U.S. Senate approval Tuesday, Dec. 16, 2014, of 45-G, by a 76-to-16 vote, has assured passage of the measure, part of H.R. 5771, The Tax Increase Prevention Act of 2014, and providing a fiscal boost to freight railroads, particularly short line and regional operations.
Section 116 of H.R. 5771 in essence extends the credit only through 2014, while keeping language defining the "Effective Date" as follows: "The amendment made by this section shall apply to expenditures paid or incurred in taxable years beginning after December 31, 2013."
A summary by the House Ways and Means Committee says the provision is designed to "extend through 2014 the railroad track maintenance tax credit. The credit is equal to 50% of all qualified railroad track maintenance expenditures paid during the tax year. According to [the Joint Committee on Taxation], this provision would reduce revenues by $207 million over 2015-2024,
Section 116 was one of numerous extensions enacted by the outgoing 113th Congress prior to its disbandment, as Republicans prepare to assume leadership in both the House and the Senate in 2015. The American Short Line & Regional Railroad Association (ASLRRA) has vociferously advocated for the tax credit as key to the health of smaller railroad properties.
In a statement Wednesday, Dec. 17, ASLRRA said, “Action on this bill was critical for hundreds of small freight railroads as well as railroad customers, contractors and suppliers. The Joint Committee on Taxation estimates that Section 45G incentivizes between $300 million and $400 million in short line capital and maintenance expenditures each year.”
But ASLRRA Legislative Policy Committee 45G Subcommittee Chairman Bob Ledoux of Florida East Coast Railway cautioned that the industry had “no time to rest on our laurels – 45G is far too important for that, and it will expire again at the end of 2014. Early in 2015 we will be back at the grindstone working to ensure that small railroads can use more of the revenue we earn to enhance the quality and safety of our infrastructure."