Tax Extenders and Other Expiring Provisions

August 12, 2022

OVERVIEW

As we head into the last leg of this year’s Congress, a notable item that remains outstanding is a tax extenders package. Last year, there was no extenders package, which left roughly forty different provisions on the table, including various COVID-19 provisions like the Child Tax Credit and the Employee Retention Tax Credit, and other credits passed under the Tax Cuts and Jobs Act (TCJA), such as 163(j) limitations on business interests, and research and development amortization changes.

The R&D provision is likely to be the most watched as a tax extenders package is negotiated (likely as a title added to a larger vehicle). Stakeholders across various industries will closely monitor what Congress does, as companies consider how they will be allowed to write off research expenses over the next five years. In addition to this provision, efforts are ramping up regarding tax provisions for a lower threshold for IRS credit card and other third-party processors forms. The threshold is $600, below the old threshold of $20,000, due to the changes made under the American Rescue Plan.

The hope for a tax extenders package begs the question as to when the next vehicle to attach this rider might arrive.  Considering that the CHIPS and Science Act passed, and that Congress was able to move the budget reconciliation package, there are only a few major vehicles left that an extenders package could be attached to, most likely  a large appropriations bill, likely in the lame duck, or the National Defense Authorization Act (NDAA).Each of these larger packages will have their own set of challenges, which could further complicate inclusion of a tax extenders title.

One thing to note is that some of the provisions that expired in 2021 may not be retroactively extended almost two years later, as there will be provisions expiring in 2022 that will need to be addressed.

UPCOMING DEADLINES

Congress is facing several upcoming deadlines and program authorizations that are expiring in 2022. Below are  details for a majority of upcoming expiring provisions.

Expiring Provisions 2022

Appropriations:

  • September 30: Federal government funding expires

COVID-Related Benefits/Mandates

  • March 22: COVID-19 Claims Reimbursement to Health Care Providers and Facilities for Testing, Treatment, and Vaccine Administration for the Uninsured is set to expire
  • March 25: the Purchase of Monoclonal Antibody Treatments, Scaling Back State/Territory Allocations expire
  • March 31: Scaling Back Planned Purchases of Preventive Treatments for Immunocompromised
  • April 5: The Uninsured Program will also stop accepting vaccination claims due to a lack of sufficient funds
  • April 18: Face mask mandate on public transportation expire
  • June 30: Child Nutrition Waivers expire
    • Seamless Summer Option Waiver
    • Summer Food Reimbursement Rates Waiver
    • Non-Congregate Meal Service Waiver
    • Meal Times Requirements Waiver
    • Parent/Guardian Meal Pick Up Waiver
    • CACFP Specific Meal Pattern Flexibility Waiver
    • Offer Versus Serve Flexibility for Senior High Schools Waiver
    • Area Eligibility in the Afterschool Program and for Family Day Care Home Providers Waiver
    • Onsite Monitoring Requirements in the School Meal Programs Waiver
    • Onsite Monitoring Requirements for States Agencies in the Child and Adults Care Food Program Waiver
  • August 31: Student loan deferral and 0 percent interest rate expire

Program Authorizations:

  • September 30: National Flood Insurance Program Authorization expires
  • September 30: Temporary Assistance for Needy Families (TANF) and the Child Care Entitlement to States expires
  • September 30: Food and Drug Administration User Fee Programs Expire:
    • Prescription Drug User Fee Act (PDUFA VI)
    • Biosimilar User Fee Amendments (BsUFA II)
    • Generic Drug User Fee Amendments (GDUFA)
    • Medical Device User Fee Amendments (MDUFA IV)
  • September 30: FAA Reauthorization Act of 2018 expires
  • September 30: The PEPFAR Extension Act of 2018 expires
  • September 30: National Defense Authorization Act (NDAA)
  • September 30: The Water Resources Development Act (WRDA) of 2020 expires
  • Child Nutrition Reauthorization which hasn’t been updated since 2010[1]

Health Care Extenders

  • March 31: Delay of the 2 percent Medicare sequestration cut expires (replaced with 1 percent reduction in sequester)
  • June 30: 1 percent reduction in the Medicare Sequester expires
  • December 31: Medicare Radiation Oncology Rules Delay expires[2]
  • December 31: 3 Percent Payment Increase Supporting Physicians and Other Professionals in Adjusting to Medicare Payment Changes During 2022

Tax Provisions and Extenders[3]

