In This Week's Edition of Snapshot…
- Council Sends Letter to the Hill on UBIT Concerns
- Rettig Comments on Johnson Amendment, SALT Workarounds in Senate Finance Hearing
- President Trump Nominates Judge Kavanaugh to Replace Justice Kennedy
- Council and FEMA Announce New Partnership to Assist in Disaster Coordination
- New W-4 Form Receiving Pushback
- In the States: Localities Increasingly Deny Property Tax Exemption, States Preparing for the 2020 Census
Today, the Council sent a letter addressed to members of Congress urging them to join us in advocating for the delay in implementation of the two new UBIT provisions included in the 2017 tax code overhaul. The letter asks legislators to take a stand for charities in their community and to call for Treasury to 1) delay the implementation of these provisions, 2) issue official guidance to answer the outstanding questions, and 3) provide a transitional period following the release of guidance. The Council also stated its support for Rep. Mike Conaway’s (R-TX) legislation—the Nonprofits Support Act (H.R. 6037) , which would repeal the UBIT provisions for tax-exempt organizations—and encouraged members of Congress to cosponsor this bill.
On June 28, President Trump’s nominee for IRS commissioner, Chuck Rettig, testified before the Senate Finance Committee. Facing questions from Committee members regarding his would-be approach to the top position at IRS, Mr. Rettig commented on several issues that have implications for the charitable sector.
Senator Ron Wyden (D-OR) asked Mr. Rettig about whether he would continue to enforce the Johnson Amendment (i.e. the prohibition on electoral activity by 501(c)(3) organizations), despite previous assertions from the Administration that this provision would not be enforced under their watch. Mr. Rettig responded saying the he would “follow the law” and pledged “impartial, non-biased operation of the Internal Revenue Service.”
On issuing regulatory guidance on the new tax laws, Mr. Rettig promised that he would work to provide “clear, timely, [and] succinct guidance.” The top IRS nominee also expressed skepticism toward state programs to utilize the charitable deduction as a component of workarounds to the new limitations on the federal state and local tax (SALT) deduction.
In additional news from the Senate Finance Committee: Jennifer Acuña—whose previous roles include the Committee’s senior tax counsel and tax counsel for the Ways and Means Committee—stepped into the chief tax counsel position for the Finance Committee, replacing Mark Prater following his departure for PricewaterhouseCoopers. Additionally, Jeff Wrase will be stepping into the position of staff director, taking over for Jay Khosla, who now serves the chief economic policy counsel for Senate Majority Leaders Mitch McConnell (R-KY).
On Monday, President Donald Trump nominated Judge Brett Kavanaugh to replace retiring Justice Anthony Kennedy on the Supreme Court. Judge Kavanaugh is currently a federal appeals court judge and formerly worked as an aide to President George W. Bush. While Judge Kavanaugh’s nomination will only require 51 votes to end debate, (as opposed to the usual 60) due to the Senate changing its rules last year, there is still the potential for a tough road to confirmation. According to the Wall Street Journal, “Republicans have 51 seats in the 100-member Senate, but with Sen. John McCain (R-AZ) fighting brain cancer in Arizona, they are currently operating with only 50 lawmakers to the Democrats’ 49. A simple majority is required to confirm the nominee, with the vice president able to break a tie.”
The Senate recently changed its schedule to be in session during August—when Congress has traditionally taken a break and the House will be out of session—potentially giving the body more time to consider Judge Kavanaugh’s nomination. However, Congress still has 12 appropriations bills to pass before the start of the 2019 fiscal year on Oct. 1, 2018. Additionally, Judge Kavanaugh’s long paper trail may push back his confirmation hearings. The Journal noted, “Republicans have said they hope to confirm Judge Kavanaugh in a time frame comparable to Mr. Trump’s first pick, Justice Neil Gorsuch, who was confirmed in 66 days last year. The White House’s aim is to win confirmation in time for Judge Kavanaugh to join the high court when it meets in late September to review petitions for the new term. But lawmakers said Judge Kavanaugh’s long paper record may take longer for them to review. He served for the last 12 years on the appeals court, and before that was involved in controversial political work, including writing much of independent counsel Kenneth Starr’s report that prompted the impeachment of former President Bill Clinton. Mr. [Chuck] Grassley [R-IA] said it was too early to say when the hearings would begin. Sen. Dianne Feinstein of California, the top Democrat on the Judiciary Committee, said she anticipated the hearing would take place in September, after Labor Day.”
