Senate Democrats

H.R. 6049, the Renewable Energy and Job Creation Act of 2008 (Senate Amendments)

On September 23, 2008, the Senate is expected to hold roll call votes on three amendments to H.R.6049, the Renewable Energy and Job Creation Act of 2008. The Legislative Bulletin for the underlying bill was originally released on July 9, 2008. This Bulletin addresses the three upcoming amendments.

Summary and Background

Senate Democrats are committed to enacting an energy policy that invests in renewable energy, lowers gas prices, makes America more energy independent, reverses global warming, and strengthens our national security. The extension and expansion of renewable and energy efficiency tax credits is a critical step towards achieving that goal.

In the 110th Congress, Finance Committee Chairman Baucus and Ranking Member Grassley have worked to pass these energy tax “extenders,” as well as other non-energy tax extenders, including an Alternative Minimum Tax (AMT) patch, while ensuring that these tax cuts are paid for out of revenues generated from closing corporate tax loopholes and revoking taxpayer subsidies to big oil companies. Unfortunately, on multiple occasions, the great majority of Bush-McCain Republicans failed to join them in this effort, opting instead to protect the interests of big business over taxpayers. Earlier this year, the Senate failed twice to invoke cloture on a motion to proceed to consideration of H.R. 6049, the Renewable Energy and Job Creation Act of 2008.

In early September, Senators Baucus and Grassley, along with Majority Leader Reid and Minority Leader McConnell, worked to produce a bipartisan tax relief and job creation package that would: 1) provide for energy tax extenders; 2) prevent the AMT from raising taxes for millions of middle class Americans; and 3) provide for other non-energy tax extenders that are critical to the financial health and growth of American families and businesses during these uncertain economic times. The package also includes a measure to ensure the fair treatment of Americans facing mental health challenges and includes disaster relief. With the exception of the AMT patch, which will not be offset, the Baucus-Grassley package would be paid for (energy tax and non-energy tax extenders).

The Baucus-Grassley package will be presented in two parts:

·        A Baucus-Grassley substitute amendment to H.R.6049 entitled, the Energy Improvement and Extension Act of 2008 (the energy tax extenders); and

·        A Baucus-Grassley amendment to the substitute amendment entitled, the Tax Extenders and Alternative Minimum Tax Relief Act of 2008.

The Senate is expected to vote on these amendments on September 23, 2008. In addition to these amendments to H.R.6049, the Senate will also vote on a fully-offset (paid for) AMT patch amendment to the Baucus-Grassley substitute amendment to H.R6049, entitled the Alternative Minimum Tax Relief Act of 2008, which will be offered by Senator Reid.

Major Provisions

For a more in depth summary of the Baucus-Grassley package, please visit the Finance Committee’s website and click on legislation.

Baucus-Grassley Substitute Amendment to H.R.6049

Energy Tax Extenders (Offset)

Renewable Energy Incentives

  • Extension and Modification of Production Tax Credit
  • Long-term Extension of Energy Credit
  • Long-term Extension and Modification of the Residential Energy-Efficient Property Credit
  • Sales of Electric Transmission Property
  • New Clean Renewable Energy Bonds (“CREBs”)

Carbon Mitigation and Coal

  • Carbon Capture and Sequestration (CCS) Demonstration Projects
  • Solvency for the Black Lung Disability Trust Fund
  • CO2 Capture Credit
  • Refund of Coal Excise Taxes Unconstitutionally Collected from Exporters
  • Steel Industry Fuel
  • Carbon Audit of the Tax Code

Transportation & Domestic Fuel Security

  • Plug-in Electric Drive Vehicle Credit
  • Incentives for Idling Reduction Units and Advanced Insulation for Heavy Trucks
  • Bicycle Commuters
  • Expansion of Allowance for Cellulosic Biofuels Property
  • Extension of Biodiesel Production Tax Credit; Extension and Modification of Renewable Diesel Tax Credit
  • Extension and Modification of Alternative Fuels Credit
  • Extension and Expansion of the Alternative Refueling Stations Credit
  • Publicly-Traded Partnership Income Treatment of Alternative Fuels
  • Percentage Depletion for Marginal Wells
  • Refinery Expensing

