In This Week's Edition of Snapshot...
- The White House
- House Committees’ Infrastructure Principles Unveiled
- House Ways and Means Committee
- House Energy and Commerce Committee
- Department of Treasury
- Department of Health and Human Services
- Department of Agriculture
- Department of Homeland Security
- Happening in the States
2020 State of the Union
President Donald Trump delivered the annual State of the Union speech to Congress on February 4.
President Trump plans to release his 2021 budget request on February 10, kicking off spending negotiations with Congress for the fiscal year that starts October 1. Once this fiscal “wish list” is released, appropriators on Capitol Hill will start scheduling hearings to hear from top Trump Administration officials about the funding needs of federal agencies. This is the beginning of the long road ahead in the federal budget process.
On Wednesday January 29, the House Democrats unveiled their framework of a $760 billion, five-year infrastructure plan, followed by a Ways and Means Committee hearing signaling the start of discussions on how to pay for these federal investments. Infrastructure in this context generally means improvements or new construction of roads and bridges, passenger rail, airports, wastewater and broadband expansion in rural areas, and incorporating ways to address climate impact issues like fuel options for zero emissions vehicles.
On the same day, the Ranking Member of the House Transportation and Infrastructure Committee, Rep. Sam Graves (R-MO), outlined infrastructure principles that represent Republican priorities to include the sustainability of the Highway Trust Fund, technology innovations, and the needs of rural communities.
Both sides have signaled the need for Congress to work in bi-partisan fashion to improve the nation’s infrastructure.
House Ways and Means Democrats have scheduled a hearing for February 11 to examine how the regulatory process may have helped companies sharply reduce their tax bills in the wake of the 2017 tax overhaul. The hearing will also delve into how corporate audit rates compare to those faced by lower-income individual taxpayers. The Committee’s Democrats want to examine differences between IRS audit rates on large corporations and those who claim refundable credits, including the Earned Income Tax Credit.
The House Energy and Commerce Committee's Health Subcommittee will hold the first Congressional hearing on the coronavirus outbreak next week. The Centers for Disease Control (CDC) Director Robert Redfield is set to appear.
More Clarification Possible on Opportunity Zones?
According to Bloomberg Tax, the Internal Revenue Service is considering clarifying penalties related to investor activity in tax-advantaged Opportunity Zones. Investors must prove every six months that 90% of their assets are held in property that meets a number of requirements, such as the property being located within the designated zone and is “substantially improved,” if not built up from scratch. If they fail the test, they can face a penalty calculated using amounts involved in the fund and the IRS tax underpayment rate, which is based on a low percentage periodically determined by the Treasury Department, plus 3%.
New Open Data Requirement
The open data requirements of the Taxpayer First Act (H.R. 3151) are now in effect. The public will be able to find helpful nonprofit information intending to lead to increased transparency, reduced fraud, and greater innovation. Under the law, nonprofits must file their tax returns electronically, and the IRS must release the returns to the public in a searchable format.
Unrelated Business Income Tax (UBIT) Proposed Regulations
The White House is reviewing rules for how nonprofits should calculate taxes owed on income they earn from activities that diverge from their core mission. UBIT applies to any activities a nonprofit engages in that aren’t related to the tax-exempt purpose of the organization. The White House Office of Management and Budget received proposed regulations from the IRS on February 3 that supposedly include details on a provision in the 2017 tax law (Pub. L. No. 115-97) that requires nonprofits to calculate unrelated business income tax (UBIT) separately for each trade or business. Foundations may be affected by these regulations if they have employees working in any businesses unrelated to their core mission.
HHS Secretary Alex Azar declared a public health emergency in the United States in an effort to contain the presence of the new coronavirus. On February 3, the White House ordered the closure of the U.S. border to foreign nationals who have recently been in China. A mandatory 14-day quarantine was implemented on February 5 for any arriving passengers coming from Hubei Province where the epicenter of the outbreak is in the city of Wuhan. Screening is also mandatory for any passengers returning to the United States who had been to mainland China. The emergency declaration lets the U.S. Food and Drug Administration (FDA) expedite the development of drugs, vaccines and diagnostic tests in response to the outbreak and unlocks more resources for states.
