Tax Extender Bill Leaves Five Tax Breaks in the Dust.
(Parker Tax Publishing December 22, 2014)

While the Tax Increase Prevention Act of 2014 (TIPA) is widely seen as a blanket one-year extension of expiring tax breaks, not all expiring provisions were extended. Of the sixty tax preferences up for extension for the 2014 tax year, five failed to make the cut: (1) the health coverage tax credit for displaced workers and retirees, (2) the plug-in motorcycle tax credit, (3) the energy-efficient appliance credit, (4) New York Liberty Zone tax-exempt bond financing, and (5) partial expensing of refinery equipment. H.R. 5771 (12/16/2014).

The following is a recap of the five forlorn provisions, all of which expired on December 31, 2013.

Health coverage tax credit (HCTC) for displaced workers and retirees: The Code Sec. 35 health coverage tax credit permitted certain displaced workers and retirees to pay only a portion of their qualified health insurance. Eligible workers included those receiving trade readjustment allowances under the Trade Adjustment Assistance program. Retirees (age 55 or older) receiving benefits from the Pension Benefit Guaranty Corporation were also eligible. Unlike the other four expiring provisions, this one was actually targeted for extinction. The 2013 expiration date was appended in 2011 by Pub. L. 112-40; the health coverage tax credit was originally enacted by the Trade Act of 2002 without a sunset provision.

Plug-in motorcycle tax credit: Often referred to as the "plug-in motorcycle credit", the Code Sec. 30D(g) credit applied to highway-capable plug-in two-wheeled and three-wheeled vehicles. The plug-in motorcycle credit bears the distinction of being the only entirely new tax break introduced by American Taxpayer Relief Act of 2012 (ATRA). The omission of the popular new credit from TIPA was a shock to many. House Ways and Means Chairman Dave Camp, (R-Mich) has indicated that the omission was an accidental oversight as a result of the last minute push to finalize the legislation.

Energy-efficient appliance tax credit: This credit under Code Sec.45M allowed U.S.-based manufacturers of energy efficient dishwashers, clothes washers, and refrigerators a credit equal to the sum of the credit amounts figured separately for each type of appliance produced during the calendar year ending with or within its tax year. Originally enacted as part of the Energy Policy Act of 2005, the tax break had previously been extended three times, most recently by ATRA.

New York Liberty Zone tax-exempt bond financing: In the wake of the 9/11 tragedy, the Job Creation and Worker Assistance Act of 2002 provided for the treatment of qualified New York Liberty Zone bonds as tax-exempt facility bonds. The deadline for issuing these tax-preferred bonds had been extended three times, most recently by ATRA.

Partial expensing of refinery equipment: This provision under Code Sec. 179C allowed taxpayers to elect to expense 50 percent of the cost of certain refinery equipment placed in service prior to January 1, 2014. To qualify for this incentive, a binding construction contract must have been in place by January 1, 2010. Originally enacted as part of the Energy Policy Act of 2005, the tax break had previously been extended by the Emergency Economic Stabilization Act of 2008.

Because these five provisions were not extended by TIPA, the tax breaks will not be available for taxpayers filing their 2014 tax returns. Whether Congress resuscitates the Code Sec. 30A(g) plug-in motorcycle credit, which appears to have expired because of an error, remains to be seen. (Staff Editor Parker Tax Publishing)

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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