Members of the House Ways and Means Committee seem likely to keep non-qualified deferred compensation provisions out of an important package of small business tax breaks and revenue increases.

Industry watchers at law firms and trade groups gave that assessment this week as Ways and Means leaders scheduled a Feb. 12 markup of the package, the Small Business Tax Relief Act.

The bill, which does not yet have a number, would serve as a supplement to the no-frills House version of the minimum wage increase bill, H.R. 2.

The Senate has passed another version of H.R. 2 that incorporates a long list of tax breaks and revenue increases, including provisions that could sharply limit moderate-income and high-income executives’ use of non-qualified deferred comp plans.

The House could pass the small business tax package this week and add it to the House version of H.R. 2.

Members of the House then would have to meet with members of the Senate in a conference committee to iron out differences between the House and Senate versions of H.R. 2.

Supporters of the tax package say Congress needs to compensate small businesses for the cost of the proposed increase in the minimum wage, and also to raise revenue to pay for the small business tax breaks.

“Even if these provisions are not included in the final Minimum Wage Bill, we believe they will be reformulated and brought up again this year,” lawyers at Williams & Jensen P.L.L.C., Washington, write in a note to the firm’s clients. “[Senate Finance Committee] Chairman Max Baucus, D-Mont., has stiffened in his support of the provisions, and they won’t go away easily.”

The non-qualified deferred comp provisions now in the Senate version of H.R. 2 would amend Internal Revenue Code Section 409A to impose a dollar cap on the annual accrual of nonqualified deferred compensation that is the lesser of $1 million or the individual’s average annual compensation determined over 5 years.

The provisions also would amend the Section 162(m) (“million dollar deduction”) limit to treat any former employees (and beneficiaries) as continuing to be covered by the section 162(m) limits after termination of employment.

Critics of the provisions say the effects would be far broader than the authors had anticipated. Sen. Charles Grassley, R-Iowa, the most senior Republican on the Senate Finance Committee, has called for narrowing the provisions to apply only to executives with annual deferred comp packages of $1 million or more.

“We’re not anticipating the Senate’s provisions gaining traction in the House,” says Jack Dolan, a spokesman for the American Council of Life Insurers, Washington.

The Association for Advanced Life Underwriting, Falls Church, Va., also has been talking to members of Congress about the issue.

Although the AALU believes it has made progress, “we’ve got a long road ahead in battling the political dynamics at play in this debate and countering the rhetoric that lumps deferred compensation and executive compensation in the same category,” says David Stertzer, chief executive officer of the Association for Advanced Life Underwriting, Falls Church, Va.

Even if the House leaves the deferred comp provisions out of the House minimum wage bill, “House negotiators will still have to address the matter in conference committee with the Senate,” Stertzer says.