Energy Conservation and Efficiency

  • Qualified Energy Conservation Bonds
  • Extension and Modification of Credit for Energy-Efficiency Improvements toExisting Homes
  • Extension of Energy-Efficient Buildings Deduction
  • Extension of Credit for Energy-Efficiency Improvements to New Homes
  • Modification and Extension of Energy-Efficient Appliance Credit
  • Accelerated Depreciation for Smart Meters and Smart Grid Systems
  • Extension and Modification of Qualified Green Building and Sustainable DesignProject Bond
  • Investments in Recycling

Revenue Provisions

  • Modification to Section 199
  • Basis Reporting by Brokers on Sales of Stock
  • FUTA Surtax
  • Modification of Section 907
  • Oil Spill Liability Trust Fund

Baucus-Grassley Amendment to The Substitute Amendment to H.R.6049 — Non-energy Tax Extenders (Offset)

and AMT Patch (Not-Offset)

Alternative Minimum Tax (AMT)

  • AMT patch
  • Extension and Modification of AMT Credit Allowance Against Incentive Stock Options (ISOs)

Individual Extender Provisions

  • Deduction of State and Local General Sales Taxes
  • Qualified Tuition Deduction
  • Teacher Expense Deduction
  • Additional Standard Deduction for Real Property Taxes
  • IRA Rollover Provision
  • Treatment of Certain Dividends of Regulated Investment Companies (RICs)
  • Estate Tax Look-Through for Certain RIC Stock held by Nonresidents
  • Extend the Treatment of RICs as “Qualified Investment Entities”

Business Extender Provisions

  • Research and Development Credit
  • New Markets Tax Credit
  • Exception Under Subpart F for Active Financing Income
  • Look-Through Treatment of Payments Between Related CFCs Under the ForeignPersonal Holding Company Rules
  • 15-Year Straight-Line Cost Recovery for Qualified Leasehold, Restaurant, andRetail Improvements
  • Modification of Tax Treatment of Certain Payments to Controlling ExemptOrganizations
  • Basis Adjustment to Stock of an S Corporation Making Charitable Contributions ofProperty
  • Temporary Increase in Limit on Cover over of Rum Excise Tax Revenues to PuertoRico and the Virgin Islands
  • American Samoa Economic Development Credit
  • Mine Rescue Team Training Credit
  • Election to Expense Advanced Mine Safety Equipment
  • Deduction Allowable with Respect to Income Attributable to Domestic Production Activities in Puerto Rico
  • Qualified Zone Academy Bonds (QZABs)
  • Indian Employment Credit
  • Accelerated Depreciation for Business Property on Indian Reservation
  • Extend and Expand 50% Tax Credit for Certain Expenditures for MaintainingRailroad Tracks
  • 7-Year Recovery Period for Certain Motorsports Racetrack Property
  • Expensing of “Brownfields” Environmental Remediation Costs
  • Extend Work Opportunity Tax Credit (WOTC) for Hurricane Katrina Employees
  • Extension of Increased Rehabilitation Credit for Structures in the Gulf Opportunity Zone
  • Enhanced Charitable Deduction for Qualified Computer Contributions
  • Tax Incentives for Investments in the District of Columbia
  • Enhanced Charitable Deduction for Food Inventory
  • Enhanced Charitable Deduction for Contributions of Book Inventory to Schools
  • Wool Trust Fund
  • Special Expensing Rules for Certain Film and Television Productions

Tax Administration Extender Provisions

  • Permanent Authority for Undercover Operations
  • Permanent Authority to Disclose Information Related to Terrorist Activities

