In This Week's Edition of Snapshot…
- We Need Your Input on UBIT!
- Appropriations Update
- Rettig Takes Over as New IRS Commissioner
- 2018 Elections: Attorneys General
- 2018 Ballot Measures of Interest
Many foundations and other charitable organizations are going to face major changes when filing taxes this year due to unrelated business income tax (UBIT) modifications made under the 2017 tax reform.
Under current law, any charity—including foundations—that provides parking or transportation benefits to employees will owe UBIT on the value of those benefits when filing taxes this year.
The Council has pushed-back against this provision, arguing that 1) the premise of charging UBIT on activities that do not generate income is, fundamentally, an inappropriate use of this tax structure, and 2) with the lack of timely guidance, the expectation of compliance by charities for this tax year is unreasonable.
Additionally, charities with more than one stream of unrelated business income will be required to calculate those separately, or “silo” them, for the purposes of determining how much is owed in UBIT. In August, the U.S. Department of Treasury/IRS released proposed regulations for this provision. The Council is currently in the process of drafting comments.
In our conversations with policymakers regarding both issues, we have learned that they want examples. In order for our advocacy efforts on behalf of the sector to be effective, we need to hear from you.
Let us know! The survey should not take longer than seven minutes. Our input with lawmakers relies on your feedback, and we need that to make our case. Please send us an email (email@example.com) or give us a call at 703-879-0629.
On Tuesday, the Senate passed a “minibus” spending bill—a term used to describe when Congress packages two or more appropriations bills together. According to the Wall Street Journal, “The Senate passed its second appropriations bill in five days on Tuesday, boosting spending for the next fiscal year for the Defense Department [DoD], medical research and the opioid crisis, and funding other departments through Dec. 7 to avoid a government shutdown before the midterm elections. … The bill funds the departments of Defense, Education, Labor, Health and Human Services and related agencies and makes up much of discretionary spending that Congress appropriates. It is the first time in 22 years that the bills are on track to make it to the president’s desk by the end of the year. ‘These milestones may sound like inside baseball, but what they signify is a Senate that is getting its appropriations process back on track,’ said Senate Majority Leader Mitch McConnell (R-KY) on the chamber’s floor as he encouraged lawmakers to support the bill.”
Last week, Congress sent the first package of appropriations bills to President Donald Trump’s desk and is awaiting his signature. That minibus included the Energy and Water, Legislative Branch, and Military Construction-Veterans Affairs spending bills. And while the DoD spending package includes a continuing resolution (CR) through Dec. 7, for all of the other appropriations bills that are not signed into law by Sept. 30, lawmakers continue to work on completing some of those. According to a POLITICO Pro Budget & Appropriations, “…spending leaders are still trying to keep afloat the legislation, H.R. 6147 (115), that includes Agriculture, Financial Services, Transportation-HUD and Interior-Environment. ‘We are very close to an agreement,’ Senate Appropriations ranking member Patrick Leahy (D-Vt.) said on the floor today. ‘Most of the funding issues have been resolved, but we are hung up on controversial poison pill riders. We should not delay this package over unrelated policy matters that have no place on must-pass spending bills.’”
One of the “poison-pill riders” contained in H.R. 6147 is anti-Johnson Amendment language—the Johnson Amendment prohibits 501 (c)(3) organizations from participating in, or intervening in (including the publishing and distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office. In order for Congress to pass this minibus, it is likely that the anti-Johnson Amendment language and other controversial riders would be dropped.
Last Wednesday, Chuck Rettig was confirmed as the new IRS commissioner. The Senate voted 64-33 to approve Rettig’s nomination. Sen. Ron Wyden (D-OR), the ranking member of the Senate Finance Committee, along with 30 other Democrats and two Independent senators, voted against Mr. Rettig’s nomination.
POLITICO went on to note that, since the IRS and the Office of Management Budget (OMB) are still working on several important regulations for the 2017 tax overhaul, the Commissioner will play a key role in this process as taxpayers are still seeking clarity on some provisions before the start of the next filling season.
Among the IRS commissioner’s priorities are the improvement of data security and combating tax-related identity theft, as well as working with Congress to increase the agency’s funding for FY 2019.
Exclusive from our colleagues at the National Council of Nonprofits.
Races for attorney general often go overlooked, but their effect on foundations and nonprofits should not be underestimated. This year 31 offices are up for grabs out of the 43 states that directly elect the official. As the “chief legal advisor and chief law enforcement officer of the state,” according to Ballotpedia, the official sets enforcement priorities and issues legal advice to the executive and legislative branches, as well as defends and prosecutes litigation on behalf of the state. Often the Attorney General is responsible for overseeing foundations and nonprofits, whether directly by state statute or under inherent authority to prevent the misuse of charitable assets. For example, the next New York Attorney General will be charged with overseeing an estimated $150 billion worth of assets in the nonprofit sector in the state and take over the investigation into alleged mismanagement of the Trump Foundation for engaging with the political campaign of then-candidate Trump.
- Colorado: Voters this November are being asked to decide the fate of 13 ballot measures, some of which affect campaign rules and other community concerns. Initiative 173, if approved, would enable candidates competing against self-funded opponents to take donations five times the current limits. Other measures would raise sales and use taxes to fund transportation and hike income taxes to increase education spending. The Legislature proposed six constitutional amendments for voter consideration, including three proposals to shift post-2020 Census redistricting from the Legislature to independent commissions.
- Florida: Amendment 10 provides for the public election of county-level officials for tax collector, property appraiser, supervisor of election, sheriff, and clerk of circuit court and changes the legislative calendar. Nonprofits have long complained that locally elected tax assessors and appraisers have an incentive to deny tax exemptions to placate anti-tax advocates.
- Nebraska: Initiative 427 would expand Medicaid eligibility to cover single adults and couples without minor children who cannot qualify for Medicaid now, as well as parents and disabled people with incomes up to 138 percent of the poverty level — $16,753 for a single person or $34,638 for a family of four. The initiative was cleared for the ballot last week when the state supreme court threw out a challenge by former lawmakers.