On November 2, President Obama signed into law The Bipartisan Budget Act of 2015. This piece of legislation is anticipated to have a broad impact within the tax world, not only due to certain tax compliance changes, but because it allows Congress to narrow its focus on other tax issues before the end of the year.
Basics of the Bill
The two-year budget agreement extends the debt ceiling into March 2017 and will increase spending by about $80 billion over the next two years. These funds will be divided evenly between defense and domestic programs, marking a key compromise between Democrats and Republicans.
The bill plans to partially offset those spending increases through savings made from changes to the Social Security disability insurance fund and Medicare payments to doctors and other healthcare providers. According to the Washington Post, additional revenue would be raised by auctioning off portions of government-owned broadcast spectrum, selling oil from the Strategic Oil Reserve and (perhaps most important to the broader tax community) by cracking down on audits of large business partnerships.
The changes to the audit partnership regulations will have a major impact on CPAs and taxpayers. For more information, please read Eye on the Executive.
What it Means for Extenders
While the bill has direct tax implications for partnerships, the completion of the budget deal itself may have the strongest tax impact by allowing Congress to take up the issue of tax extenders before the end of the year.
During a recent ThinkTank event at alliantgroup’s Houston headquarters, U.S. Congressman and newly appointed Chairman of the House Ways and Means Committee Kevin Brady (R-TX) spoke on the current level of congressional commitment to getting the extenders bill passed, referring to the legislation as one of his highest priorities. During an open Q&A session, the Congressman discussed the pending extenders bill, which includes the extension of several business-friendly tax provisions (and in the case of the R&D Tax Credit and Section 179D, expansions to make these tax incentives more readily available to U.S. businesses).
By passing an extenders bill, Brady expressed his hope that this could lay the ground work for future tax reform measures—and getting the budget bill out of the way could prove to be an important step in getting this vital extenders bill past the finish line.