Please note, we will take a break from publishing Washington Snapshot while Congress is on recess from April 15-26, as well as during the week of the Leading Together 2019 Conference. Our next edition is scheduled for May 9. However, if any important executive or regulatory developments occur, we will send an update.
In This Week's Edition of Snapshot...
- House Passes Bill to Redesign the IRS
- Bill Related to Opportunity Zones Reintroduced
- The Modern Fight Over Donor Disclosure
- Status of Government Grant and Contracting Reforms
On Tuesday, bipartisan legislation to restructure the IRS, add protections to taxpayers, and upgrade agency technology passed the House by voice vote. The Taxpayer First Act of 2019 (H.R.1957) cleared the House despite some concerns among progressive Democrats about a provision that would codify the IRS's existing free file program. The program partners with private sector companies, such as Intuit and H&R Block, to offer tax preparation at no charge to certain low-to-middle-income taxpayers. Critics of the provision say the IRS should develop and offer its own free filing system.
Among the bill provisions are new limits for private debt collectors that have contracts with the IRS. The language would restrict collectors from going after those whose primary income stems from supplemental security income benefits or disability insurance, or who have an annual income of 200 percent or less of the applicable poverty level.
In addition, the measure would create an independent appeals process for taxpayers as a customer-service improvement. It also includes new protections for victims of tax return identity theft; would allow the IRS to boost its information technology staff by authorizing a faster-than-normal hiring process the agency has previously used; and directs IRS senior leadership to devise a reorganization plan, which would be recommended to Congress.
The legislation is headed to the Senate where it has bipartisan support. The Senate Finance Chairman Chuck Grassley (R-IA) has indicated the IRS legislation most likely won’t need a Finance Committee hearing before the bill moves to the Senate floor. A date for a Senate vote hasn't been set by Republican leaders.
Last month Rep. Mark Meadows (R-NC) reintroduced the Creating Advancement and Personal Improvement in Targeted American Localities (CAPITAL) Act (H.R.1852). The bill would amend the Internal Revenue Code of 1986 to provide for designation of qualified opportunity zones every 10 years.
Created by changes to the tax code in the Tax Cuts and Jobs Act in December 2017, Opportunity Zones are state-designated low income Census tracks eligible to attract private capital to economically distressed communities through a new tax-preferential treatment of capital gains taxes. Each state’s governor could designate up to 25 percent of its low-income tracts for the Opportunity Zone designation. Current law allows designations to expire after 10 years. Rep. Meadows’ bill would allow for the designation of new opportunity zones every 10 years, allowing the policy’s benefits to build and compound rather than expire.
Exclusive from our colleagues at the National Council of Nonprofits.
The need and reason for donor privacy versus confidential disclosure to the government continues to be debated across the country. Recently, the Ninth Circuit Court of Appeals refused to reopen a case that had approved a requirement that nonprofits and foundations submit their list of donors to the California Attorney General. In California and a few other states, nonprofits and foundations are required to submit to the state government the same list of donors that the organizations include in their Form 990s filings with the IRS. Similar confidentiality protections apply to ensure that the disclosures are not made public. At the state level, a new law in Mississippi turns the other way by barring state or local government from requiring any list or record that would identify an organization’s members, supporters, volunteers, or donors. The legislation, reportedly drafted by interest groups outside the state, prohibits public agencies from releasing any information without written permission from all affected individuals and the organization. There is an exception for certain enforcement and litigation purposes. Lawmakers in Michigan and West Virginia previously rejected this type of donor secrecy legislation.
Lawmakers across the country in 2019 have considered numerous proposals to impose new reporting requirements for nonprofits providing services on behalf of governments. They have rejected some abusive mandates, but many bills are still under review. A measure in Utah, ostensibly limited to governmental entities, sought to empower the State Auditor to establish a training program for managing and accounting for governmental funds. The original version of the legislation included a catchall phrase that could have allowed the Auditor to force nonprofits providing services on behalf of the state under grants and contracts to take (and perhaps pay for) the training. The Utah Nonprofits Association fought and won to have the provisions affecting nonprofits removed. A separate bill pending in North Carolina would require all nonprofits with state grants or sub-grants to post conspicuously in their offices the State Auditor's hotline number for anonymously reporting improper governmental activities.
Lawmakers in Colorado agreed to delete mandates in a bill that would have required certain government contractors of professional or technical services to utilize tracking software, at their own cost, that counts the contractor’s employees’ keystrokes and screen shots to verify that hours billed for work under the contract on a computer are legitimate. Maryland and Washington have similar measures pending. Legislation in Hawaii would require nonprofits seeking grants from the State to submit formal tax-exempt certifications, Form 990s, and compliance documents. Finally, a bill on Maryland Governor Hogan’s desk would make technical corrections to last year's law mandating that the state pay indirect costs on state and other non-federal government grants and contracts.