Hopes for CERTS Tax Exemption wanes as clock runs out

WASHINGTON, DC – As the 117th Congress comes to an end, hopes are fading quickly for passage of H.R. 7477 – CERTS Tax Exemption Act.

The U.S. Senate filed the Fiscal Year 2023 (FY23) omnibus appropriations package today absent the tax provisions necessary to include language for the CERTS Tax Exemption Act.

“Despite widespread bipartisan support for making CERTS relief funding exempt from taxation, we still needed tax-related legislation to attach the language,” said UMA President and CEO Scott Michael. “Unfortunately, Congress opted to leave tax considerations to the next Congress.”

Other tax-related casualties include:

  • The elimination of the 100% bonus depreciation for equipment. Effective 2023, businesses will only be able to deduct 80% of their investments in transient assets immediately, with the remaining 20% spread across the asset’s life. This reduces to 60% and to 40%in 2025, and a phase-out by 2026.
  • The Child Tax Credit was expanded in the American Rescue Plan to $3,000 ($3,600 for children under six years of age) and made it fully refundable. The maximum today is $2,000.
  • Beginning in 2022, businesses can no longer deduct 100% of their research and development costs
  • immediately and must amortize those costs over five years. Most agree the change discourages research and development and it is widely agreed the provision requires change.
  • A provision in the Tax Cuts and Jobs Act limits business interest expense to 30% of earnings before interest, taxes, depreciation, and amortization. Many were seeking to restore the more liberal limit.

“UMA Members sent nearly 400 letters to their Representatives in the House resulting in 88 Democrat and Republican cosponsors on the CERTS tax exemption bill. A bipartisan group of 4 lead House cosponsors and 12 Senators also wrote House and Senate leadership asking them to include language making CERTS grants tax exempt in any tax bills that may move between now and the end of the year,” said Ken Presley, UMA Vice President, Legislative & Regulatory Affairs & Industry Relations/COO.

Ken Presley

The objections to moving any tax legislation largely center on House Republicans’ desire to deal with spending and taxes in the next Congress, as they will have a majority in the 118th Congress.

“It remains to be seen if there is an appetite in the 118th Congress for CERTS tax relief,” said Presley. “For Congress, anything COVID relief related is now in the history books and not the newspaper.”

On a positive note, the bill, if passed, would establish the position of assistant secretary of commerce for travel and tourism within the Department of Commerce to be appointed by the president. Also, private school bus contractors would be permitted to access grants directly through the Environmental Protection Agency Clean School Bus program, with added flexibility to move buses funded through the program to other districts should a contract not be renewed.

The Senate and House are expected to vote on the package this week prior to the government funding deadline of Dec. 23.

Share this post