Some sources starting to shift prior outlook; others say issue tied to tax reform
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The outlook for possibly extending the biodiesel tax incentive beyond this year is now in the cloudy crystal ball. In recent days, we have talked with many contacts in Washington and the industry about the odds of another retroactive extension of the biodiesel tax incentive, which will expire at the end of this month as Congress did not include extension language in the pending stopgap spending measure. Sources are split regarding whether the program will be extended. Where there is agreement is that even it if is extended, that is not likely for the first six months or so of 2017 because lawmakers instead will focus on tax reform issues of which tax extenders will likely play a part of that debate. Contacts predicting no eventual extension acknowledge that no final decisions in Congress have been made but because some prior tax extenders like Section 179 and research and development were previously extended permanently, while others were extended five or two years, there are not as many lawmakers in support of further extension as there was when lawmakers supporting Section 179 and research and development incentives were seeking extensions. Tax reform linkage. If the 2017 tax reform discussion is not completed by the end of the first session of the new Congress, sources signal that could up the odds that Congress would retroactively extend for a short period the expired biodiesel tax incentive. And even if tax reform is completed, some sources say there could be a modified extension of the biodiesel incentive that could include a phased down or phased out program over a period of years. Just as many contacts, however, say they believe GOP leadership in Congress wants no more extensions of any kind. Thus, a murky situation.
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