In This Week's Edition of Snapshot…
- Ways and Means Committee Adopts FY 2019 Budget Views and Estimates Letter
- Senior Treasury Official Leaves Agency Amid Tax Reform Implementation
- In the States: SALT Workaround Bills Advance
On Tuesday, the House Ways and Means Committee held a short markup to adopt their Views and Estimates Letter—a document the Committee is required by law to submit to the House Budget Committee that conveys how Ways and Means view the aspects of the FY 2019 budget that fall within their jurisdiction.
According to Chairman Kevin Brady’s (R-TX) opening remarks, “While today’s markup may seem like a procedural formality, this letter is very important to our Committee’s work. It allows us to identify challenges facing our nation and begin moving forward to solve them and improve lives in our communities.” Ranking Member Richie Neal (D-MA) stated at the hearing that the Democrats on the Committee could not come to consensus with the Majority’s letter, and would therefore be submitting their own.
Regarding the budget bill that was passed a couple of weeks ago, it included a package of provisions—the Family First Prevention Services Act (H.R. 253), which was introduced by Rep. Vern Buchanan (R-FL) at the beginning of this Congress—that would restructure the way that the federal government funds child welfare programs. Federal funding for foster care will be made available earlier in the placement process, and federal reimbursements will only go to support the placement of children with families rather than placement in group facilities.
Last week, Deputy Assistant Secretary for Tax Policy at the U.S. Department of Treasury Dana Trier announced that he was stepping down from his position with Treasury.
Prior to his departure, Mr. Trier was expected to be deeply involved in the decision-making and writing of the highly technical rules that will be produced by Treasury as part of the implementation of the new tax reform legislation. His resignation comes shortly after he made public comments indicating his willingness for the Office of Management and Budget to play a larger role in the regulations-writing process, as well as his views on what the shortcomings of the legislation were. No announcement has been made yet about Treasury’s plan to replace Mr. Trier.
Exclusive from our colleagues at the National Council of Nonprofits.
Governors and legislators across the country are looking to overhaul tax codes to avoid state tax increases for residents caused by the federal tax law. New York Governor Cuomo announced legislation intended to decouple state tax law from the federal tax code “to avoid more than $1.5 billion in state tax increases brought solely by increases in Federal taxes.”
A proposal is pending in Idaho to cut personal and corporate income tax rates and to enact a $130 nonrefundable child credit. A Nebraska bill, in addition to decoupling state tax law from the federal standard deduction, would restore state personal income tax exemption credits to avoid $226 million in state tax increases. Michigan lawmakers reached a deal with Governor Snyder to provide a $4,900 personal tax exemption. Likewise, Maryland’s Senate unanimously passed a bill to ensure the state’s personal exemption remains in place.
A revenue-neutral plan proposed by the Vermont Governor would change adjusted gross income (AGI), reintroduce personal exemptions, create a state-defined income deduction, lower marginal rates, and, significantly, replace the current state charitable deduction with a five-percent tax credit for contributions to charitable organizations. Iowa legislators are considering a bill to reduce the top individual tax rate to provide an estimated $1 billion a year in tax relief and automatically couples state tax law to federal changes.
New Jersey lawmakers have introduced perhaps the most robust bill yet to avoid the consequences of the newly imposed federal caps on state and local tax deductions under the tax law. While some states have been looking to California for SALT workaround legislation – empowering taxpayers to make donations to state-run organizations and receive state tax credits – the Garden State is considering authorizing municipalities, counties, or school districts, via ordinance or resolution, to create one or more charitable funds “for specific public purposes,” which must be “materially narrower” than the local unit’s general purpose. Taxpayers would be able to donate to the charitable fund and receive a tax credit against their property tax liability, if the donation is made to a fund in the area where the taxpayer’s property is located. The bill passed the New Jersey Senate this week.
To Disclose or Not to Disclose Donors
Arizona municipalities would be prohibited from requiring any nonprofit organization (charitable and all other nonprofits) to disclose donor information, disclose its Form 990 Schedule B, register as a political action committee, or–in connection with a potential political campaign finance violation–submit to an audit or subpoena, or produce evidence, under legislation that passed the state House last week. The bill, which passed on a mainly party-line vote after extensive debate, seeks to prevent mandated donor disclosures of 501(a) organizations, which include all 501(c) organizations (including social welfare groups, unions, and chambers of commerce), as well as church groups organized under Section 501(d) of the tax code. Going in the opposite direction, the Washington State Legislature passed its version of a bill to require 501(c)(3) nonprofit organizations to disclose donors if the organizations contribute $10,000 in cash or in-kind support to another charitable organization for ballot measure advocacy or if they conduct independent expenditures in excess of $10,000 on ballot measures. Washington Nonprofits has engaged with legislators to express concerns of the nonprofit community about the legislation.
These polar-opposite actions reflect a significant divide on the issue across the country. Last week, the Second Circuit Court of Appeals ruled against Citizens United and its foundation in their attempt to avoid disclosing donors to the New York Attorney General. Some states, including New York, require nonprofits, as part of their annual filings, to provide an un-redacted copy of their Form 990 Schedule B (Schedule of Contributors). In Congress, Representative Peter Roskam (R-IL), a senior Ways and Means Committee member, introduced H.R. 4916, the Preventing IRS Abuse and Protecting Free Speech Act, seeking to bar Treasury from requiring that Section 501(c) groups disclose the identities of contributors. The legislation comes after 50 conservative advocacy groups in November sent a letter to the Hill calling for the elimination of donor disclosures entirely.