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For Tax Measures, Deadlines Extend Beyond Midnight

Although fiscal cliff clocks in Washington were counting down on Monday toward midnight, the tax provisions hanging in the balance face a series of deadlines over the next few days.

That’s because although major tax measures, including the 2001 and 2003 rates (PL 107-16, PL 108-27), were due to expire with the turn of the calendar, Congress could come back after the deadline passes and retroactively adjust the tax rates.

A more significant deadline to some policy experts is Jan. 3 when the current Congress gives way to the 113th Congress, changing the political dynamics on Capitol Hill as Democrats gain seats in the House and the Senate. That would also complicate matters, however, because the legislative slate from the previous two years is wiped clean, requiring that lawmakers start over with a new bill that would have to originate in the House.

Lawmakers have been trying to finish work on a tax cut extension before the end of the 112th Congress at noon Thursday. That would allow them to use existing House-originated or House-passed tax bills as vehicles, and allow for both parties to build consensus with help from retiring members that do not have to worry about future elections.

An added benefit of finishing work this week would be that no changes in tax withholding amounts would be reflected in most paychecks.

In fact, extensions of expiring tax cuts have a long history of being enacted after they technically expire at the end of a calendar year. Technically, changes in tax tables can be made until individual taxpayers file their tax returns April 15, although that can complicate withholding for employers.

Senators have been motivated to complete a deal by Jan. 1 so that they could say that they acted to prevent a tax increase on middle-class families.

Retiring House Rules Chairman David Dreier of California said it was possible for lawmakers in both chambers to pass legislation containing a deficit agreement until noon Jan. 3, when the session formally ends.

Appropriations Chairwoman Barbara A. Mikulski of Maryland has been focused on another important date this week, Wednesday, the first working day of the new year, when automatic spending cuts under the 2011 debt deal (PL 112-25) would take effect.

“These are supposed to be triggered, if we don’t resolve the issues today, [and] will happen on Jan. 2. What is being proposed is that we would cut $110 billion in 2013, $55 billion in defense and $55 billion in nondefense,” she said Monday. “This means every single program. Not programs that are dated, not programs that are bloated, not programs that might be for another era or only benefited a small group of people in a distant past. It means every single program.”

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