SENATE FAILS TO ACT ON BIODIESEL TAX CREDIT, ESTATE TAX NOW REPEALED

News Date January 05, 2010

Lost in the debate over health care reform, the Senate was unable to act on the biodiesel tax credit, thus allowing the critical incentive to expire.  Even though the situation for action was appearing dire, NASDA President Ed Kee sent a letter to Senate Leadership encouraging them to address this vital tax credit.  Unfortunately, a one-year extension was included in a controversial bill extending other expiring tax provisions, as well as, codifying new spending rules.  With these extra provisions, the time ran out on the legislation.

If key Senate leaders have their way, the tax credit will only remain expired for only a short time.  Senate Finance Committee Chairman Max Baucus, D-Mont., and Ranking Member Charles Grassley, R-Iowa, sent a letter to Senate Leadership notifying them of their plan:

“We write to inform you that early in the next year, we intend to address the extension of various tax provisions expiring on or before December 31, 2009. We intend to extend the provisions without a gap in coverage, just as the House did on December 9th of this year. The legislation will extend several important tax benefits to individuals and businesses. The legislation will also extend a number of energy tax provisions, including the biodiesel tax credit, and natural disaster relief.” 

To make up for the lost time, many anticipate the legislation to be retroactive for the biodiesel incentive.

Along with the biodiesel tax credit, the Senate also failed to address the expiring estate tax.  As a result, the estate tax is repealed for 2010, and, without further action, the tax would then revert to the original levels in 2011 with an exemption of only $1 million and a maximum tax rate of 55 percent.  In 2009, the exemption amount was set at $3.5 million and the maximum tax rate of 45 percent.  Alike the biodiesel tax credit, supporters are anticipating action by the Senate early in 2010, which, could also be treated retroactively.  However, there are potential legal challenges if applied retroactively to Jan. 1.  (Contact: David Hickey)