AHLSTARZ Tax and Accounting Service -- Numbers, Simplified.

The House, during the week beginning November 30, is expected to take up legislation that would extend current estate tax levels for one year. Advocates for a permanent fix to the tax said that Congress would likely revisit the issue in 2010.

House Democratic leadership and some Democrats on the House Ways and Means Committee had pushed for a permanent fix but were dissuaded from that route when a majority of members questioned the sizeable cost that would have to be paid for under the pay-as-you-go (PAYGO) rule. PAYGO requires Congress to offset the costs of tax cuts or increases in entitlement spending with savings elsewhere in the budget. It was also uncertain whether the Senate, which has not adopted the PAYGO rule, would approve the estimated $256-billion, 10-year cost of making the tax cut permanent.

Both the House and Senate approved funding for extending current estate tax rates in their budget plans, and President Obama proposed extending the 2009 estate tax levels permanently in his budget blueprint. Under current law, individuals are exempt from the tax up to the first $3.5 million of their estate's value. Any amount over that is taxed at a rate of 45 percent. The estate tax is slated for repeal as of January 1, 2010, under provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) (P.L. 107-16). However, that legislation is set to expire at the end of 2010, leaving estate tax rules to revert to pre-2001 levels.

By Jeff Carlson, CCH News Staff