Ways & Means Working Toward Tax Reform
Tax reform has been a hot topic among the House Ways and Means Committee this week. On Monday, the Committee met for a retreat to discuss priorities for 2016. Chairman Kevin Brady (R-TX-8) spoke later that day at the Heritage Foundation, citing the Committee’s intent to “move forward to advance a tax code that’s built for growth,” and its commitment to “seiz[e] any opportunity to accomplish exactly that.”
The following day on Tuesday, the Committee held its first hearing of year on improving the economy with testimony from Doug Holtz-Eakin—President of the American Action Forum, Kevin Hasset—Director of Economic Policy Studies and State Farm James Q. Wilson Chair in American Politics and Culture at the American Enterprise Institute (AEI), Stephen Moore—Distinguished Visiting Fellow at the Heritage Foundation’s Project for Economic Growth, and Jared Bernstein—Senior Fellow at the Center on Budget and Policy Priorities.
Later on Tuesday, Chairman Brady met with Senate Finance Committee Chairman Orrin Hatch (R-UT) to discuss international tax reform. Tax Notes reports that Brady and Hatch plan to meet weekly as they take steps to move toward the goal of accomplishing international reform.
The Council is working diligently to continue our engagement with Members of Congress and senior staff to educate them on our issues, and to advance tax policies that would be beneficial to our members.
Primary Season is Officially Underway
This past Monday marked the kickoff of the presidential primaries season with the Iowa Caucus. Of the Republican candidates, Senator Ted Cruz (R-TX) emerged victorious with 27.7% of the votes—followed by Donald Trump with 24.3%, and Senator Rubio (R-FL) with 23.1%.
On the side of the Democrats, the race was too close to call until mid-afternoon on Tuesday when former Secretary of State Hillary Clinton was announced as the winner with 49.9% of the votes over Senator Bernie Sanders (I-VT), who received 49.6% of the votes.
Also significant: the results of the Caucus prompted a number of candidates to suspend their campaigns. Senator Rand Paul (R-KY), former Arkansas Governor Mike Huckabee, former Senator Rick Santorum, and former Maryland Governor Martin O’Malley all announced that they would be shuttering their campaign operations.
With a long road ahead of us leading to the November elections, we urge our readers to brush-up on permissible election-related activity. For more information on this topic, we suggest the following resources as a starting point:
- Webinar Recording: Washington Update – The Rules of Engagement for 2016
- For Council Members: Election Year Politics – What Foundations Need to Know
- Learn Foundation Law: Electioneering Rules for Private Foundations and Public Charities
And, of course, the Council’s Legal team is available to our members to answer any specific questions you may have!
Adding Scholarship Restriction for Renewal Purposes
A community foundation inquired about one of its scholarship funds, which was renewable up to five years after the initial award if the minimum GPA requirement was met. The donor informed the foundation that it now wished to add a new requirement that would deny renewal to any recipient who either gets married or enlists in the military. Unsure of how to handle this request, the community foundation contacted the Council for guidance.
Private funders may impose restrictions or conditions regarding scholarship eligibility, provided they are objective and would not promote discrimination. But given this donor’s failure to clearly state the marriage or military restriction at the outset, the Council’s legal team advised against instituting them since they may be unenforceable and, from a non-legal perspective, could lead to public criticism.
Under Internal Revenue Code section 4945(g), grants to individuals must be awarded on an objective and nondiscriminatory basis. Conditions for renewing a grant must be based on this same standard.
Here, tacking on marriage or military conditions for renewal may be seen as arbitrary or as unfair changes to the requirements the student previously agreed to. In addition, midstream changes to a fund’s requirements may give the appearance of undercutting the disinterested, charitable nature of the gift. The legal team advised that both scholarship eligibility and renewal conditions be clearly stated in the award letter or in an agreement signed by both the foundation and the recipient for maximum enforceability.
Going forward, the Legal team suggested that the foundation may implement the marriage or military restriction in the next scholarship application cycle, but cautioned doing so based on appearances. The foundation should consider that other issues come into play. For example, issues of marriage and right to privacy bring in Constitutional considerations. And, the community foundation might take into consideration potential negative ramifications for its reputation in the community.
For more information on this or any other tricky legal matters, please contact the Council’s Legal Affairs team at firstname.lastname@example.org.
Access to the Council’s legal team is a valuable member benefit. Council attorneys are available to discuss your legal questions and to provide legal information by telephone, email and through our various publications and newsletters. This information is intended for educational purposes and does not create an attorney-client relationship. The information is not a substitute for expert legal, tax or other professional advice tailored to your specific circumstances, and may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Code.
Exclusive from our colleagues at the National Council of Nonprofits.
Emerging State Issue: Turning to States to Solve the Impasse Over Obamacare
According to the views of two retired Congressional leaders, the states are the answer to the question, how can we get past partisan gridlock on the Affordable Care Act (a/k/a Obamacare)? The answer is highly relevant to the work of foundations and charitable nonprofits, both as employers and advocates for the people and communities they serve.
Beginning in 2017, states can seek State Innovation Waivers that allow them to implement creative ways to provide access to quality health care that is at least as comprehensive and affordable as would be provided under the ACA, provides coverage to a comparable number of residents of the state, and does not increase the federal deficit.
Former Speaker of the House Newt Gingrich (R-GA) and former Senate Majority Leader Tom Daschle (D-SD) are calling on the states to take advantage of a special provision of the ACA – Section 1332 – to achieve what partisans in Congress and across the country say they want to achieve: “providing more Americans with access to more affordable, flexible, patient-centered health care.” Writing in the Washington Post (“How to make both parties happy through the Affordable Care Act,” Feb. 4, 2016), the leaders urge the states to help the nation get past the impasse on health care reform by innovating on payment streams, individual and employer mandates, and in other areas, while maintaining basic protections. In essence, the states could rewrite the law to suit their conservative or progressive ideals.
The Obama Administration recently finalized the regulations on Section 1332 State Innovation Waivers so the issue is only now hitting the policy agendas in states. It is likely to generate considerable attention in state legislatures this year and in years to come.