Additional Tax Relief and Other Tax Provisions

  • Child Tax Credit
  • Provisions Related to Film and Television Productions
  • Excise Tax Exemption for Wooden Practice Arrows Used by Children
  • Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008
  • Income Averaging for Exxon Valdez Litigation Amounts
  • Certain Farming Business Machinery and Equipment Treated as 5-year Property
  • Modification of Penalty on Understatement of Taxpayer’s Liability by Tax Return Preparer

Other Provisions

  • Reauthorization of the Secure Rural Schools and Community Self-Determination Act of 2000 and Payment in Lieu of Taxes
  • Transfer of Interest Earned by Abandoned Mine Reclamation Fund

Midwestern Disaster Tax Relief

Relief for All Counties Declared Eligible for Assistance

  • Qualified Disaster Recovery Assistance Distributions
  • Recontribution of Withdrawals for Home Purchases
  • Loans from Qualified Plans
  • Suspension of Casualty Loss Limitations
  • Special Look-Back Rule for EIC and Refundable Child Credit
  • Additional Personal Exemption for Housing Victims
  • Exclusion for Certain Cancellations of Indebtedness
  • Extension of Replacement Period for Property Lost Due to Floods or Tornadoes in the Midwestern Disaster Zone

Relief for All Counties Declared Eligible for Individual Assistance or Individual and Public Assistance

Relief for Individuals and Families

  • Employee Retention Credit
  • Expansion of Hope Scholarship and Lifetime Learning Credit
  • Secretarial Authority to Adjust Taxpayer and Dependency Status for Taxpayers
  • Mortgage Revenue Bonds

Tax Relief for Businesses

  • Tax-exempt Bonds
  • Low Income Housing
  • Additional Depreciation
  • Expensing Property
  • Expensing Demolition and Clean-up Costs
  • Expensing Environmental Remediation Costs
  • Increase in Rehabilitation Credit
  • Five-year Net Operating Loss Carryback for Certain Amounts
  • Tax Credit Bonds

Tax Incentives for Charitable Giving

  • Temporary Suspension of Limitations on Charitable Contributions
  • Increase in Standard Mileage Rate for Charitable Use of Vehicles
  • Exclusion from Income of Mileage Reimbursements for Charitable Volunteers
  • Tax Benefits Not Available with Respect to Certain Property

Hurricane Ike Disaster Tax Relief

  • Low Income Housing
  • Tax-exempt Bonds

National Disaster Relief

  • Individual Loss Provision
  • Qualified Disaster Expenses
  • Treatment of Net Operating Losses Attributable to Qualified Disaster Casualty Expenses
  • Mortgage Revenue Bonds
  • Additional Depreciation
  • Expensing Property

Revenue Proposals

  • Current Inclusion of Deferred Compensation Paid by Certain Tax Indifferent Parties

Reid Amendment to Baucus-Grassley Substitute Amendment to H.R.6049 — AMT Patch (Offset)

Alternative Minimum Tax (AMT)

·        AMT Patch

·        Extension and Modification of AMT Credit Allowance Against Incentive Stock Options (ISOs)

Revenue Proposals

  • The Outer Continental Shelf (OCS) Excise Tax
  • Current Inclusion of Deferred Compensation Paid by Certain Tax Indifferent Parties
  • Delay Implementation of Worldwide Allocation of Interest
  • Clarification of the Economic Substance Doctrine and Penalty for Understatements Attributable to Transactions Lacking Economic Substance
  • Denial of Deduction for Interest on Underpayments Attributable to Non-Economic Substance Transactions

Legislative History

On May 14, 2008, Representative Charles Rangel introduced H.R.6049, the Renewable Energy and Job Creation Act of 2008 in the House of Representatives. The bill was referred to the Committee on Ways And Means, which marked up the bill on May 15, 2008, and ordered the bill, as amended, favorably reported. On May 21, 2008, the House of Representatives approved the bill by recorded vote: 263-160 (Roll No 344).