The World Health Organization (WHO) declared the coronavirus a global health emergency last week. Philanthropic funders looking for ways to respond to the global crisis can find information on the Council’s website.
The Department will host its annual Agricultural Outlook Forum February 20 – 21 with top USDA officials and industry leaders. The day prior, February 19, the Secretary’s Office of Partnerships and Public Engagement will convene USDA agencies and private partners to discuss departmental strategic priorities and identify partnership opportunities for support of rural and underserved communities through the Centers of Community Prosperity initiative, launched in October 2019. Philanthropic funders are considered important stakeholders in rural community development and are welcome to attend these briefings.
USDA also released a third and final round of tariff aid on February 3, for farmers suffering from the effects of trade retaliation related to the imposition of trade tariffs in 2019 by President Trump. The Administration paid about $11 billion last year to eligible producers for their 2019 financial losses. The new bailout funds are expected to bring the total closer to $14.5 billion.
The Federal Emergency Management Agency (FEMA) is seeking applicants for its Youth Preparedness Council. The council offers an opportunity for youth leaders to serve on a distinguished national council and participate in the Youth Preparedness Council Summit in Washington, D.C. Selected youth complete a preparedness project of their choosing while learning about disaster preparedness from FEMA leadership and other national organizations. Students in 8th- 11th grades are eligible to apply.
Direct questions to FEMA’s Office of External Affairs, Congressional and Intergovernmental Affairs Division at (202) 646-3444 or FEMA-IGA@fema.dhs.gov.
Seattle-area companies, including Amazon, Microsoft, Expedia, and Costco Wholesale Corporation, have expressed support for a proposed business tax to combat the region’s homelessness crisis. A Washington State bill (HB 2907 - 2019-20) released last week would authorize King County, home to Seattle and the headquarters of these companies, to impose a levy on big businesses with employees who make more than $150,000 a year. The new revenue would be earmarked for affordable housing, homelessness services and public safety.
Exclusive from our Colleagues at the National Council of Nonprofits
Trend Spotting: Reforming Government Grants and Contracts
After years of advocacy on the subject, it appears that 2020 may be the year that state governments take seriously the need to treat their nonprofit partners fairly when reimbursing them for services performed in communities. In 2014, the federal government adopted grants reforms in the groundbreaking OMB Uniform Guidance. Those regulations mandate that nonprofits must be paid their indirect costs and set rules for how to negotiate rates or claim a de minimis rate. Pending federal rulemaking seeks to clarify and strengthen this mandate. Until recently, however, state and local governments have mostly ignored the Uniform Guidance when issuing grants and contracts that dictate no or very low indirect cost reimbursement rates. The result to nonprofits often is multiple government grants that set wildly inconsistent reimbursement rates for work performed on governments’ behalf, creating administrative challenges and added costs. Those costs – for things like accounting services, building repairs, and other needed managerial and administrative functions – must be covered somehow, and nonprofits often turn to foundations and other funders to fill the gaps.
The status quo, acceptance of unfair and unjustifiable rates, appears to be changing. Legislation before the DC City Council aims to solve the problem by requiring the city to pay any federally negotiated indirect cost rate, to pay a minimum rate of 10 percent, or to negotiate a single rate (citywide) with nonprofits. At a hearing last week, dozens of witnesses, including the National Council of Nonprofits and three funding organizations, testified to the urgent need for the legislation. If the statement of the Committee Chair is any indication, the bill could be enacted in the next few months and many other jurisdictions could take up grants reform with DC as a model. Legislators in California, Delaware and Maryland are already expected to pursue grants and contracting reform this year.