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Senate backs vote on tax bill affecting employer-provided benefits

Posted On: Dec. 13, 2010 12:00 AM CST

WASHINGTON—Legislation that would extend the tax-favored status of several employer-provided benefits, including educational assistance and child care facilities, survived a key test Monday when the Senate agreed to stop debate, setting the stage for a final vote, most likely on Tuesday or Wednesday.

Under the bill, H.R. 4853, Section 127 of the Tax Code, which allows employers to reimburse employees for up to $5,250 in annual undergraduate and graduate educational costs without the reimbursement being included in employees' taxable income, would be extended though Dec. 31, 2012. The tax break is set to expire Dec. 31.

The measure also would continue through the end of 2012 a section of a 2001 law due expire at year-end in which employers are eligible to receive a tax credit equal to 25% of expenses for developing and operating child care centers as well as a tax credit of 10% on expenses for child care and referral services.

In addition, the measure would extend through Dec. 31, 2011, a provision in a 2009 economic stimulus law that allows employees to make pretax contributions of up to $230 a month to pay for mass transit expenses. Without an extension, the monthly maximum contribution would be reduced to the prior limit of $120 effective Jan. 1, 2011.

While final Senate passage is considered likely, House Democrats, who are upset about provisions that would continue tax breaks for upper-income individuals, have threatened to block consideration of the measure if it reaches the House floor.