As many people know, federal tax law is created in part by the Internal Revenue Code (IRC) enacted by Congress in title 26 of the United States Code. For that reason, it is constantly changing and shifting with each legislative session and may often be difficult and complicated to keep up with. This year, there are number of important bills in various states of development that have the potential to seriously effect the business community’s ability to make energy and sustainability improvements that are economically viable.
HR4428, or the American Microturbine Manufacturing and Clean Energy Deployment Act, would amend the Internal Revenue Code and create a 30% investment tax credit on the manufacturing of microturbines. The bill is meant to bring the development of microturbine technology in the United States onto the same level as renewable energy development that already enjoys similar tax incentives. Furthermore, HR4428 would do away with restrictions on large development projects that are currently kept out by the tax code. Unfortunately, this bill is not likely to make it past the House Ways and Means Committee.
S.2260, also called the Expiring Provisions Improvement Reform and Efficiency Act (EXPIRE), is a Senate bill that would make permanent or extend the tax credit for increasing R&D expenditures, new market tax credits, the Working Opportunity Tax Credit, tax credits for qualified leasehold improvements, the 50% bonus depreciation for qualified properties, empowerment zones tax credits, and an increase in the amount expensed under §179D as well as an extension of its effective dates. This is a hugely important bill to the business community that has so far been reported in the Senate Finance Committee and is awaiting passage by the Senate.
HR4438, the American Research and Competitiveness Act of 2014, would amend the Internal Revenue Code and make a permanent R&D tax credit. This tax credit was originally introduced in 1981 and has been extended fourteen times since then. So far the bill has passed the House and is going to the Senate with a moderate chance of being enacted.
HR4457 is the American Small Business Tax Relief Act of 2014 that would, among other things, permanently extend the §179D deductions currently in the tax code. This bill has been reported by the House Ways and Means Committee but has yet to make it through the House and has a moderate chance of enactment with both Republican and Democratic support in its co-sponsors.
All of the House bills must pass first through the House Ways and Means Committee, Chaired by retiring Representative Dave Camp from Michigan, who seems to be on a mission through his Tax Reform Act to repeal many tax deductions and exemptions that primarily effect the business community including §179D. We will keep an eye on the situation but expect some more intense debate on bills like this as the legislative session continues.