Senate Finance Committee approves tax extenders bill

By Derrick Cain

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, April 3, 2014 - The Senate Finance Committee approved, by voice vote, legislation Thursday to renew various expired tax provisions, known as “tax extenders,” and to provide assistance for biodiesel, cellulosic biofuel and other renewable fuels.

The package includes provisions, many of which expired in January, that aim to benefit individuals, families, and small businesses, incentivize innovative research and development, and promote alternative and renewable energy initiatives, among other issues. The bill also includes an extension of a conservation easement-related tax incentive. A summary of the bill can be viewed here.

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The bill now heads to the Senate floor, but a schedule has not yet been set. The House appears ready to take a different approach by making some of the extenders permanent.

“By passing this bill, the Finance Committee has put an expiration date on the status quo,” said Committee Chairman Ron Wyden, D-Ore. “The stop and go nature of these tax extenders contributes to the lack of certainty and predictability America needs to create more family wage jobs. But it makes no sense to let these incentives disappear without a comprehensive reform proposal to replace them when jobs, innovation and research, and people's homes are on the line.”

The legislation includes two-year extensions for:

• A 30 percent investment tax credit for alternative vehicle refueling property, which includes fuel pumps for ethanol, biodiesel, liquefied hydrogen, and compressed or liquefied natural gas. The extension is estimated to cost $8 million over 10 years. 

• A production tax credit for cellulosic biofuel production facilities, allowing claims of a $1.01 per gallon production tax credit. The cost is estimated at $55 million over 10 years.

• A $1 per gallon tax credit for biodiesel, as well as the small agro-biodiesel producer credit of 10 cents per gallon. The cost is estimated to be $2.6 billion over 10 years.

• An extension of the bonus depreciation for facilities producing cellulosic biofuel to expense 50 percent of their eligible capital costs in the first year for facilities placed in service by the end of 2013. The bill would extend this bonus depreciation for two additional years for facilities placed in service before the end of 2015. The cost is estimated to be $1 million over 10 years.

• An extension of the 50 cents per gallon alternative fuel tax credit and alternative fuel mixture tax credit. This extension is estimated to cost $90 million over 10 years.

• An extension of tax incentives for charitable contributions of conservation easements.

Sen. Chuck Grassley, R-Iowa, said he was able to secure renewal of expired wind energy tax provisions, and noted the package also includes a reinstatement of a tax incentive for the production of domestic biodiesel. “Renewable energy supports thousands of jobs and generates billions of dollars in investment across the country,” Grassley said. “Public policy continues to help renewable energy develop and generate electricity and fuel from natural resources. It's good news for the economy and for energy diversity to restore these provisions.”  

Grassley said he hopes for full Senate consideration of the bill as soon as possible.

Many organizations were delighted with the committee's proposal.

Wade Cowan, first vice president for the American Soybean Association, said the biodiesel tax credit extensions will help soybean produces “compete and succeed in the face of growing competition.”

“The extension of the biodiesel tax credit is huge,” Cowan said. “Biodiesel blenders create a renewable and safe domestic energy source for our country and a valuable market for the soybean oil American farmers produce.”

Bob Dinneen, president and chief executive officer of the Renewable Fuels Association, applauded the extension of biofuels tax credits. “Extending these important incentives for two years will give much needed certainty for the industry while also providing a bridge to future discussions regarding energy tax reform,” Dinneen said.

Brooke Coleman, executive director of the Advanced Ethanol Council (AEC), said his organization was pleased that the proposal would extend a number of provisions for cellulosic biofuels, including the producer tax credit and the special depreciation allowance. “It will be very important to move this package along quickly, as executives in our industry are weighing the pros and cons of developing the next wave of projects here or abroad,” Coleman said.

The Land Trust Alliance applauded the committee for including the conservation easement provision, offered by Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., and several other senators.

The conservation easement provision, first enacted by Congress in 2006 and extended several times before, expired at the end of 2013. Donations of conservation easements, which retire development rights to protect important natural and historic resources on private lands, had increased to one million acres a year under the provision, which enables landowners to receive a tax benefit for their donations.

“We will continue to push for making this incentive permanent, so that landowners can give conservation due consideration without racing a tax deadline or being unsure of what the results of their conservation commitment would be,” said Rand Wentworth, LTA president.

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