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Monday August 3, 2015

Washington News

Washington Hotline

34th Highway Fund Extension

On July 30, by a vote of 91-4, the Senate passed a three-month extension for the Highway Trust Fund. The House had previously approved The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 (H. R. 3236). The bill extends highway funding for 3 months and is the 34th short-term extension of the Highway Trust Fund.

The Senate also passed a 6-year act to fund highways, bridges and other infrastructure. The DRIVE Act would be the first multi-year highway bill since 2005.

Sen. Jim Inhofe (R-OK) was the lead sponsor for the bill. He stated, “The DRIVE Act is a solution, it’s the solution – a bipartisan solution. It provides the needed long-term funding certainty so that the major construction projects can get off the ground – projects that are not possible with short-term extensions. And it will signal to job creators that America’s economy is not only going to grow, but it’s going to be sustained because the infrastructure will exist to support it.”

The DRIVE Act includes fairly complicated revenue-raising provisions. It was necessary to assemble seven different revenue provisions in order to pay for construction over six years.

1. Estates – More comprehensive reporting rules on the basis of assets. With an accurate basis, when heirs sell appreciated property there will be a larger capital gains tax.

2. Passport – Any person owing over $50,000 in tax will be subject to passport revocation or denial of his or her renewal request.

3. Overstated Basis – If a taxpayer claims too high of basis on sale of an asset, the IRS will have six years to discover the error and collect more tax.

4. Mortgages – Comprehensive reporting requirements will lead to more accurate home interest deductions.

5. Corporations and Partnerships – There will be changes in some of the filing deadlines.

6. Tax Debt – Private collectors will be hired to obtain payments from taxpayers who owe back taxes.

7. Pension Plans – Certain funding requirements may be satisfied with surplus assets until year 2025.

The House will review the Senate bill in September and is likely to pass its own version of the long-term bill. The three-month extension is designed to permit the House and the Senate to agree on a six-year bill by the end of October.

Editor’s Note: The complexity of the tax revenue provisions shows how challenging it was for the Senate to find six years of funding. However, if the Senate and House can develop a six-year plan by October, that is clearly very helpful for states and cities who are attempting new highway, bridge and other infrastructure projects.

Published July 31, 2015

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