“Key Tax Provisions of the Fiscal Cliff Deal”
After much wailing and gnashing of teeth, Congress finally came to an agreement to temporarily avert the fall over the so-called fiscal cliff. The core components of the American Taxpayer Relief Act of 2012 (the “Act”) were to increase tax rates on certain high-income individuals, to provide a permanent fix to the alternative minimum tax, to extend the existing estate tax exemption amounts, and to extend certain expiring provisions. More noteworthy than what the Act is, is what it is not. It is not a “grand bargain” to cut the deficit; rather, key budget balancing challenges have been left for this spring. It is not an end to the parade of expiring tax provisions that permeate the Code. Perhaps most importantly, the Act is not comprehensive tax reform, and the difficulty of passing the Act was a vivid demonstration of the difficulties inherent in reaching a consensus on a revised tax regime.
Even though the Act does not represent comprehensive tax reform, and contains many provisions expiring at the end of the year, it also contains provisions that could significantly impact taxpayers for years to come. This Stroock Special Bulletin provides an overview of key tax provisions of the Act, and some of their implications.