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Highlights of the 2015 Extenders

Bipartisan Effort Passes Extenders; Makes Some Permanent

When testifying before the House Ways and Means Committee in April, IRS Commissioner Koskinen feared Congress would delay passing extenders until late in the year, stating that any provisions left out of the legislation could postpone the start of filing season due to the IRS needing time to adequately prepare for changes. When the tax extenders legislation was announcedit was only fitting that the Commissioner mentioned the extenders as one of the key reasons that tax season is going to start on time in 2016.

Unlike previous years, this extenders package doesn't simply push temporary deductions into 2016; the PATH Act makes several tax breaks permanent and is being called the first major step toward comprehensive tax reform by Finance Committee Chairman Orrin Hatch.

Here are a few of the changes for 2016 listed in the section-by-section summary:

Permanent Extensions and Incentives

  • Enhanced child tax credit
  • Enhanced American opportunity tax credit
  • Enhanced earned income tax credit
  • Above-the-line deduction for eligible expenses of elementary and secondary school teachers
  • Low-income housing tax credit rates for non-Federally subsidized buildings
  • Military housing allowance exclusion for determining whether a tenant is low-income
  • Treating RIC as a qualified investment entity under FIRPTA
  • Charitable deduction for contributions of real property for conservation purposes

Extensions through 2016

  • Exclusion of qualified principal residence indebtedness
  • Mortgage insurance premiums treated as qualified residence interest
  • Above-the-line deduction for qualified tuition and related expenses
  • Biodiesel and renewable diesel incentives

Other Notable Changes

The PATH Act also introduces several reforms to the IRS: IRS employees are required to "[be] familiar with and act in accordance with the taxpayer bill of rights;" IRS employees are prohibited from using personal email accounts for official business; 501(c) organizations "facing an adverse determination may request administrative appeal to the IRS Office of Appeals;" the process for seeking tax exemption as a 501(c)(4) will be streamlined; and IRS employees who take "official action for political purposes" will be fired.

Two other important parts of the PATH Act will likely receive a lot of press. The first targets the moratorium on the medical device excise tax and the tax on expensive health care plans, which Orrin Hatch has described as part of the effort to repeal the Affordable Care Act. The second lifts the ban on the export of crude oil. CNN explains the reasoning offered for ending the ban as a matter of economics: "high supply and low prices. Crude oil is currently below $35 per barrel, with gasoline under $2 per gallon at the pump in many places nationwide." 

Sources: CNN; Congress.govHouse Ways and Means Committee; Internal Revenue ServicePATH Act Summary; Senate Finance Committee

 

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