House Prepared to Act on Estate Taxes

H.R. 4154, the Permanent Estate Tax Relief for Families, Farmers, and Small Business Act of 2009, has been added to the House floor calendar.  The bill would extend the estate tax provisions, due to expire at the end of this year under current law, and allow a $3.5 million estate tax exclusion and a reduction in the maximum estate and gift tax rate to 45% after 2009.  Specifically, it would repeal the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) that eliminate the tax on estates and generation-skipping transfers and the step-up in basis provisions for property acquired from a decedent for estates of decedents dying after 2009.

On December 1, House Majority Leader Steny Hoyer (D-MD) told reporters that “this week we will be dealing with the estate tax” and predicted the House will permanently fix the estate tax problem. He also predicted extenders legislation will pass the House before its holiday recess this month.

Hoyer said the House leadership believes that a permanent estate tax extension is the best policy, with the estate tax exclusion set at a “reasonable level” of $3.5 million. He said this exclusion would protect all but the wealthiest, and would prevent small farms or small business from having to be dissolved in order to settle claims for estate taxes. Hoyer predicted that the estate tax bill to be on the floor “soon.”

The House Rules Committee is scheduled to meet on December 2 to report out the rule for H.R. 4154, the Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009. The House could take up the bill as early as Thursday, December 3.

This new activity heartens our hope that the extension of the current estate tax regime will occur this year.  There were problems with other recent proposals such as a one year extension, which could have had unforeseen repercussions in an election year-and possibly even result in the imposition of the (n0w archaic) $1 million per spouse exemption equivalent due to a failure to act for political gain and finger pointing by one side or the other.

Posted in Status of Tax Legislation, WillPlan Blog.

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