Note: Snapshot will not be published while Congress has adjourned for Thanksgiving recess.
In This Week's Edition of Snapshot...
Nonprofit Community Letter
Last week, the Council on Foundations joined several other nonprofit organizations in sending the Biden-Harris transition team a letter highlighting the sector’s urgent federal legislative priorities. The letter urges President-elect Biden to support the policies referenced in the July Nonprofit Community Letter that the Council on Foundations and more than 4,000 charitable organizations had signed. With nonprofits around the country continuing to struggle with the ongoing health and economic impacts from this pandemic, at the same time the need for services skyrocketing, it is critical that support for the nonprofit sector be included in any COVID-19 relief package.
Congress' To Do List
Members of the House returned to D.C. this week for the first time since the Nov. 3 election with a significant to-do list before a new Congress is sworn in, including continuing federal funding, a COVID-19 relief package, and addressing several provisions from the last COVID-19 bill that expire in December.
Funding for the federal government is currently set to expire on December 11, 2020. House and Senate Appropriations Leaders have signaled that they are hopeful to reach a top-line agreement soon. Still, even if a top-line agreement is reached, House and Senate appropriators would need to work out the differences among the 12 bills. Last week, the Senate Appropriations Committee released their omnibus legislation. The House Appropriations Committee considered their bills earlier this spring and summer. Still, it remains unclear if the White House will support a broader package or if ultimately Congress will need to pass another continuing resolution to keep the federal government open.
Congressional Democrats and Republicans appear no closer than when they left to reaching an agreement on a COVID-19 relief package. Despite bipartisan agreement that Congress should pass something, the two sides seem far apart on the size and scope of a package. On Tuesday, Speaker Pelosi and Leader Schumer sent a leader to Senate Majority Leader McConnell asking that he work with them to develop a bipartisan, bicameral COVID-19 package.
Also Congress could do something to address several provisions that expire in December, including funding for specific health programs, CARES Act relief provisions, several tax provisions, among others. Some of these items may get included in a funding package, while others may end up being addressed in 2021. The Council on Foundations is especially focused on extending and expanding the $300 above-the-line temporary charitable deduction included in the CARES Act which expires at the end of the year.
House Ways & Means Subcommittee Hearing with IRS Committee Rettig
On Friday, Internal Revenue Service Commissioner Charles Rettig will appear before the House Ways & Means Oversight Subcommittee. In September, Subcommittee Chairman Bill Pascrell, sent a letter to Commissioner Rettig to address several issues, including issues related to general operations within the agency, the impact of COVID-19, and issues of tax compliance.
Department of Commerce
According to a new recently released U.S. Census Bureau report, employment among the nation’s three million post-9/11 veterans was higher from 2014 to 2018 than it was among those who never served in the armed forces.
National Oceanographic and Aeronautical Administration
The Atlantic States Marine Fisheries Commission (ASMFC), in cooperation with and funding from the NOAA Fisheries Office of Aquaculture, will be issuing approximately $675,000 in grants to fund marine aquaculture pilot projects focusing on sustainable aquatic farming techniques and regional business practices to grow U.S. domestic seafood. Researchers at U.S. academic institutions, research laboratories, for-profit companies/firms, nonprofits, and state agencies are all eligible. The deadline for proposals is 5:00 PM EST, January 15, 2021.
Department of Housing and Urban Development
On November 12, HUD announced a major milestone for the Rental Assistance Demonstration (RAD) program, which has now facilitated more than $10 billion in capital investment since the program's inception to improve or replace 140,000 public housing units – the majority of which house extremely low-income families, seniors, and persons with disabilities.
Department of Treasury
- On November 19, Treasury and the IRS issued final regulations under section 512(a)(6) that provide guidance on how an exempt organization, subject to the unrelated business income tax, determines if it has more than one unrelated trade or business, and, if so, how the exempt organization calculates unrelated business taxable income (UBTI). The Tax Cuts and Jobs Act added Internal Revenue Code Section 512(a)(6) which requires tax exempt organizations to calculate UBTI separately for each trade or business activity. This rule prevents organizations from using losses from one unrelated trade or business to offset income from a different unrelated trade or business. However, the statute did not include rules for determining whether an organization has more than one unrelated trade or business or for identifying different unrelated trades or businesses. Treasury and the IRS released interim guidance in Notice 2018-67 in August 2018 and released proposed regulations in April 2020.
