In This Week's Edition of Snapshot…
- House Committee Sets Series of Tax Reform Hearings
- White House Sends Rescissions Proposal to Congress
- IRS Debuts New EO Search Tool
- Form 990s for Calendar-Year Organizations Due Soon
- In the States: Vermont Considers Repeal of Charitable Deduction; Municipal Tax Assessor Targets Nonprofit Property Exemption
House Ways and Means Chairman Kevin Brady (R-TX) and Tax Policy Subcommittee Chair Vern Buchanan (R-FL) announced yesterday a series of hearings on the recently passed tax reform legislation. The hearings will examine “how tax reform is growing the U.S. economy, creating more jobs here at home, and increasing paychecks for hard-working Americans.”
The first hearing of this series is scheduled to take place next Wednesday, May 16, at 10:00 a.m. ET.
On Tuesday, President Donald Trump sent Congress a package to rescind $15 billion that had been previously authorized but not yet spent. According to The Wall Street Journal, “President Donald Trump’s proposal to roll back $7 billion from the popular Children’s Health Insurance Program [CHIP] drew immediate bipartisan concern Tuesday, an indication of the hurdles the effort to cut federal spending will face in the Senate. The proposed cuts to the children’s health program quickly emerged as the most contentious element of Mr. Trump’s request…”
The Journal goes on to note that the White House has been exploring ways to cut federal spending since President Trump signed a $1.3 trillion omnibus spending package into law in March. This could be the first of multiple rescissions requests from the administration. Roll Call noted, “The initial request doesn’t include any money from the $1.3 trillion omnibus spending bill President Donald Trump begrudgingly signed into law in March. But, the senior administration official hosting a call with reporters said the White House does plan to send such a request later this year. ‘We plan to follow up with another rescissions package down the line that does address the omnibus bill, but that is not in this package,’ the official said.”
Yesterday, the House took the president’s rescissions package and drafted it into formal bill language. If and when it passes the House, the bill should be fast-tracked in the Senate, bypassing a potential 60-vote threshold to begin and end debate in the upper chamber; however, according to POLITICO, Democrats argue that President Trump's bill would require the full 60 votes because it targets mandatory funding, not solely discretionary funding. See this POLITICO Pro DataPoint for a general explanation of the Congressional rescissions process.
This week, the Internal Revenue Service (IRS) launched a new online tool to help users find information about a tax-exempt organization’s (EO) federal status: the Tax Exempt Organization Search (TEOS). This new tool replaces EO Select Check—which had been in use since 2012—with a more user-friendly tool that offers information on an organization’s tax-exempt status, allows users to check if an organization is eligible to receive tax-deductible contributions, and features images of recently filed Form 990s, including Form 990-Ts filed by charities.
On Wednesday, the Internal Revenue Service (IRS) issued a reminder for tax-exempt organizations operating on a calendar-year that their Form 990-series information returns will be due on May 15. Generally speaking, tax-exempt organizations are required to file their Form 990s on the 15th day of the fifth month after their financial-/tax-year ends.
The IRS also reminded organizations to exclude all personally identifiable information about donors (such as social security numbers) from their reporting, given that the IRS and the filing-organization must make Form 990s public accessible.
Exclusive from our colleagues at the National Council of Nonprofits.
Vermont Considers Repeal of Charitable Deduction
A tax reform bill in Vermont looks to mitigate the impact of the federal Tax Cuts and Jobs Act, but in doing so threatens charitable giving in the state. The legislation, among other things, would eliminate the itemized deduction for charitable giving and replace it with a five-percent tax credit. The Governor first proposed the repeal-and-replace approach, but the House further restricted the incentive. The House-passed bill would impose a cap on the tax credit at donations of $10,000 (for a maximum $500 credit). Under current law, an upper-income taxpayer who donates $100,000 can reduce state tax liabilities by $9,400 (9.4% tax bracket); under the proposal, the tax incentive would be capped at $500. A nonprofit community letter signed by more than 30 organizations expresses strong opposition to the reduction in the giving incentive during the process. Apparently in response to the advocacy letter, the Senate Finance Committee voted for a revised version of the measure to remove the cap and allow for unlimited contributions to be eligible for the charitable tax credit. The bill now goes to another committee and all changes are expected to be negotiated in conference and with the Governor.
Municipal Tax Assessor Targets Nonprofit Property Exemption
In an move ostensibly to expand the tax base, a Connecticut municipal tax assessor has issued revocations of dozens of property tax exemptions for nonprofit organizations. Norwich Assessor Donna Ralston claims that the organizations’ property “can be considered a tax-exempt use by the state and the feds, and still be a taxable use in the city.” Ralston is refusing any presumption of automatic exemption despite organizations receiving exemption from filings with the state and federal governments for years, sometimes decades. Tax revenues from the revocation pale in comparison to the economic impact nonprofits bring to the area according to a coalition of nonprofit organizations. Local arts and culture nonprofits produced an estimated $168 million in economic impact in the area in 2015. Gian-Carl Casa, president and CEO of the state association of nonprofits, CT Community Nonprofit Alliance, said this may be a broader trend in Connecticut.