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Congress might finally renew the Short Line Rehabilitation Tax Credit for 2010 by Memorial Day. If not, an extension might not be passed until November. That’s the message James Bowers shared on Tuesday during a “Railroad Maintenance Tax Credit Update” breakout session during the American Short Line and Regional Railroad Association’s (ASLRRA) annual meeting in Orlando, Fla.

A partner with accounting firm Bowers & Co. CPAs P.L.L.C., Bowers said an extension of the short-line tax credit — which expired on Dec. 31, 2009, and has yet to be renewed for 2010 — is part of an “extenders package” under consideration in Congress that would extend various expired tax credits, such as those for ethanol. Although the short-line tax credit would only account for $165 million of the proposed $30 billion extenders package, revenue would need to be increased somewhere in the federal budget to make up for monies not collected because of the short-line tax credit and other tax credits, said Bowers.

There’s a 50-50 chance the extenders package — which got lost in the shuffle during the health care reform bill brouhaha — could be passed by month’s end, he said.

“The House and Senate have passed slightly different versions of the extenders package, and the bills have to be reconciled,” said Bowers.

If the measure isn’t enacted this month, the short-line industry will be “scrambling around” to get a tax credit extension through Congress and likely would have to arrange a “last-minute deal” close to year’s end because of other pressing legislative matters, said Bowers.

ASLRRA and the short-line industry are seeking a multi-year extension, but the extenders package would only extend the tax credits for one year, retroactive to Jan. 1, 2010, and expiring on Dec. 31, 2010.

“We hope to get a six-year extension in the next highway bill,” said Bowers.

The latest extension also would not include an ASLRRA and short-line industry provision to increase the credit limitation from $3,500 per mile of owned or leased track to $4,500, he said. But as in 2008 and 2009, short lines could apply tax credits against their Alternative Minimum Tax, said Bowers.

— Jeff Stagl