55 Tax Breaks Expired at Stroke of Midnight, December 31

By:  Raven Clabough
01/02/2014
       
55 Tax Breaks Expired at Stroke of Midnight, December 31

At the stroke of midnight on December 31, 55 popular tax breaks expired, adding further uncertainty for millions of businesses and individuals across the country. 

The Associated Press notes that this is a pattern seen virtually every year, where Congress permits the tax breaks to lapse only to renew them later, retroactively, just in time for taxpayers to claim them by the time they file their returns. Unfortunately for the businesses and individuals impacted, this pattern makes it difficult to plan ahead, and may not be guaranteed.  

Many of the tax breaks were substantial, including billions in credits for companies that invest in research, exemptions for financial institutions that do business overseas, and allowing businesses to write off capital investments.

Others applied to film producers, makers of motorcycles, and teachers who use their own money to purchase classroom supplies. Some of the other tax breaks that expired were deductions for state and local sales taxes that benefit individuals who live in the nine states that do not have state income tax.

Additional breaks included those pertaining to college students and commuters who use public transportation, and credits for power companies that use windmills.

Another tax break permitted to expire is the Work Opportunity Tax Credit (WOTC), which provided financial incentives to companies that hired not only veterans and ex-convicts, but also welfare recipients, people on food stamps, and others who may have difficulty thriving in the job market.

"This is essential," asserted Marlene Roll, the junior vice commander of the Veterans of Foreign Wars in Buffalo. "A company might have been on the verge of being able to hire a veteran, but not quite… and if they have that tax credit, maybe they have that little extra cash flow."

Since Congress is on vacation until January, the tax breaks were not able to be renewed in time to avoid expiration.

Of course, this is nothing new. One tax expert told WGRZ News that since 1996, there have been at least eight or nine tax breaks that have been allowed to expire and then been renewed. And while the tax breaks are often renewed following expiration, the Associated Press explains that this process is not as harmless as it seems:

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