WASHINGTON – In one of its last actions before adjourning for the remainder of the year, the U.S. Senate passed the House’s very short-term tax extenders package. Late Friday evening, President Obama followed suit and signed the bill into law. The package was a last ditch effort put together by House tax writers after a longer-term, bipartisan deal was torpedoed by the president just a few days before. 

The upside for our industry is that many of the tax credits that had expired at the end of 2013 are now back on the table for 2014. The downside, however, is that they were extended only for 2014 and will expire again at the end of this year, along with 20-plus credits already slated to expire at the end of the year. Here is a summary of some of the items most important to our industry, that were reauthorized in the package for 2014:

• The Work Opportunity Tax Credit (WOTC): This is a credit employers were able to take for hiring veterans, the long-term unemployed, those on government assistance and other targeted groups. American businesses had been claiming roughly $1 billion a year in WOTC credits.
• Biodiesel Blender’s Credit: Those in our industry who have been blending biodiesel products into their diesel fuel had been getting a $1 per gallon tax credit. This is one of those credits that expired in 2013, but in the past Congress has retroactively applied this credit and many in the industry expected this to happen again.
• Compressed and Liquefied Natural Gas Credit: Retailers who sold CNG or LNG were eligible for a tax credit of $0.50 per gasoline gallon equivalent sold.
• Bonus Depreciation: Prior to its expiration, this credit allowed a company to deduct up to 50% more than would normally be available in one tax year for a qualifying purchase. This created a significant boost for companies looking to update major technologies.
• Research & Development Tax Credit: This credit allowed companies to claim significant tax credits on the costs of research and development of new products they ultimately don’t sell. It is seen as a major driver of innovation in American business.

The tax writing committees in both chambers will install new chairmen come January. Former GOP Vice Presidential Nominee Paul Ryan (R-WI) assumes the gavel of the House Ways and Means Committee and Senator Orrin Hatch (R-UT) is expected to take control of the Senate Finance Committee.  Both incoming Chairmen have expressed an interest in attempting comprehensive tax reform, hopefully eliminating the annual scramble to reauthorize such tax credits. While the success of that effort is very much in doubt due to the political climate in Washington, it would be nice to at least see the effort attempted.