Dear Readers: Due to the predictions that many of us in the DC metro area are going to be buried in snow by the end of this week, we are sending Washington Snapshot to you a day early. For those of you who are also prepping for cold weather—stay warm!
Upcoming Ways & Means Hearing Will Address Tax Reform
Ways & Means Chairman Kevin Brady (R-TX-8) announced that the Committee will hold its first hearing of the year next Tuesday, January 26th at 10:00am ET.
The hearing will have a broad focus on improving the economy, but it is expected that tax reform will be a significant topic of this discussion. During the first several months of his tenure as Chairman, Brady has noted that poverty rates and ongoing unemployment indicate an underperformance of the economy, and that reforming the tax code may provide an outlet for correcting some of these issues.
“Over the coming months we are going to take real steps toward fixing our broken tax code by examining and engaging the ideas and energy of every House member who wishes to be heard,” Brady said at a hearing last year. “America needs a simpler, fairer, flatter tax code that's built for growth—the growth of our family's paychecks, the growth of our local businesses and the economic growth of our nation.”
As we reported last week, international tax reform is high on Brady’s list of priorities this legislative year, and he intends to push an international tax bill through his committee this year to build momentum toward a comprehensive reform of our tax code.
New Changes to IRS Advisory Committee on Exempt Organizations
This Tuesday, the IRS issued a press release announcing that it will be making several changes to its Advisory Committee on Tax Exempt and Government Entities (ACT).
The ACT serves as a public forum for members of the tax-exempt and governmental sectors to discuss the tax issues that impact their work and operations with IRS officials. The Committee—which is currently compartmentalized into five subcommittees (Employee Plans, Exempt Organizations, Federal, State and Local Governments, Indian Tribal Governments, and Tax Exempt Bonds)—also issues a yearly report to give input and recommendations on current or proposed IRS policies, programs, and procedures.
Moving forward, the purpose and structure of the ACT will shift in the following ways:
- The focus will shift from utilizing subcommittees to addressing tax administration issues for tax-exempt and governmental entities, broadly.
- The number of committee members will decrease from 21 to 15, beginning this June.
- Terms for ACT members will transition from two-year terms with the option to extend it by one year, to a flat three-year term.
As our readers will recall, the Tax-Exempt and Governmental Entities (TE/GE) Division of the IRS announced its priorities last October. Moving forward, the five year priorities for this division will be: 1) continuous improvement, 2) knowledge management, 3) risk management, 4) data-driven decision-making, and 5) employee engagement.
Commissioner of the TE/GE Division Sunita Lough noted that they will “continue to consider more refinements of the ACT structure in coming months and potentially make more changes in 2017. We also remain committed to getting feedback and input from our stakeholders, both operationally within TE/GE and through the ACT.”
Exclusive from our colleagues at the National Council of Nonprofits.
Update: New Jersey Hospital Property Tax Remains in Flux
New Jersey municipalities, nonprofit hospitals, and potentially many other nonprofits and foundations may find themselves in a legislative tug-of-war over property tax exemptions now that Governor Christie has let expire without his signature (pocket vetoed) a bill to impose a community service fee on some acute care hospitals.
As reported previously in Washington Snapshot, nonprofit hospitals in the state had negotiated a legislative deal that reaffirms the property tax exemption for nonprofit hospitals, an issue questioned in a recent court ruling, but that also would have mandated payment of fees to host communities, essentially imposing a statutory payment in lieu of taxes (PILOT) scheme. The bill was opposed by the state League of Municipalities, which is expected to seek revisions that will generate even more money for its member governments. The new Legislature sworn in last week will now have the opportunity to reconsider the legislation. Concerned nonprofit advocates are working to ensure that the broader nonprofit and philanthropic communities are not adversely affected by any revisions.
Illinois Leading Efforts to Implement Federal Grants Reform
The State of Illinois and Forefront (formerly Donors Forum), the state association of nonprofits and regional association of grantmakers, are celebrating yet another success in their ongoing efforts to streamline and simplify the grant/contracting process in Illinois. Historically, governments have reimbursed nonprofits for less than the full costs of the services they provide and foundations often have been called on to subsidize those uncovered costs.
Illinois is the first state to align state grant and contract policies and rules with the OMB Uniform Guidance by enacting state legislation, the Grant Accountability and Transparency Act (GATA). Among other things, the federal grants reforms finalized in late 2014 mandate that nonprofits providing services for governments must be reimbursed for their reasonable indirect costs (sometimes called overhead or administrative costs) when federal funds are part of the funding streams. The Illinois GATA statute extends to all state contracts and grants the federal mandate for reimbursing nonprofits for their indirect costs.
The first annual report to the Governor and Legislature on GATA highlights the process, progress, and metrics on revising the grant-making rules for 52 state agencies. According to the report, more than 200 volunteers from state agencies and nonprofit organizations have worked together for the past year developing the recommendations and the new rules needed to implement the changes. Also, work has started in developing uniform assessments, contracts, and applications, along with establishing a statewide grant manual and listing of all funding streams, and common technology to support all of these processes.
It should be noted that the progress achieved in Illinois would not have been possible without foundation support that provided an outside facilitator to keep the process moving forward.
Philanthropy is Projected to Increase in 2016 and 2017
This week, the Lilly Family School of Philanthropy at Indiana University in conjunction with Marts & Lundy released their Philanthropy Outlook for 2016 & 2017. The report analyzes trend data and projects:
- Total giving,
- Giving by individuals and households,
- Giving by foundations,
- Giving via estate bequests,
- Giving by corporations, and
- Giving to education.
According to the report, total giving is expected to grow 4.1 percent in 2016, and an additional 4.3 percent in 2017. To explore the full report, click here.