In This Week's Edition of Snapshot...
- 2021 Budget and Appropriations Process
- Coronavirus Funding Action
- Department of Treasury
- Department of Education
- Department of Health and Human Services
- Department of Homeland Security
- Department of Defense
- Department of Veteran Affairs
- Federal Reserve Bank – Philadelphia
- Happening in the States
When Congress returned this week from the President’s Day holiday break, many of the subcommittees of the House Committee on Appropriations and other relevant authorizing committees dove into hearings with Cabinet Secretaries and their budget staffs who are called to the Hill annually to explain and defend the president’s budget request. President Trump unveiled his 2021 budget request -- A Budget for America's Future -- on February 10. Testifying this week – the Secretaries of Health and Human Services, Education, Transportation, Energy, and Acting Secretary of Homeland Security and the Administrator of the Small Business Administration.
Congressional appropriators, House and Senate both, plan to work through the weekend on a multibillion-dollar emergency package to combat the coronavirus, aiming for passage as early as next week. It is being reported by many Capitol Hill news outlets that bipartisan discussions on a final figure are getting “close.”
The Internal Revenue Service has been busy:
- The recent IRS and Treasury Notice of Proposed Rule Making related to Sections 162, 164 and 170 of the tax code has helped to clarify tax treatment of contributions by businesses to certain charitable organizations in light of the 2017 tax law’s $10,000 cap on state and local tax (SALT) deductions. Specifically, the guidance has provided a safe harbor that allows businesses making charitable contributions the choice to treat those contributions as an ordinary and necessary business expenses rather than utilizing the charitable deduction provisions which may be disallowed if a state or local tax credit is received in return. The Notice clarified that a reduction in state or local tax liability is itself a business purpose and therefore the charitable contribution has a direct relationship to the business. Bloomberg Tax reports that groups representing schools and scholarship funds have raised concerns about this guidance although they said the rules are a step in the right direction.
- On February 26, the IRS's Low Income Taxpayer Clinic (LITC) Program Office issued its annual program report (PDF). The report describes how LITCs provide representation, education, and advocacy for taxpayers who are low income or speak English as a second language (ESL) and need to resolve tax problems with the IRS, such as audits, appeals, and tax collection disputes. Through the program, IRS awards matching grants of up to $100,000 per year to qualifying organizations. For the 2020 grant year, $11.6 million in matching grants was awarded to 131 recipients across the country for development, expansion or continuation of LITCs. Find information about LITCs by geographic area in IRS Publication 4134.
- The IRS is nearly done with proposed rules under the 2017 tax law that required nonprofits to report income streams separately that are unrelated to their main purpose. Prior to the overhaul, tax exempt organizations could group income from things like basketball tickets, rental property, and corporate partnerships all in one bucket. The Section 512(a)(6) change—often referred to as siloing or basketing—is aimed primarily at large organizations, such as universities, that could have many income streams. The new rule has introduced complexity for nonprofits that employ volunteers in multiple areas of unrelated business or business unrelated to the nonprofits’ core mission.
- For a summary of new tax laws affecting tax exempt organizations, check out this IRS webpage posted on January 28.
- This week the IRS announced it is establishing a new cross-agency position to police people promoting aggressive tax maneuvers and named Brendan O'Dell to the post on a temporary basis. The role is meant to ensure coordination of ongoing investigations and develop new approaches to identify promoters of aggressive tax arrangements. The marketing of abusive tax deductions for donating land through conservation easements is one example of something that will be under the microscope.
Education Secretary Betsy DeVos announced on February 19 that 190 institutions have been selected to participate in a new pilot program that would boost private sector involvement in the Federal Work-Study program. The experimental program would allow more students to use Work-Study funds working for private sector employers through internships, apprenticeships, and other “work-and-learn” arrangements. During the 2016-2017 award year, more than 600,000 students at more than 3,000 colleges and universities participated in the program, but the department says fewer than one percent supported off-campus employment with private employers.
President Trump’s request to Congress proposes to cut the 2021 budget for the Federal Work-Study program by more than half - $500 million, down from the nearly $1.2 billion that Congress appropriated last year.
