WASHINGTON, D.C. - A bill (H.R. 4213) soon may be considered in the Senate to extend $31 billion in terminated tax cuts, the Bureau of National Affairs reports.
Sen. Max Baucus (D-MT), chair of the Finance Committee, said that the money to pay for the restoration would partly come from rejecting a biofuels tax credit for paper mills?? use of the so-called black liquor fuel?"a loophole in the current biodiesel tax credit provisions that has been exploited by paper mills to benefit from the credit although not producing biofuels. Closing this loophole represents the biggest revenue amendment to the House-approved Tax Extenders Act of 2009. By preventing the paper industry from receiving a new $1.01-a-gallon cellulosic biofuels producer tax credit for using black liquor, the bill would raise an estimated $23.9 billion during the next decade.
Codifying the economic substance doctrine would provide additional funds.
The revenue would offset a year??s extension of more than 40 tax cuts for businesses and individuals that expired on Dec. 31, 2009. Of particular interest to convenience and petroleum retailers would be an extension of the $1-a-gallon credit for making biodiesel, diesel from biomass and renewable diesel, would also receive extensions until Dec. 31, 2010.
Other provisions extended include the research and experimentation tax credit, active financing exception and a 15-year cost recovery provision for improvements to restaurants and retailers.
The Senate bill also clarifies the economic substance doctrine, in addition to requiring a 40 percent liability fine for tax underpayments traced to dealings without any economic value other than tax savings. The proposal, which would only effect transactions after its enactment date, is projected to bring in $5.5 billion from 2010 to 2020.
The two tax increases would be augmented by a savings of $8 billion over 10 years in a bill to lower monies going to the Medicare Improvement Fund.
"The legislation before us ?? is urgent because it would extend critical programs and tax incentives that create jobs," said Sen. Baucus. "This bill provides much-needed tax relief in a time of economic uncertainty."