Updates to Tax Extenders, Refunds, Tax-Exempt Transportation Benefits

December 26, 2019 — On December 20, 2019, the President signed into law the Taxpayer Certainty and Disaster Tax Relief Act of 2019, generally extending a number of “Tax Extenders” (bills that are routinely set to expire in one to three year periods) through 2020. While several of the provisions were set to expire at the end of this year, several of the items expired December 31, 2017, providing taxpayers with opportunities to amend returns for tax refunds.

Tax Extensions and Modifications

The bill included extensions and modifications to a number of provisions. Some of the key items extended under the legislation are as follows:

• Work opportunity tax credit
• New market tax credit
• Employer tax credit for paid family and medical leave

Potential Tax Refund Opportunities

The following extenders were previously expired as of December 31, 2017, and could represent refund opportunities for applicable taxpayers:

• Exclusion from gross income of discharge of qualified principal residence indebtedness
• Treatment of mortgage insurance premiums as qualified residence interest
• Energy-efficient commercial buildings deduction (IRC 179D)
• Classification of racehorses as 3-year property for depreciation purposes
• Treatment of motorsports entertainment complexes as 7-year property for depreciation purposes
• Empowerment zone tax incentives
• Nonbusiness energy property credit
• Energy-efficient homes credit (IRC 45L)
• Credit for excise tax on alternative fuels*

*The IRS was directed to provide guidance within 30 days on a one-time submission for refunds.  In addition, the definition of alternative fuel mixture was modified to remove liquefied petroleum gas, compressed or liquefied natural gas, and compressed or liquefied gas from biomass from the definition.

Medical Device Excise Tax and Transportation Fringe Benefits (Tax-Exempt Entities)

In addition to the tax extenders, the legislation included a couple of other key changes including the repeal of the 2.3% medical device excise tax set to be reinstated for sales occurring after December 31, 2019.  The legislation also repealed the increase in unrelated business taxable income (UBTI) for certain transportation fringe benefits (parking tax) provided to employees of tax-exempt organizations. 

SECURE Act

On the same day, the President also signed the SECURE Act which provides many improvements to the retirement system.  Redpath will issue additional information on the opportunities provided by this Act.

Review Your Tax Returns for Refund Opportunities

Due to the retroactive extension of several “extenders,” many taxpayers will have opportunities for refunds. If you have any questions on how the Taxpayer Certainty and Disaster Tax Relief Act of 2019 will affect you or your business, please contact John Kammerer at jkammerer@redpathcpas.com or (651) 255-9305.