No Agreement on H.R. 4297
House and Senate tax writers failed to reach an agreement this week on a final tax reconciliation conference report (H.R. 4297), despite earlier predictions that a final bill would be unveiled this week. It appears that the final bill will include both the AMT relief the Senate wants and the extension of the lower rates on investment income the House wants, as well as provisions necessary to cover the out-year revenue losses of the lower rates. According to Senate Finance Committee Chairman Grassley, these items add up to $74 billion over five years, $4 billion more than the budget limit. Reports indicate that the substance and size of any revenue offsets to be included in the bill is the final sticking point.
House and Senate negotiators are also working on the form and substance of a possible second tax bill that would include various tax extenders, including the R&D tax credit, that could either move separately or attached to the pension bill currently in conference. These provisions were originally included in the House and Senate-passed bills but were pushed out to make room for the extension of the lower rates and the AMT relief.
S-CORP continues to work with key players in the Senate to ensure that the Senate-passed provision that would provide relief from the “sting tax” on excess passive income held by S corporations remains in one of these two bills.