What is a 'Sunset Provision'

A sunset provision is a clause in a statute, regulation or similar piece of legislation that provides for an automatic repeal of the entire or sections of a law once a specific date is reached. Once the sunset provision date is reached, the pieces of legislation mentioned in the clause are rendered void. If the government wishes to extend the length of time for which the law in question will be in effect, it can push back the sunset provision date any time before it is reached.

BREAKING DOWN 'Sunset Provision'

The purpose of a sunset provision is generally to allow lawmakers to institute a law when change or government action is required reasonably quickly, when the long-term ramifications of the law in question are difficult or impossible to foresee, or when circumstances warrant such a legal structure.

A good example of legislation warranting a sunset provision is the U.S.A. Patriot Act. Intended to address relatively short-term security concerns following the events of September 11, 2001, the act, when it was initially drafted, included a sunset provision for December 31, 2005.

Often, a law with a sunset provision can get votes because lawmakers who might otherwise oppose permanent implementation of the law may be okay with a temporary implementation due to special circumstances.

RELATED TERMS
  1. Provision

    A provision is a stipulation in a contract or legal document ...
  2. Sunrise Provision

    A sunrise provision is a contract provision that extends coverage ...
  3. General Provisions

    A balance sheet item representing funds set aside by a company ...
  4. Severability

    A severability clause states that the terms of a contract are ...
  5. Uniform Individual Accident and ...

    The Uniform Individual Accident and Sickness Policy Provisions ...
  6. Exon-Florio Provision

    A provision that allows the president of the United States to ...
Related Articles
  1. Investing

    Banks Helped By Lower Loan Loss Provisions

    Many banks saw improved credit quality in the first quarter of 2011 leading to lower loan loss provisions.
  2. Insurance

    The Tax Implications of Fully Repealing the ACA

    Repealing the Affordable Care Act would have a financial effect on individuals and employers.
  3. Taxes

    Did a Beer-Loving ‘Bro’ Write the New Tax Bill?

    Beer, wine and liquor producers emerged as remarkably big winners in the new tax law. But were their tax breaks the result of real economic need?
  4. Investing

    Guess Who Just Sued the Justice Department? (MSFT)

    Microsoft wants to let you know if the government has been going through your things.
  5. Personal Finance

    The Top 7 Financial Planning Mistakes You Might Make

    Here are seven financial planning mistakes and how to fix them.
  6. Investing

    Corporate Bonds and the Importance of Covenants

    Any type of investor, private or institutional, should be acquainted with the significance of covenants in corporate bond agreements.
  7. Financial Advisor

    The Impact of 2015 Tax Extender Bill on Savers

    The passage of the PATH legislation at the end of 2015 gives advisors more clarity on how to help clients with tax and financial planning.
  8. Financial Advisor

    Succeeding At The Series 63 Exam

    Your career as a securities agent begins with this test. We'll show you how to score high.
  9. Personal Finance

    Career advice: Accounting versus law

    Identify the key differences between working in accounting and working in law and understand which specific skills make you better-suited for each career.
  10. Trading

    Warrants: A Risky But High-Return Investment Tool

    Discover the advantages and disadvantages of warrants, a largely unexploited investment vehicle.
RELATED FAQS
  1. What's the difference between accrued expenses and provisions?

    Read about the differences between accrued expenses and provisions, and why a company might record one over the other in ... Read Answer >>
  2. What major laws regulating financial institutions were created in response to the ...

    Read about the major federal responses to the financial crisis of 2008, such as the Dodd-Frank Wall Street Reform Act and ... Read Answer >>
Hot Definitions
  1. Return On Equity - ROE

    The profitability returned in direct relation to shareholders' investments is called the return on equity.
  2. Working Capital

    Working capital, also known as net working capital is a measure of a company's liquidity and operational efficiency.
  3. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  4. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
  5. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
  6. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative ...
Trading Center