This week, the Council announced a new partnership with the Federal Emergency Management Agency (FEMA) to allow for increased knowledge sharing around disaster response and relief. This collaboration will allow for increased efficiency and coordination of disaster relief efforts. The Council serves as a resource for philanthropic organizations during disasters as well as a liaison to much-needed government resources. “‘We’ve seen how powerful it can be when philanthropy and the government work together, and we’re excited to partner with FEMA to improve our efforts,’ said Stephanie Powers, Council vice president of policy and partnerships. ‘We have seen too many communities struggle to rebuild after a hurricane or flood while organizations unknowingly duplicate efforts. Through collaboration and consistent communications, we can best aid these communities during the ongoing recovery duration.’”
This week, POLITICO Morning Tax reported that the 2019 IRS Form W-4 is receiving pushback from stakeholders after a draft was circulated. According to the article, “Critics of the draft 2019 W-4 form that the IRS released last month are beginning to make their opinions known on the employee withholding document. Like the agency has with other forms, the IRS has redesigned the W-4 to reflect changes from the [Tax Cuts and Jobs Act] TCJA. ‘It seems to me that the form is rather complicated,’ said Cindy Hockenberry, director of tax research and government relations for the National Association of Tax Professionals. That could cause exemption confusion, she said.”
Exclusive from our colleagues at the National Council of Nonprofits.
Connecticut municipalities have arbitrarily denied property tax exemptions to community nonprofits in 41 towns across the state, according to a member survey conducted by the CT Community Nonprofit Alliance, the nonprofit association in the state. Approximately two thirds of nonprofits responding to the survey acknowledged that they had been recently denied tax exemptions on their properties despite having a history of receiving tax exemption and having no changes in use. Municipal tax assessors reportedly are increasingly targeting nonprofit property for taxation to fill budget gaps caused by decreased state funding. One locality counters that half of the denials (18 out of 36) resulted from nonprofits failing to submit the proper forms. Regardless, no notice or clarifications of the denials were given to the nonprofits when the denials were ordered. The General Assembly had to pass last-minute legislation during the waning hours of session to protect organizations that had been denied. The CT Nonprofit Alliance is looking for better definitions and protections in the next session.
While the decennial census mandated by the U.S. Constitution is a federal responsibility, states are taking action to ensure their interests are protected and their citizens counted. Last month California Governor Brown signed the Budget Act of 2018 that provides unprecedented state funding of $90.3 million for 2020 Census planning and outreach in the state. The amount appropriated is $50 million more than the Governor initially proposed and reflects the advocacy work of more than 100 organizations, including CalNonprofits, the state association of nonprofits. According to a news release from the Census Policy Advocacy Network of California, “This historic state investment is in direct response to the federal administration’s negative rhetoric against California’s diversity and the effort to depress participation in the 2020 Census by adding an untested citizenship question to the questionnaire form.”
Eight other states have appropriated funding ranging from $115,000 to $5 million for general census support, additional state personnel, community engagement, and matching funds. Forefront, the state association of nonprofits and foundations in Illinois, helped secure $1.5 million for “community providers statewide to encourage census participation” under the Illinois budget. The Michigan Nonprofit Association is expected to receive $500,000 directly under the state budget to aid in securing a fair, accurate, and complete count.
Delaware leaders are sponsoring a resolution to raise concerns about the importance of the 2020 Census and to establish a complete count commission. Delaware joins seven other state legislatures looking to establish state-level complete count commissions and an additional four governors who issued executive orders to support the census. Nonprofits are encouraged to join complete count commissions/committees and engage with census work in their communities.