Office of Career, Technical, and Adult Education
OCTAE announced a new initiative to build the capacity of community colleges to improve career and technical education credential attainment rates among youth and adults enrolled in associate degree programs. The Pathways to Credentials project launched its technical assistance phase, offering colleges the opportunity to apply for free customized technical assistance on stackable credential program design. A cohort of up to 10 community colleges will be selected. Find details and the application form at https://cte.ed.gov/initiatives/credentials and you can also register for a March 5 informational webinar. Applications are due April 2.
HHS Secretary Alex Azar confirmed on February 27th that the Administration is planning to transfer $136 million for its coronavirus response from substance abuse and mental health programs, the low income energy assistance program, the National Institute of Health, children and family services, aging and disability programs, and various Center for Disease Control programs, including AIDS/HIV prevention. The Centers for Disease Control and Prevention has already tapped $105 million to combat the infectious disease.
Federal Emergency Management Agency
Did you know that FEMA has a Philanthropy Team in the US Virgin Islands that provides up-to-date, relevant, and philanthropic-based disaster recovery resource information that can help connect philanthropy funders with the islands’ ongoing unmet needs? This federal team focuses on identifying opportunities, creating partnerships, and supplying capacity building opportunities for those communities still making the gradual comeback from the devastating damage of back-to-back Hurricanes Irma and Maria in 2017. They publish a newsletter for philanthropic audiences that shares their work and the needs of these communities for private philanthropic investment and grantmaking. To subscribe to the “Pursuing Possibilities with Philanthropy” newsletter, email FEMA-USVI-Philanthropy@fema.dhs.gov.
The Pentagon has adopted five ethical principles governing the department's usage of artificial intelligence. These are intended to position the United States as the leader in the ethical and lawful use of artificial intelligence. The principles, which will apply to combat and non-combat areas, were derived after more than a year of consultations with AI experts in the private sector, government, academia and with the public, the Pentagon said.
Applications are open through March 17 for qualified community organizations to apply for millions in adaptive sports grants to support therapeutic and recreational reintegration programs for veterans with disabilities. All applications must be submitted to Grants.Gov. The VA will announce awards based on a competitive selection in fall 2020.
Reinventing Our Communities is a national biennial conference series hosted by the Philadelphia Fed and other cosponsors. This year's conference theme—Equity InSight—will highlight innovative approaches to reducing disparities in employment, housing, and wealth creation. The event will take place May 27–29 in Philadelphia. Register now to join community development experts, policymakers, and thought leaders to dialogue about ways in which communities can cultivate economic opportunity and mobility. Questions? Email firstname.lastname@example.org or call 215-574-6458.
Exclusive from our colleagues at the National Council of Nonprofits.
Lawmakers across the country are looking to raise revenues or cut taxes through reforms to property tax exemptions. Most directly affecting nonprofits is a measure under negotiations in Utah that could result in much stricter rules for granting property tax exemption to frontline charitable organizations. A measure in Nebraska would reduce property valuation taxation by a percentage each year and adjust the school funding formula accordingly. Although the bill would not affect nonprofits directly – as generally exempt from property taxes – nonprofits have expressed concern about the negative impact on the state’s treasury and programs it funds. The Nonprofit Association of the Midlands (NAM) wrote: “As we’ve seen before, when the state cuts services for programs such as K-12 education, Nebraskans turn to nonprofits to help meet their needs. For this reason, NAM has concerns about the overall impact of LB 974 on the nonprofit community and its potential impact on the fiscal health of the state.”
In Illinois, Governor Pritzker called for lower property taxes, and North Dakota Governor Burgum proposed growing the state Legacy Fund and using a portion of the earnings for property tax relief. The New York State Senate recently passed a bill calling for a study on the impact of a high concentration of tax-exempt property has on a municipality’s economic viability. The bill now moves to the Assembly for consideration. And, a lawmaker in Idaho introduced a bill to completely eliminate property taxes and increase sales taxes to 11 percent. He admitted he doesn’t believe it will move this year, stating, “I call it a thought grenade; we threw it out there, wanted to see how it went and how it works and what the problems are.”