these legislative initiatives could serve as the vehicle for a year-end tax package.
It is also important to recognize that the CR effectively creates two must-pass pieces of legislation in the first quarter, as Congress will need to pass appropriations legislation first by January 19, and then again by February 2, to fund the government. If a tax package is not enacted this year, these two early 2024 appropriations bills will be likely legislative vehicles.
Pressure for a year-end tax package has been significant given the unlikelihood of tax legislation in the 2024 presidential and congressional election year and the fact that the "Big Three" Tax Cuts and Jobs Act (TCJA) tax provisions requiring attention (section 174 research and experimentation (R&E) amortization, section 163(j) earnings before interest, taxes, depreciation, and amortization (EBITDA) calculation, and 100 percent bonus depreciation) all have a retroactive component. This year's novel CR approach provides for two legislative vehicles in the first quarter of 2024, potentially enhancing the likelihood of a year-end tax package even if "year-end" becomes the first quarter of 2024. #TaxTake
Upcoming Speaking Engagements and Events
Marc will present at the 2023 Blue Cross Blue Shield National Tax Conference in Austin on November 29.
In the News
In Bloomberg Law, Jorge discussed the potential for a year-end tax package in light of the Senate's recent vote to approve a stopgap spending bill through early 2024.
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