The tax deal that includes a retroactive fix for domestic R&D expensing through 2025 passed the House! Now what?
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Hello, everyone. Good morning. It is a beautiful, sunny Thursday morning. And I have good news for you the tax deal, which includes a retroactive fix for domestic r&d, expensing software expensing passed the house last night 357 in favor 70 against. It's incredible, honestly, for so much of last year, when I was talking to you and talking to everybody about this, you know, there was a proposed piece of legislation, you know, in the house and and then in the Senate, but there was not really a whole lot of movement, we kind of had a little bit of a what turned out to be a false start in June with that bill. But it was a kind of a frustrating year, because there was no larger package, for it to be part of that carried a tax section for it to be there. And it is extremely unusual for tax issues to ride on their own. And so the fact that this has happened, and that, you know, tax issues are basically never retroactive. So this is huge. This is really, really, really huge. And we're not there yet. But this is a massive, massive step forward. Having 357 bipartisan votes for this from the house, referring it to the Senate gives a very, very strong message to the Senate about support for this. I just watched the debate on it myself. And I'm struck by how this is actually a sign of Congress working right. There's a bipartisan bill, there were, you know, a lot of people saying this isn't a perfect bill. But it's good. And it's good enough. And it's what we have to pass from the stuff that helps us like, like software, r&d, expensing, to low income housing, tax credits, and and child tax credits and an increase in expense ability of equipment purchases. So like computers and whatnot. There's, there's a lot of stuff to like in it. And I think this is a huge win, a huge win for our community. And, you know, for the American economy. Of course, it does not include the foreign r&d expensing, which, you know, is still a huge disappointment. As many of you know, I am personally impacted by that since I live in Denmark. But this also now lines up everything else to expire in 2025. And so it looks like Congress is preparing to have a big tax negotiation in 2025. And I hope that we can make an argument for that, then, after having a few years break to not think about taxes so much. So this is going to the Senate. And now this passed under suspension of the rules in a house, which means there was very limited debate, it was like, speed debate, you know, where, you know, with some members only getting 30 seconds, you know, 20 minutes total for each side. But in the Senate, I believe it is not expected to go under suspension. And so, you know, they might have amendments, they there are some members talking about wanting to do a markup, which, you know, is basically drawing out the process, because this is getting kind of tangled up and some other issues like immigration and whatnot. I think overall, we should be very encouraged, quite frankly. I mean, I, honestly, I don't think I've been so encouraged about the functioning of Congress in a very, very long time, considering the amount of dysfunction that comes out of that place, especially in the last couple of years, to see, you know, Republican and Democratic members standing together, you know, in support of this, and also an opposition. It was a it was a very unusual sight, I think to see, you know, an extremely conservative Republican man from Texas yielding time to women from California and New England with pink and purple highlighted hair. But also, you know, small business owners and people who were on the other side, Republicans, small business owners and Democrats from the center of Philadelphia, about about the Housing Tax Credit pieces. She representative Blakemore of Utah mentioned that small business owners had come up to him on the soccer field, about the r&d expensing piece of it and how much it was hurting their businesses. So I don't know if y'all are part of our group, but good work on that. So I'm actually I'm very encouraged about how all this got done. And, and I think it was a great thing that all of those things are together. I know so many of you, you know, you run indie businesses, because it allows you to live, you know, outside of a major city close to family, and you know, have three, four or five kids, right. So you're not only going to benefit from the r&d part, but also from the child tax credit. So I think this is this is really huge. But the Senate is going to be an uphill battle. We can take a break, we can pause for a second, feel good about what happened in the house, because it's incredibly even got to the point of being in a package, and then it got to a vote and the vote got through. All of that is amazing. The Senate is going to be more challenging. There are some senators who are calling for a markup. They might try to drag this out. So the thing so the Senate also they might take their time with us. The house moved through relatively quickly. So the Senate and also they're gonna go on recess for two weeks on February 12. So that means if they don't pick it up by then then we have to wait two weeks. So then we're looking at the first week of March when they pick it up. Now, it would be better if this passes sooner. But that's an that's that's unclear right now. But it is already clear that there are a couple of senators who are against it. Notably, Senator Crapo from Idaho. Senator Tillis from North Carolina, some of the senators from Texas are threatening to drag it out and don't feel any urgency about it. So we need to start putting the pressure on them. And there are two ways we can do that. So the first one, which we can't do today, but hopefully we can do very soon, is simply calling your senator and or your Senators plural, both of them and asking them to support the Senate Bill.
We do not have a Senate Bill number yet. So that is not actionable for you today, but I will certainly let you know, when we have a bill number. And I will let you know exactly what you need to say again, I am incredibly heartened, by the way by how many of you called Congress for the first time because of this, like it's just, it's really, really encouraging. And I am, I'm so proud of you for stepping outside of your comfort zone and doing something different. I want to I want to quote someone who emailed me and said, I've never called my congressman before but your script of what exactly to say pretty much made my procrastination on that task disappear. And all went well. That is wonderful to hear. So many people saying that they're the the staff in their in their congresspersons office called, you know, picked up on the first or the second ring. Amazing. I mean, what company or organization can you call where he got through on the first ring? So so the first thing we're gonna have to call our senators again, the second thing is, while it's working through the process in the Senate, we can continue to get pieces in the press about this. As I mentioned in my email the other day, if you are willing to talk to the press about this, to talk about how it impacts your business, please, please let me know. Especially if you are from a state whose Senator appears against this, and you know, so that's Idaho, there's North Carolina, there's Texas, Massachusetts, there's, there's more states that we've that we've got to be pounding the pavement in. But we need to make sure that every single senator is hearing from their constituents about this. But so if you are willing to speak to the press, please let me know there is a ton of interest right now, as many of of you know, who have already been emailing with and getting you in touch with reporters. The deadlines can move fast. So for example, there was a bunch of people who raise their hand to talk about state and local tax deductions as it related to this bill. You know, that talked to a reporter about that, but then that one was moving really fast, and it's not clear when that's coming out. So some of these things. Some of these things move really fast. But being willing to have a 1520 minute conversation with a reporter and share your experience is really, really impactful. So if you are willing to publicly talk about how you've had to lay people off or you know, take out personal loans or use credit cards or use to get a home equity line of credit, empty your business bank accounts, you know, empty and personal savings, all those kinds of stories are really the ones that resonate very strong. Only with reporters and with members of Congress. So that's where we are right now. But today this is this is a good day. I am I am. I'm proud of us. I am proud of how far we have gotten. We have further to go. But I think we can pause and feel kind of hopeful about this for the first time in a long time. And I just want to close with a quick note. And people have been asking, Do I need to refile or, you know, how does that look? So one of our members is Chris Julian, who is a CPA in Seattle, who has a lot of small business clients, and he mentioned that there's actually a form, people will be able to file. I'm just going to quote him the last thing the IRS needs is more amended returns, probably true. So they will likely allow this to be done prospectively with a form 3115. So potentially don't need to refile. But rather have your tax accountant file that form. And if you don't have a tax accountant, there are several in our group like Chris, so that's where it looks right now. Very, very exciting stuff. I'm ready to fight for this in the Senate. And I hope you are too. So let's get this done.