Member Login

House Ways & Means Committee Approves Tax Extender Package | NAIFA GovWatch | Advocacy | NAIFA
Advocacy

NAIFA GovWatch

House Ways & Means Committee Approves Tax Extender Package

Issue: Tax

Date: May 16, 2008

This afternoon the House Ways & Means Committee approved a $57 billion tax package that would:

Pay-As-You-Go Rules:

The good news is this package will not be paid for by changing the tax treatment of insurance products sold by NAIFA members. However, NAIFA members should continue to be on alert in the current “pay-go” environment because Congress will continue to look for ways to pay for new tax bills.

The package will be paid for by modifying the offshore nonqualified deferred compensation (NQDC) provisions and delaying a rule due to take effect next year that would allow companies more flexibility in allocating their worldwide interest income.

Reinstatements and Extenders: Among the 37 tax rules to be reinstated is the provision to allow tax-free direct gifts to a charity from an IRA.  Also included is the $100/day penalty for violation of mental health parity rules. Four new tax provisions are also in the package: an above-the-line deduction for property taxes, relief for alternative minimum tax (AMT) taxpayers who exercise incentive stock options, equalization of deductibility rules governing certain attorney contingency fee arrangements, and modifications to the child tax credit.

Among the 2008 extenders is a one-year extension of the Subpart F exception for active financing -- a provision important to many insurance companies. . Also included among the 2008 extenders is extension of the New Markets tax credit.

Next Steps:  The tax extender package may go to the House floor for a vote prior to Memorial Day. However, Senate action is likely to be deferred until after Memorial Day. The Senate Finance Committee will consider a tax extender package that currently does not contain offsets. However, offsets are expected prior to committee action. Whether the Senate will accept the offsets used by the House remains to be seen. Insiders say chances are 50-50.

Neither the House nor the Senate bills will address this year's AMT issue. A "patch" – expected to cost some $70 billion this year – is needed to prevent millions of new taxpayers from becoming liable for the AMT this year. Action on this year's AMT patch is not likely until just before the year ends.

NAIFA Staff Contact: For additional information on this issue, please contact Michael Kerley at Mkerley@naifa.org.

Please visit us at www.naifa.org/advocacy

Back to NAIFA GovWatch