Permanent estate tax legislation could be delayed until 2010 by Congress, lobbyists are cautioning, although final action may not take place until December.
That is the view of officials at the Association for Advanced Life Underwriting despite a recent flurry of action on the issue, including increasingly strong Congressional support for legislation that would make permanent the 2009 estate tax level, and reunify the estate and gift taxes, the lobbyists say.
They say the most likely scenario is that Congress will extend the 2009 level of $3.5 million per person exemption and a 45% top tax rate into 2010–and then deal with the certainty issue in an omnibus tax package next year.
At the same time, bipartisan legislation was introduced in the Senate as Congress departed for a recess April 2 that would extend the carryback period for net operating losses of life insurance companies for 2008 and 2009.
The bill, S. 823, was introduced by Sen. Olympia Snowe, a ranking member of the Senate Finance Committee.
According to officials at the American Council of Life Insurers, the bill is a stand-alone version of a provision that was initially in the economic stimulus package.
It would temporarily extend the carryback period for net operating losses for tax years 2008 and 2009 for all industries. “Life insurance companies are included,” the ACLI says.
“It makes sense that Congress would extend the carryback period in this time of economic turmoil,” says Whit Cornman, a staff official at the ACLI.
As to other tax issues, AALU lobbyists cite Congress’ focus on health care reform. “Another dynamic consistent with this is the fact that the study of tax reform options requested by President Obama is due in December,” according to David Stertzer, AALU CEO. “That would suggest that the big tax issues are likely to emerge in 2010, rather than 2009.”
This is despite the fact that the Senate approved a 2010 budget blueprint amendment before recessing that would increase the permanent estate tax exemption to $5 million and cut the top tax rate to 35%.
But Stertzer calls the provision “largely symbolic,” saying it was offset by another amendment added later, before the entire blueprint–or “concurrent resolution”–was passed by the Senate on a party-line vote.
The other amendment creates a point of order that would disallow any additional estate tax relief–beyond that which was contained in President Obama’s budget–less an equal monetary amount of tax relief is first provided to individuals earning less than $100,000. That amendment was introduced by Sen. Richard Durbin, D-Ill., and passed by a vote of 56-43.