Choices Congress Could Make

Extend 2009 Law Retroactively

H.R. 4154.  Passed in the House on 12/3/2009 by a vote of 225 – 200.  Not a single Republican voted for the bill.  Never came to a committee vote in the Senate.  Probably what most practitioners, Democratic congressmen and the Service believe will happen.

Extend 2009 EGTRRA prospectively

The longer Congress waits the more likely the change will be prospective only to avoid uncertainty of constitutional change and politically unpopular action of instituting a tax retroactively.

Extend 2009 for 2010 retroactively

The idea here is a quick retroactive patch for 2010 to allow Congress the time to address estate tax reform.


Because these involve major political differences, not likely to happen quickly and therefore not likely to be retroactive.

Do Nothing Is Most Likely Result

The  Joint Committee on Taxation in 2005, estimated cost of $290 Billion for repeal of estate tax for years 2011 – 2015.  When savings in interest payment on debt were taken into account the total cost of repealing the estate tax for a decade was nearly $1 Trillion.

Center on Budget and Policy Priorities; March 16, 2005; “Estate Tax Reform Could Raise Much-Needed Revenue:  Some Reform Options with Low Tax Rates Raise Very Little Revenue;” Joel Friedman and Ruth Carlitz.

If Sunset occurs there will be a need for enactment of legislation to deal with GSTT issues for trusts created during EGTRA and perhaps legislation to deal with issues involved with Section 1022.

Extensive Estate Tax Reform

If Congress is going to address the estate tax, use the opportunity to address extensive, meaningful estate tax reform.  Issues that have been on the radar screen.