Local Tech Wire

RESEARCH TRIANGLE PARK, N.C. – The warned its members Thursday that the “carried interest tax” issue remains a hot one in Congress.

The NVCA and more than a thousand of its members recently wrote Congress a letter opposing the change in how venture fund income is treated. The House is debating the concept again Friday.

Here’s the letter as sent to members by NVCA President Mark Heesen. The letter was printed online at PE Hub.

“To NVCA Members:

“The carried interest situation in Washington continues to be extremely fluid. Here is the current state of play:

“House bill HR 4213, which contains the proposed carried interest tax change, was rejected by the Democratic Blue Dog coalition [Thursday], making passage unlikely in its current form. There are still efforts being taken by House leadership to whip up enough votes to bring the legislation to the floor.

“At this point, it is unclear as to whether that will be possible. If the House does not vote on this bill, the Senate can not act and Congress will recess until June 7th without passing a tax extenders package.

“While no single provision brought this bill down, the impact of carried interest tax changes on job creation played a significant role in the thinking of many House Democrats to call on Speaker Pelosi to pull the bill and start over. If the current opposition continues, this will be a substantial victory for the venture capital industry.

“But the battle is not over.

“As we have seen with this legislation in the past, things can change rapidly. The House could rewrite the bill in the next 24 hours and whip up votes to pass HR 4213. If that happens, the bill will move to the Senate which will be pressed to get something passed to extend unemployment benefits. We have been working closely with members of the Senate Finance committee on alternatives to the House carried interest provision and would be hopeful that these alternatives would be introduced as part of that process.

“Regardless of what transpires this week, one thing remains clear: Carried interest will continue to be a target as a revenue raiser — for when the tax extenders package is again brought to the floor – or for other programs that are proposed between now and the end of the Congressional calendar currently scheduled for October 8. However, the push back from House Democrats on HR 4213 evidences a real concern from legislators that changing the taxes on long term investors is bad public policy. Our voice was heard – and if and when this debate begins again, we will be starting from a stronger position after the events of this week.

“We would like to be able to provide you with the current state of play before the weekend and will hold an all member communication call tomorrow, Friday at 1:00 p.m. eastern / 10:00 a.m. pacific at which time we will update you with the latest developments and our strategy going forward.

“Our membership has been one of our greatest strengths throughout this process. We thank you for your ongoing support and I look forward to updating you [Friday].”

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