In This Week's Edition of Snapshot…
- President, Congressional Leaders Eye Spending Reductions
- Trump to Nominate Muzinich for Deputy Treasury Secretary
- Updates to IRS Publication 526 Regarding Giving for Natural Disasters
- In the States: SALT Workaround Enacted in New York, Oklahoma Preserves Charitable Giving Incentive
On March 23, President Trump signed a bipartisan omnibus bill into law which authorized the appropriation of $1.3 trillion in funding for the federal government. This bill faced criticism throughout the debate process from conservatives who wanted deeper spending cuts than the legislation included.
Now, House Majority Leader Kevin McCarthy (R-CA) is working with President Trump on what is known as a “rescission package”—a measure that was enacted under the 1974 Congressional Budget and Impoundment Act and would allow Congress to consider a resolution (requiring only a simple majority for passage in the Senate) that would identify specific appropriations to cut from the recently passed spending bill.
The move—which has only rarely been used—comes after criticism of the omnibus from the President during the signing ceremony of the bill, stating, “To prevent the omnibus situation from ever happening again, I’m calling on Congress to give me a line-item veto for a government spending bills." White House officials are reportedly exploring ways to bring back the line-item veto, despite the fact that it was struck down by the Supreme Court as unconstitutional in 1996.
Earlier this week, POLITICO reported that President Donald Trump intends to nominate Justin Muzinich—a former Wall Street banker—to be the deputy secretary at the U.S. Department of the Treasury. The story noted, “Muzinich, currently a counselor to Treasury Secretary Steven Mnuchin, would formally take on the No. 2 role if he is confirmed by the Senate. Initially, Mnuchin appeared unlikely to select a deputy after a pair of candidates did not work out. … Muzinich, a former Morgan Stanley banker and an adviser to Jeb Bush’s 2016 presidential campaign, has spent most of his time at Treasury focused on the tax overhaul that Trump signed last year. As deputy secretary, he’s expected to focus on implementation of the tax plan, housing finance reform, international affairs, and other key Treasury agenda items.”
On a related note, David Kautter (assistant Treasury secretary for tax policy) and current interim head of the IRS, is scheduled to testify before the Senate Finance Committee on April 12. POLITICO Morning Tax reported that Senate Finance Committee Chairman Orrin Hatch (R-UT) said, “‘The hearing will focus on making certain the agency is well staffed and has the technology it needs to serve taxpayers, reduce fraud and keep tax payer information secure…’” Morning Tax also noted that the recent bipartisan IRS restructuring bill (introduced by Reps. Lynn Jenkins [R-KS] and John Lewis [D-GA] may be addressed by Kautter and that, because Finance has not yet received the paperwork for President Trump’s nominee to be the next IRS commissioner—Chuck Rettig—Kautter will likely continue in his dual roles for the foreseeable future.
The Internal Revenue Service (IRS) maintains Publication 526, which provides guidelines and information for taxpayers who wish to claim the charitable deduction. The IRS debuted changes to this publication this week with regard to charitable giving for natural disasters, per the changes on this topic that were enacted under the new tax reform law. The agency cautions that anyone who downloaded or viewed this document prior to March 15 will see outdated guidance, as the updates will apply for the 2018 tax year. The updated version of Publication 526 is available now on the IRS website.
Exclusive from our colleagues at the National Council of Nonprofits.
New York lawmakers over the weekend enacted a $168 billion budget for fiscal year 2019 that includes the first new law designed to get around the federal $10,000 cap on the deductibility of state and local taxes (SALT) enacted in December. The New York FY 2019 Budget creates two new state-operated Charitable Contribution Funds, one for health care and the other for education in New York. Assuming the workaround plan is deemed lawful by the IRS, a question that is in dispute, state taxpayers who itemize deductions will be able to claim these contributions as charitable deductions on their federal tax returns. Those taxpayers may also claim a state tax credit equal to 85 percent of the donation amount for the tax year after the donation is made. The legislation also authorizes school districts and other local governments to create charitable funds that accept donations and reduce local property taxes (via a local credit) equal to a percentage of the donation. Legislators in at least seven other states (California, Connecticut, Illinois, Nebraska, New Jersey, Virginia, and Washington State) are considering, or have considered, similar SALT workaround legislation.
After years of tax cuts and spending austerity, Oklahoma lawmakers reversed course last week and increased taxes by $447 million to fund teacher and other public employee pay raises and additional education spending. One way the Legislature increased revenues was by capping itemized deductions at $17,000, as has been proposed in several other states in recent years. Hawai`i, Kansas, and North Carolina, and now Oklahoma exclude charitable donations from under the cap, meaning that donations to the work of charitable nonprofits continue to be deductible under state tax law.