House and Senate tax-writing committee Republicans are reportedly nearing completion of a year-end tax package that addresses tax extenders, retirement policy provisions, a limited number of Tax Cuts and Jobs Act (TCJA) technical corrections, proposals from the House-passed innovation tax bill, and IRS reform provisions. The House version of the bill (attached) was posted on the House Rules Committee Website on November 26 and announced by House Ways and Means Committee Chairman Kevin Brady (R-TX).

Exact plans are unclear, but such a package could be considered in the House as soon as this week and potentially added to a year-end government funding bill.

Upon release of the package, Chairman Brady made the following statement: "This broad, bipartisan package builds on the economic successes we continue to see throughout our country. The policy proposals in this package have support of Republicans and Democrats in both chambers. I look forward to swift action in the House to send these measures to the Senate."

Below are some descriptions of the current plan.

Tax extenders

With regard to the tax extenders, the railroad track maintenance credit would be made permanent and incentives for biodiesel and renewable diesel would be extended and phased out. The remainder of the slate of 20-plus provisions that expired at the end of 2017 would be extended for 2018. The oil spill liability trust fund rate and black lung liability trust fund excise tax rate would be extended for 2019.

Retirement savings

Many of the retirement savings proposals from the Family Savings Act of 2018 (H.R. 6757), approved by the House in September, are expected to be part of the package, including multiple employer plan provisions and a fiduciary safe harbor for the selection of a lifetime income provider. Additional provisions, including one from the Retirement Enhancement and Savings Act (RESA) to require benefit statements to include a lifetime income disclosure that would convert a participant's current account balance into a monthly annuity at retirement age, are expected to be part of the package. Also from the Family Savings Act is a proposal to allow penalty-free withdrawals from retirement plans for individuals in case of birth of child or adoption. Universal Savings Accounts are not included.

Innovation

Provisions of the American Innovation Act of 2018 (H.R. 6756), also approved in September, are expected to be included: an increase in the deduction for certain start-up costs from $5,000 to $20,000, and an increase in the phase-out from costs in excess of $50,000 to $120,000 (excess costs would continue to be amortized ratably over 180 months); and an exception to current rules that limit the use of net operating losses and certain tax credits when there is an ownership change.

Technical corrections

Five TCJA technical corrections are expected to be part of the package, providing that:

 — the Section 199A pass-through deduction for qualified REIT dividends applies to both direct holders of REIT stock and indirect shareholders of REITs through mutual funds

 — qualified improvement property is 15-year property under the modified accelerated cost recovery system (MACRS), which also would make such property eligible for 100% bonus depreciation

 — modifications made to NOL carryforwards and carrybacks apply to net operating losses arising in tax years beginning, not ending, after December 31, 2017

 — attorney's fees related to sexual harassment or abuse cases are deductible by victims

 — any non-Section 965 tax payments (e.g. estimated taxes) will not be misapplied by the IRS to a taxpayer's Section 965 tax liability

IRS reform

The package is expected to include many provisions of the Taxpayer First Act (H.R. 5444) approved by the House in April, including the contents of related bills that were part of the combined measure sent to the Senate, such as the 21st Century IRS Act. Language to establish an "IRS Independent Office of Appeals" and to implement an absolute right to go to Appeals in certain limited circumstances is similar to that included in H.R. 5444. Also expected to be included are some provisions unique to Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden's (D-OR) version of the Taxpayer First Act (S. 3246), such as whistleblower reforms. The package is not anticipated to include more controversial provisions such as elimination of the IRS Oversight Board.

Disaster relief

Disaster relief provisions would be available to those affected by Hurricane Florence, California wildfires and other disasters. They would provide tax-favored withdrawals from retirement plans, employee retention credits and a temporary suspension on charitable contribution limitations.

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ATTACHMENT

Senate Amendment to H.R. 88