The Ignored Congressional Crisis That Could Raise Your Taxes
Policy + Politics

The Ignored Congressional Crisis That Could Raise Your Taxes

The to-do list Congress left itself for the lame duck session beginning next month is daunting. In addition to agreeing to spending bills to prevent another government shutdown, some members want to revisit the issue of the president’s war powers, others want to see action on immigration, and still others are calling for more attention to jobs bills. Oh, and there will be more than a few calls to confirm a new Attorney General. 

While it may not be garnering a lot of headlines, though, an expired package of tax provisions, little known outside Washington, has the potential to create as much of a headache for lawmakers as a number of much more visible issues.

Related: How Fair Is the Tax System in Your State?

Congress this year allowed a package of so-called “tax extenders” to expire, and has left it to the lame duck session to renew them. The extenders are a grab bag of tax breaks and incentives targeting everything from businesses’ research and development costs to money teachers spend out of their own pockets to buy classroom equipment. 

In the past, the extenders have been renewed on a routine basis, but in the 113th Congress, virtually nothing has been routine. The EXPIRE Act, a bill renewing them through 2015 passed the Senate Finance Committee, but was not passed by the full Senate. In the House, Republicans identified a number of the extenders that they felt strongly about and tried to make them permanent, severing them from the remainder of the tax breaks.

The House Republican move gained no traction in the Senate, not least of all because the package of extenders, as it exists now, is a compromise. There are elements of it Democrats like and elements they hate. The same holds true for the GOP. The reason that it has passed routinely over the years is that lawmakers were willing to swallow some measures they disliked in order to gain the ones the supported.

The move in the House to make elements important to Republicans permanent while leaving the extenders favored by Democrats out was a non-starter in the Senate for two reasons. First of all, there was little Democratic appetite for passing a bill tailored specifically to Republican sensibilities. Second, removing the elements of the bill important to the GOP and passing them separately virtually guaranteed that Republicans would never allow the remaining extenders to pass.

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While this may sound like an obscure argument that few voters will take notice of, Internal Revenue Service Commissioner John Oscine, in a letter to Congress last week, made it obvious why continuing to delay passage of the tax extenders will start to matter very much to millions of members of the general public.

“The IRS is currently facing a great deal of uncertainty related to the expired provisions, which raises serious operational and compliance risks,” he wrote. 

“This uncertainty, if it persists into December or later, could force the IRS to postpone the opening of the 2015 filing season and delay the processing of tax refunds for millions of taxpayers,” Oscine added. The ultimate result of further delay, he said, would be “service disruptions, millions of taxpayers needing to file amended returns, and substantially delayed refunds.”

Last week Senate Finance Committee Chair Ron Wyden (D-OR) urged his fellow lawmakers to make passing the extenders a priority in the coming lame duck session.

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“It has been over six months since the Finance Committee passed the EXPIRE Act with strong bipartisan support,” Wyden said in a statement. “As the 2015 filing season begins to loom large, it is more urgent than ever that Congress moves in a decisive and bipartisan way to renew expired tax provisions that will give taxpayers the certainty they need to plan their finances.”

He added, “As the economy begins to show signs of strength, uncertainty from the federal tax code is the last thing American businesses and families need as they look to grow and invest. Congress needs to act swiftly on these important tax provisions so it can get to work on a comprehensive overhaul of the tax code and lift the fog of uncertainty from taxpayers.” 

Unfortunately, swift action in the public interest has not been a hallmark of the 113th Congress.

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