What’s Happening in Congress Regarding Our Taxes?

Courtesy of the National Association of Enrolled Agents

NAEA’s E@lert’s holiday present to readers and taxpayers  is a one-week reprieve on Taxmageddon. The short version is that negotiations are ongoing and largely behind closed doors.

Shifting gears a bit, we have news about the tax writing committees. At the start of the 113th Congress (the congress that will be sworn-in in January), the Senate Finance and House Ways and Means Committees will see new faces. The Democratic Steering Committee awarded two Finance Committee seats to Sens. Sherrod Brown (D-OH) and Michael Bennet (D-CO).  The House Ways and Means Committee welcomed Reps. Tim Griffin (R-AR), Mike Kelly (R-PA), Tim Scott (R-SC) and Todd Young (R-IN).

Three Democratic Members will return to the posts they once held on the committee during the 111th Congress. (When the Dems lost the House majority after the 2010 mid-term election, three Dems were removed from the committee in order to shift seats to incoming Republicans, who increased their committee numbers and representation.) The minority party’s returning panel members will be:  Reps. Allyson Schwartz (D-PA), Linda Sanchez (D-CA) and Danny Davis (D-IL).  At the present time, Senate Republicans have not received their new committee assignments from leadership.

And here is the news on a single non-fiscal cliff bill: On December 9, Senators Charles Schumer (D-NY) and Robert Menendez (D-NJ) introduced a bill that would provide tax relief to those financially affected by the effects of Hurricane Sandy.  According to the detailed press release from Senator Schumer’s office, amongst other things, the Hurricane Sandy Tax Relief Act would:

  • Allow for a full tax deduction for expenses paid or incurred as a result of disaster cleanup;
  • Lift the 50 percent charitable tax deduction for disaster relief limitation from a taxpayer’s AGI;
  • Waive the 10 percent penalty tax that would apply to affected taxpayers who made early withdrawals from their retirement plans to cover expenses incurred or associated with the aftermath of Hurricane Sandy (the maximum amount that could be withdrawn without penalty would be $100,000);
  • Provide a tax credit to businesses affected by the storm to cover employees’ wages; and
  • Permit affected taxpayers to use their prior year’s income for purposes of calculating the Earned Income Tax Credit and Child Tax Credit.

Congressman Bill Pascrell (D-NJ) introduced a bi-partisan companion bill to the legislation on Thursday, December 13.  It is uncertain if the bills will pass both chambers in the last remaining days of the 112th Congress.

You’ll note the proposed Sandy provisions are quite similar to the 2005 Hurricane Katrina provisions that became law in late 2005.

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