Dozens of Tax Provisions Expire December 31

Fifty-five temporary tax measures, also known as extenders, are scheduled to expire December 31. House and Senate leadership, as well as the chairmen of the tax writing committees, have demonstrated little interest in addressing the extenders before the end of the year. Although Congress often passes the extenders retroactively, current speculation puts 2014 action on temporary extensions of these provisions in doubt.

There are few moving pieces of legislation to carry the provisions. The eleventh-hour fiscal cliff compromise passed earlier this year made permanent a number of temporary tax provisions, including the Alternative Minimum Tax (AMT) patch. The nearly annual efforts to pass an AMT fix had often served as a crucial "must pass" legislative vehicle for passage of other temporary tax measures; without it, there is no obvious path to passage of the extenders. Congress is attempting to reach deals on several issues before the year ends, but those bills are unlikely to include the extenders.

Senate Finance Committee Chairman Max Baucus (D-MT) and House Ways and Means Committee Chairman Dave Camp (R-MI) have been trying to build momentum for comprehensive tax reform. This, however, places even retroactive passage of the extenders in doubt because the tax writers do not want to signal any delay or roadblock in their efforts to pass a full-scale tax overhaul by passing only temporary tax provisions.

The Congressional Research service has published a complete list of tax provisions expiring in 2013. NACUBO has identified five expiring provisions of particular interest to its members:

1. Tax-Free Distributions from Individual Retirement Accounts for Charitable Purposes. The IRA charitable rollover allows individuals 70½ and older to donate up to $100,000 from their IRAs and Roth IRAs to public charities, including colleges and universities, without having to count the distributions as taxable income.
2. Modification of Tax Treatment of Certain Payments to Controlling Exempt Organizations. Also known as 512(b)13(E), this provision quantifies as UBIT only the portion of payments to the controlling exempt organization from interest, annuities, rents, and royalties from a controlled organization that exceed fair market value.
3. Above-the-Line Deduction for Qualified Tuition and Related Expenses. This deduction allows eligible taxpayers to deduct up to $4,000 in tuition expenses as an above-the-line exclusion from income.
4. Tax Credit for Research and Experimentation Expenses. Current law allows companies to claim this business tax credit for research and development activities conducted at universities or other qualifying organizations, including research consortiums that may include universities.
5. Energy Efficient Commercial Building Deduction. Section 179D permits a government building owner (for example, public institutions of higher education) to allocate the 179D deduction to one or more persons "primarily responsible for designing the property"; this party can include architects, engineers, contractors, environmental consultants, or energy services providers.