  • September 30: Highway Trust Fund excise taxes
  • September 30: Leaking Underground Storage Tank Trust Fund financing rate
  • December 31: Allowance of full deduction for business meals
  • December 31: Incentives for biodiesel and renewable diesel
  • December 31: Railroad track maintenance credit (expiration of 50-percent rate) (sec. 45G(a))
  • December 31: Full expensing tax preference included in TCJA phased out at the end of 2021

Statutory PAYGO

  • December 2022 or January 2023: Statutory PAYGO cuts from the ARPA could take effect either in December 2022 or January 2023 because the law requires OMB to issue a sequestration order within 15 days of the end of a Congressional Session.[4]

Public Health Emergency

  • The flexibilities around Medicare payment for telehealth are good through the length of the declared public health emergency (PHE).[5] The Biden Administration has indicated it would most likely renew the PHE through 2021 and give states 60 days notice before it would let the declaration expire. Many in Congress have indicated they would like to ensure that beneficiaries are able to maintain many of the telehealth services they have been able receive during the pandemic. Legislative changes would be necessary to ensure Medicare could continue to keep these telehealth flexibilities. These changes could get expensive depending on how the bill is drafted.
  • Secretary Xavier Becerra last renewed the PHE in April with an effective date of April 16, 2022. The renewed declaration will last for 90 days through July 16, 2022.
  • The 60-day notification of the ending of the PHE would have come in mid-May. However, no notification was provided so another renewal is expected in July. That puts the next 60-day notification window in mid-August.

Expiring Provisions 2023

Debt Ceiling

  • In December 2021, Congress raised the debt limit by $2.5 trillion which is expected to last into 2023.

Program Authorizations:

  • September 30: The Agriculture Improvements Act of 2018, known as the Farm bill expires

Health Care

  • September 30: Funding for Medicare quality measure endorsement, input, and selection expires
  • September 30: Funding Medicare outreach and assistance for low-income programs ($50 million for each fiscal year) expires
  • September 30: Funding for the Medicaid Money Follows the Person Rebalancing Demonstration program at $450 million per fiscal year expires
  • September 30: Disproportionate share hospital (DSH) reductions resume
  • September 30: Protections against spousal impoverishment for partners of Medicaid beneficiaries who receive home and community-based services expire
  • September 30: Community mental health services demonstration program expires
  • September 30: Personal Responsibility Education Program (PREP) expires
  • September 30: Sexual Risk Avoidance Education (SRAE) program expires
  • December 31: Medicare work geographic index floor expires
  • December 31: Medicare patient IVIG access demonstration project expires
  • December 31: The Independence at Home medical practice demonstration program expires

Tax Extenders[6]

  • September 30: Airport and Airway Trust Fund excise taxes
  • September 30: Highway Trust Fund excise taxes- Annual use tax on heavy highway vehicles
  • December 31: Credit for residential energy property
  • December 31: Beginning-of-construction date for increased credit for business solar energy property and credit for fiber optic solar lighting system property, geothermal heat pump property, qualified fuel cell and stationary microturbine power plant property, combined heat and power property, small wind property, and waste energy recovery property
  • December 31: Five-year recovery period for certain energy property

Longer-Term Expiring Provisions[7]

  • End of 2024: Current Medicare physician Alternative Payment Model (APM) thresholds expire (based on performance year 2022).
  • End of 2025:
    • TCJA individual income tax provisions expire
    • TCJA paid family leave credit expires
    • Employer-paid student loans income exclusion expires
    • Multiple tax extenders expire such as Empowerment Zones incentives, film and live performances expensing, and the wind energy investment tax credit; health extenders including the Rural Community Hospital Demonstration program.
  • FY 2026: Medicare Hospital Insurance (Part A) Trust Fund exhaustion
  • End of FY 2026:
    • Surface transportation programs authorization provided by Infrastructure Investment and Jobs Act expires
    • Export-Import Bank authorization expires
  • 2027: Highway Trust Fund insolvency

[1] Includes several programs that have received continued appropriations or have been permanent

[2] CMS has released a proposed rule with an indefinite delay

[3] JCT List of Expiring Tax Provisions 2021-2029 https://www.jct.gov/publications/2021/jcx-1-21/

[4] Committee for a Responsible Budget

[5] https://telehealth.hhs.gov/providers/policy-changes-during-the-covid-19-public-health-emergency/#telehealth-waivers-for-patients-enrolled-in-medicare

[6] JCT List of Expiring Tax Provisions 2021-2029 https://www.jct.gov/publications/2021/jcx-1-21/

[7] https://www.crfb.org/blogs/upcoming-congressional-fiscal-policy-deadlines