Negotiators from the House and Senate reached tentative agreement Friday night on a catchall tax bill with a $4-billion price tag over three years and a “bill of rights” for taxpayers.
The House and Senate, inching toward adjournment for the year, planned to consider the package later in the evening.
The legislation, more than two years in the making, includes tax relief for farmers, free-lance writers, owners of mutual funds, recipients of employer-financed tuition and a variety of other interests. It also includes selected tax increases to pay for those benefits.
Most of the pressure for passage of the bill has come from farmers. They would benefit two ways under the bill, winning exemption from paying the federal tax on diesel fuel and authority to deduct some expenses of producing livestock even before the animals begin generating income.
Pressure also had come from accountants and other tax professionals, who are seeking corrections for hundreds of errors and ambiguities in the big tax overhaul enacted in 1986. The original purpose of the bill was to fix those errors.
A major non-tax provision seizes 540 acres of land adjacent to the Manassas Battlefield in northern Virginia to block construction of a shopping mall on the site. The Reagan Administration opposes this provision, although there has been no indication whether it would prompt a veto.
Negotiators, meeting behind closed doors, dropped another unrelated provision, which would have imposed economic sanctions against Iraq to protest that nation’s use of poison gas against some of its Kurdish citizens.
Other major provisions would:
--Require the Internal Revenue Service to fully inform taxpayers of their rights before launching an audit or collection action. This “bill of rights’ also would require 30-day notice, up from 10 days, before the IRS seizes property for taxes. It would prohibit the agency from promoting employees on the basis of how much money they collect.
--Extend expiring tax benefits to help lower-income families buy their first home, reward businesses for increased spending for research and experimentation and boost incentives for investment in low-income rental housing.
--Renew an expired provision that allows workers to exclude from income tuition payments made by their employers; most graduate study would not qualify.
--Extend an exclusion for the value of employer-financed legal-service benefits.
--Prohibit a business deduction for the basic monthly cost of a home telephone.
--Allow free-lance writers, artists and photographers to deduct certain expenses before a project starts producing income.
--Permit owners of mutual funds to deduct certain operating expenses of the fund without having to meet a requirement that only miscellaneous expenses exceeding 2% of income be deducted.