The Senate approved legislation yesterday that would put off for still another year a provision in the 1976 Tax Reform Act that would have tightened the tax treatment of Americans living abroad - buying additional time for a possible compromise on the issue.
The proposal was passed by voice vote as part of a bill containing a series of minor tax provisions. The Senate Finance Committee had sought to delay the 1976 measure for two years, but agreed to the shorter postponement after opposing sides failed to reach a compromise.
The legislation now goes to a Senate-House conference committee, which is expected to agree on a one-year postponement. The House approved a one-year delay. The two houses are rushing to send the bill to the president before the June 15 dead-life for filing overseas tax returns.
The Senate version also includes a provision by Sen. Abraham Ribicoff D-(Conn.) that would set up a new system of computing taxes for Americans living abroad, beginning with the 1978 tax year. However, sources say Congress may change that again before the year is out.
The law makers voted in 1976 to tighten the tax treatment of Americans living overseas by reducing the position of their income that is tax free and revamping the procedure for figuring taxes. However, the construction industry and other lobbies vigorously opposed it, and the measure was postponed.
Once the conference committee pushes through another year's delay in the 1976 provisions, the two houses are expected to try to work out a compromise on permanent legislation.