The construction industry is keeping a watchful eye on Congress as it prepares to tackle a long list of tax measures that expire on Dec. 31. But with few days left in the lame-duck session, lawmakers may not act by the end of the year on all of the provisions that would give construction and engineering firms a lift, lobbyists say.
The first order of business is dealing with income tax cuts dating from the George W. Bush Administration that are set to expire on Dec. 31. Republicans want the cuts to continue for all taxpayers; Democrats favor extending them for only those earning less than $250,000 per year. Construction groups favor as broad an extension as possible because the cuts affect small firms organized as partnerships and S Corporations, which are taxed at individual, not corporate, rates.
President Obama met with Democratic and Republican leaders at the White House on Nov. 30 to try to loosen the stalemate. He said there seemed to be “broad agreement that we need to get this resolved by the end of the year.” Obama asked Treasury Secretary Timothy Geithner and Office of Management and Budget Director Jacob “Jack” Lew to lead negotiations with lawmakers “to work through this logjam.”
If there is a tax-cut agreement, Andrew Goldberg, the American Institute of Architects’ vice president for federal relations, says that legislation “could be a very big vehicle [that] could very easily include a number of other provisions.” Those provisions include extensions for expiring breaks that have wide construction support, such as a deduction for energy-efficient upgrades to commercial and other buildings, Build America Bonds, Section 1603 credits for renewable-energy production and a research credit. But the GOP may insist on offsetting the cost of those “extenders” with revenue-raising moves.
AIA also wants to see Congress repeal a provision of the new health-care law that requires companies to file a 1099 form when they pay $600 or more to any vendor, effective in 2012. “The business community has been very vocal and clear that this is a huge burden, especially on small businesses,” Goldberg says. But industry suffered a setback in the Senate on Nov. 29, when a repeal proposal from Finance Committee Chairman Max Baucus (D-Mont.) failed.
The American Council of Engineering Companies would like to see a credit for brownfield cleanups reinstated, says Steve Hall, vice president for government affairs. The credit lapsed in December 2009, but some legislators favor reviving it retroactively through 2010.
Brad Penney, the Alliance to Save Energy’s government relations director, says the Bush cuts and other extensions are the only energy-related items Congress is likely to consider before adjourning. He says, “Tax extenders are pretty much it.”
|• Build America Bond program extension|
|• An extension of the deduction for energy-efficient upgrades to commercial and other buildings|
|• Brownfields remediation tax credit (expired in December 2009)|
|• Repeal of tax Form 1099 requirement (mandate takes effect in 2012)|
|• Section 1603 renewable-energy tax credit extension|
|• Research and development tax credit|
|* Unless otherwise noted, all provisions expire at the end of 2010|