On June 5, 2008, H.R.6049 was placed on the Senate legislative calendar. Unable to get consent to go to the bill, the following day, Majority Leader Reid filed cloture on the motion to proceed to consideration of H.R.6049. On June 10, the Senate failed to get cloture on the motion to proceed, with Senate Republicans voting along party lines to block consideration of the measure (50 to 44; 60 required), (Roll Call Vote No 147). On June 17, Senator Reid tried again to invoke cloture on the motion to proceed to consideration, but that effort was again blocked by Senate Republicans (52 to 44; 60 required), (Roll Call Vote No 150).

Unwilling to end the 110th Congress without providing critical tax relief to American workers, families, and business owners, Senators Baucus and Grassley, along with Majority Leader Reid and Minority Leader McConnell, worked to produce a bipartisan tax relief and job creation package. On September 23, the Senate is expected to vote on the Baucus-Grassley substitute amendment to H.R.6049 entitled, the Energy Improvement and Extension Act of 2008 (the energy tax extenders) and the Baucus-Grassley amendment to the substitute amendment entitled, the Tax Extenders and Alternative Minimum Tax Relief Act of 2008. The Senate will also vote on a fully-paid-for AMT patch amendment to the Baucus-Grassley substitute amendment, entitled the Alternative Minimum Tax Relief Act of 2008, which will be offered by Senator Reid. Each of these three amendments will be subject to a 60-vote threshold and will be voted on in the following order:

1) The Energy Improvement and Extension Act of 2008;

2) The Alternative Minimum Tax Relief Act of 2008;and

3)The Tax Extenders and Alternative Minimum Tax Relief Act of 2008.

Statement of Administration Policy

On September 23, 2008, the Administration released its Statement of Administration Position (SAP) in support of the Baucus-Grassley amendments to H.R. 6049 (the Energy Improvement and Extension Act of 2008 and the Tax Extenders and Alternative Minimum Tax Relief Act of 2008, which includes the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008)

The Administration had previously threatened to veto the House-passed version of H.R.6049 in a SAP released on May 21.

Both SAPs can be accessed here.

Related Reading

  • Democratic Policy Committee, Legislative Bulletin for H.R.6049, the Renewable Energy and Job Creation Act of 2008, available here (June 9 version)
  • Senate Committee on Finance, Summary of the Clean Renewable Energy and Conservation Tax Act of 2007, available here
  • US House of Representatives, Report to Accompany H.R.6049 (House Report 110-658) (May 20, 2008), available H.R.658.110.pdfhttp://www.congress.gov/cgi-lis/cpquery/R?cp110:FLD010:@1(H.R.658)">here
  • Joint Committee on Taxation, Estimated Revenue Effects of Chairman’s Amendment in the Nature of a Substitute to H.R.6049, the “Energy and Tax Extenders Act of 2008,” available here
  • CRS, Certain Temporary Tax Provisions (‘Extenders’) Expired in 2007, available here
  • CRS, Charitable Contributions of Food Inventory: Proposals for Change, available here
  • CRS, Energy Efficiency and Renewable Energy Legislation in the 110th Congress, available here
  • CRS, Energy Tax Policy: History and Current Issues, available here
  • CRS, Federal Deductibility of State and Local Taxes, available here
  • CRS, New Markets Tax Credit: An Introduction, available here
  • CRS, Qualified Charitable Distributions from Individual Retirement Accounts: A Fact Sheet, available here
  • CRS, Research and Experimentation Tax Credit: Current Status and Selected Issues for Congress, available here
  • CRS, Tax Credit Bonds: A Brief Explanation, available here
  • CRS, The Tax Deduction for Classroom Expenses of Elementary and Secondary School Teachers, available here
  • CRS, Taxation of Hedge Fund and Private Equity Managers, available here
  • CRS, The Work Opportunity Tax Credit (WOTC), available here
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