179D Tax Deduction Legislative Update

As the end of 2013 approaches and more importantly the 179D Tax Deduction, we feel that it is important for everyone to have a good gauge on what has happened and what we expect to happen on Capitol Hill as far as the life of the 179D Tax Deduction is concerned.

Walker Reid Strategies has been actively involved with NAESCO’s (National Association of Energy Service Companies) 179D Advocacy group. Walker Reid has participated in multiple fly in’s to Capitol Hill and have participated in numerous meetings with Congressmen and their staff, educating them about the benefits of the 179D Tax Deduction and how this incentive is a critical piece for energy conservation.During our time at Capitol Hill, Walker Reid has seen support for the legislation on both sides and we expect to have favorable outcomes once the 179D is put in front of Congress.  Currently, the main thing holding up the possibility of action on the 179D Tax Deduction before the sunset of this incentive is Comprehensive Tax Reform.

The House Committee on Ways and Means led by Chairman Dave Camp has been pushing for a major Tax Reform Bill, though Chairman Camp has thrown in the towel to a have a draft together by the end of 2013, it is expected that the committee will work on putting a bill together in 2014. While the Ways and Means Committee still has comprehensive Tax Reform on the agenda it is unlikely that we will see an extender package on expiring tax and energy incentives including the 179D Tax Deduction until Comprehensive Tax Reform is no longer an option.  At this point, we expect to see an extender package put together more than likely towards the end of 2014.

In June of 2013, the Senate Finance Committee put out a Dear Colleagues letter requesting a “blank slate” approach as a legislative starting point for tax reform. During the time period that the members of the Senate had to respond to the letter , Walker Reid had the opportunity to meet with several Senators and overall we did see support for the 179D Tax Deduction, but not so much support for tax reform as a whole, precisely the “blank slate” approach. On a positive note in April 2013, the Senate Finance Committee put out an options paper to help staff and members begin discussions on tax reform, in the options paper it was proposed to make the 179D Tax Deduction permanent and a credit.

The 179D Tax Deduction has seen a history of bipartisan support under both the Bush and Obama administrations and it was included in the proposed 2014 Presidential Budget to make the deduction permanent and increase the deduction amount. Considering the track record with the 179D Tax Deduction and other similar energy based tax incentives, we do expect to see a favorable outcome through extension or reform of the incentive come end of 2014.