The Senate passed the “Tax Increase Prevention Act of 2014” (H.R. 5771) on Tuesday night just before Congress adjourned for 2014. As Molly Bryson described in her December 5, 2014 post following the House’s passage of the bill, the tax extenders package provides a one-year retroactive extension of certain tax provisions that expired at the end of 2013. Some specific extensions that are of interest to the tax credit community include the following:
extension of 9% tax credit floor for low-income housing tax credit allocations made prior to January 1, 2015
extension of $3.5 billion in allocating authority for new markets tax credits for the calendar year 2014 round
extension of the production tax credit for wind and certain other renewable energy projects that begin construction in 2014
extension of 50% bonus depreciation for certain new equipment placed in service in 2014 (2015 for certain longer period production property)
The extent to which this legislation is beneficial really depends on the type of tax incentive involved. This is a boon for the new markets tax credit community, because it guarantees another full $3.5 billion round of funding. The benefit to renewable energy projects is less clear, as eligibility for the production tax credit is subject to a year-end construction commencement deadline. It’s also not clear how many affordable housing projects will really benefit from a 9% credit floor this late in the tax credit allocation season. In any event, January 1, 2015, when these tax extenders expire, is going to feel a lot like January 1, 2014. It will be interesting to see if this two-week extenders package becomes the poster child for the need for permanent tax reform.