Trifecta Tax Bill Stymied By Senate Stand-Off

by Mike Godfrey, Tax-News.com, Washington

22 September 2006

Senator Max Baucus has slammed the Senate majority -which is continuing to hold out for death tax repeal - for blocking Democratic efforts to pass a separate bill to renew and extend expired tax breaks including the research and development tax credit.

Baucus, Ranking Democrat on the Senate Finance Committee, on Wednesday requested unanimous consent to legislation that mirrors language in a bill supported by the majority side to renew the tax provisions, which also include the college tuition deduction, and the state and local sales tax deduction. However, an objection to the Baucus request was lodged for a third time by a Republican senator. The GOP will not allow passage of the bill unless it includes permanent estate duty repeal, something the Democrats will not accept.

According to Baucus, the continuing delay in getting the tax provisions onto the statute book is not only harming taxpayers, but also contributing to the 'tax gap', an issue frequently taken up by the Montana Democrat.

“I have repeatedly raised the problem of the ever-growing Federal tax gap. The tax gap is the difference between taxes legally owed and taxes actually paid. That gap is $345 billion a year, and growing. One thing that contributes significantly to the tax gap is confusion. Many taxpayers simply claim credits or deductions by mistake," Baucus commented.

He added:

“And that error rate is about to get worse. As IRS Commissioner Everson pointed out at a Finance Committee hearing this month, the IRS and taxpayers will face unnecessary confusion and compliance errors if Congress does not finish its changes to the tax law soon. Taxpayers will face more mistakes and hassles, if we do not extend the expired tax provisions soon.

“If Congress does not reinstate the expired tax incentives before it recesses for the election, then the IRS will have to print tax forms for next year’s filing season applying the law ‘as is’. The IRS will print the forms without the tax credit for US-based research jobs, without the tax deduction for state sales taxes, without the tax credit for hiring welfare workers, and without the tax deduction for classroom supplies that teachers buy."

“If Congress does not extend these provisions by the end of next week, then the IRS will have to spend taxpayers’ money to rush printing for supplemental documents to describe these incentives, if and when Congress eventually passes them."

“Millions of families, businesses, and workers utilize these popular tax incentives. These are not obscure tax benefits claimed on separate forms or schedules."

Recommended