- On November 6, the IRS Tax Exempt & Government Entities Division (TE/GE) released its FY 2021 Program Letter with its priorities for the new fiscal year. Among the priorities of note to tax-exempt organizations are:
- Strengthening Compliance Activities: including tax compliance in the global high wealth arena, especially for private foundations, and retirement plans of closely held businesses, such as employee stock ownership plans.
- Maintaining a Taxpayer-Focused Organization: Expand e-filing of Forms 990-series, 8038-CP and 5500-EZ, and continue to work toward electronic determination letter applications.
- Leveraging Technology and Data Analytics: Use noncompliance research and data analytics to detect emerging issues.
- Developing IRS Workforce: Merge TE/GE Knowledge Management into the IRS Knowledge Management platform to encourage information sharing.
- The Department aims to provide guidance on expansions of Opportunity Zones based on census tract revisions by early next year. Treasury supports expanding opportunity zones where those census tracts have grown in population based on the 2020 Census. This could allow states and territories to broaden some of the roughly 8,800 census tracts chosen in early 2018 for capital gains tax breaks. The Census Bureau is set to release the redrawn tracts to the public between February and March 2021, according to the program’s schedule. The Treasury will need to issue the guidance before the boundary changes are released.
- Saturday, November 21, is the deadline for people to claim their CARES Act stimulus payments if they did not:
- file a 2019 federal tax return,
- get an Economic Impact Payment,
- register for an Economic Impact Payment already.
Exclusive from our colleagues at the National Council of Nonprofits.
Charitable Giving Incentives on State Legislative Agendas
State lawmakers are considering expanding charitable giving incentives in their states to spur donations to nonprofits as they continue serving their communities through the pandemic. In Michigan, nonprofits are eager to restore two sets of charitable giving tax credits that the state eliminated nine years ago to make way for business tax cuts. One bill would create a 50 percent tax credit of up to $100 for singles and $200 for couples for charitable contributions to homeless shelters, food kitchens, food banks, and other entities with similar primary purposes. The other would provide tax credits for donations to community foundations. “We know charitable tax incentives work — when they’re gone they do diminish giving,” said Kyle Caldwell, president and CEO of the Council of Michigan Foundations. Both bills have passed the House and are pending in the Senate.
In Utah, nonprofits are asking legislators to consider an above-the-line charitable tax deduction to allow state taxpayers who claim a standard deduction to deduct a certain percentage or dollar amount from their taxable income from qualifying charitable contributions. “The drop in charitable giving – caused by job losses and economic uncertainty – comes just as demand for help is skyrocketing,” writes Kate Rubalcava, CEO of the Utah Nonprofits Association. “Sadly,” she continues, “this will undoubtedly result in more nonprofits closing their doors and many more left unable to meet the rising demand for their services.” The state association of nonprofits is circulating a sign-on letter explaining that an above-the-line, or universal, charitable deduction would be a “way to mitigate the pandemic’s economic toll on nonprofits.”
Employers, Individuals Alerted to Unemployment Fraud
Nonprofits take notice: Investigators and law enforcement departments have seen an increase in fraudulent activities regarding unemployment insurance claims. Criminals reportedly are using personal information such as social security numbers stolen by data breaches, fake email scams, and other illegal activities to file fraudulent unemployment claims. When that happens, states are sending invoices to employers, including nonprofits, to cover those costs. Reimbursing nonprofits and other employers should be particularly wary. They should carefully review the detailed bills from their state workforce agency each pay period. The U.S. Labor Department’s Office of Inspector General urges employers and individuals to immediately notify authorities if they become aware of any of these activities. The U.S. Department of Labor released a letter (UIPL 16-20, Change 2) on monitoring for suspicious activities.