Here Comes Tax Reform!
With the stars, and both house of Congress, now aligned, comprehensive tax reform is on the horizon. Last week Ways and Means Chairman, Kevin Brady (R-TX), penned an op-ed about how he hopes to give a boost to the economy by reforming the tax code, with the intent of spurring growth among small businesses. Specifically, he cites lowering tax rates for small businesses, repealing the “death tax,” and “busting up” the IRS to restructure the agency with “distinct service units trained to help different groups of taxpayers.”
As we move into 2017, we expect to see things progress quickly. The House is to mark up a bill — based on Tax Blueprint that was released in June — by early March, with the goal of passing a bill through the House by April and sending it to the Senate. Once a bill reaches the Senate, we anticipate that the Finance Committee would aim to pass it by May so that the full Senate could vote and pass the bill into conference in July — with a target enactment date before the August recess.
Though this timeline is somewhat speculative, the Council is prepared for swift action. Our government relations team continues to meet with Congressional offices to discuss the implications of tax code changes that could negatively and positively impact philanthropy.
It’s important for members of Congress and their staff to hear from us, but it’s particularly meaningful for them to hear from you — their constituents who are supporting vitality and growth in their communities. In the coming weeks, we will provide materials for you to reach out to your members in the incoming 115th Congress about tax reform.
A great example of a foundation that has already been active in reaching out to their members in the 115th Congress is the Adirondack Foundation. Click here to see their example of a letter to the Congresswoman representing their district!
Levin to Step Down as Ranking Member for Ways & Means
Ranking member of the House Ways and Means Committee, Sander Levin (D-MI), announced Tuesday that he would not seek another term as top Democrat on the committee.
He steps down after six years in leadership on the committee, citing his desire to make way for younger members to step into leadership roles and to focus more attention on healthcare and trade issues. Following his announcement, committee members Richard Neal (D-MA) and Xavier Becerra (D-CA) put in their bids to succeed Mr. Levin. However, Congressman Becerra was named as California’s next Attorney General just today, which takes him out of the running for this position.
Pelosi Re-Elected as House Minority Leader
Yesterday morning, House Democrats voted to keep Congresswoman Nancy Pelosi (D-CA) in her position as Minority Leader over her challenger, Tim Ryan (D-OH).
Immediately following the decision, Congressman Ryan issued a statement congratulating Minority Leader Pelosi, citing that he was “pleased to see that Leader Pelosi will adopt [his] proposal to expand leadership by creating a position for Freshman members and to bring back the power to Committees by creating Vice-Chair/Vice-Ranking Member positions.”
Mnuchin Tapped for Treasury Secretary
An announcement yesterday confirms Steve Mnuchin as President-elect Trump’s nomination for Secretary of the U.S. Department of Treasury.
Mnuchin, who led fundraising efforts for Trump’s presidential campaign, comes from 17 years at Goldman Sachs. Since his nomination, he has expressed his desire to focus on economic growth by supporting tax reform efforts and reforming the Dodd-Frank Act.
1023 and 1023-EZ Applicants Will Now Receive Same Determination Letter
The IRS recently announced that, moving forward, tax-exempt applicants using the Forms 1023 and 1023-EZ will now receive the same determination letter.
This is important for foundations because it helps answers the question of whether grants to 1023-EZ applicants can be treated the same as grants to 1023 applicants. It provides assurance that so long as a grantee (or potential grantee) has an affirmative determination letter from the IRS, no further due diligence is needed by the foundation to ensure that the grantee is a qualified charitable organization.
Exclusive from our colleagues at the National Council of Nonprofits.
New Government Accounting Rules to Shine a Light on Corporate Tax Breaks
States and local governments that enter into tax-abatement agreements with businesses and others will soon be required to disclose more information to the public, as the result of new nationwide accounting rules that go into effect in 2017. As a result, foundations and nonprofits will have more and better information about government policies that reduce public revenues and increase pressure on the sector to fill the funding gaps.
Under the new rules, state and local governments must report all economic development incentives as foregone tax revenue beginning with their fiscal year 2017 annual financial reports. Specifically, governments will have to disclose the gross dollar amount of corporate tax breaks for economic development and similar activities, any commitments agreed upon, and how the government will get the money back (clawback) if the goals are not achieved, among other things. The amount of foregone tax revenues for tax deals with businesses and others is significant, with estimates for 2012 exceeding $80 billion.
The new rules from the Government Accounting Standards Board are designed to encourage transparency while “provid[ing] citizens and taxpayers, legislative and oversight bodies, municipal bond analysts, and others with information they need to evaluate the financial health of governments, make decisions, and assess accountability.” Business tax abatements usually reduce tax revenues to local governments, which often turn to foundations and nonprofits to make up the some of the difference by demanding taxes, fees, or payments in lieu of taxes.