House Passes Extension of IRA Rollover, Tuition Deduction

The House has now passed legislation affecting renewable energy, and extending tax provisions that expired at the end of 2007. H.R. 6049, passed on May 21, includes a one-year extension of both the IRA charitable rollover and the above-the-line tuition deduction.

The White House announced support for extending the expiring provisions, but issued a veto threat of the measure over the proposed "payfors" (revenue offsets) - taxing offshore deferred compensation of hedge fund managers, and delaying for 10 years a new tax break for multinationals. Some members of Congress join the administration in arguing broadly that continuing current law is not a tax increase requiring an offset, and that scarce revenue ought to be retained for bills containing costs that are new to the federal government.

Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, introduced a different bill aimed at extending the expiring tax provisions. In contrast to H.R. 6049, Baucus's bill would extend all the expiring tax provisions - including the IRA rollover and tuition deduction - for two years, and also contains a one year "patch" of the Alternative Minimum Tax. The cost of this bill (S. 2886) is not currently offset, however Baucus has indicated the bill will be fully offset before it is considered by the Finance Committee. He would like to move the bill in June.

Given the White House veto threat and the offset controversy, the outlook for extending these important provisions remains uncertain.

For more information, please contact:
Karin Johns