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>> Federal: What a Will be in the Bill?
>> Federal: What Comes Next?
>> Federal: That Pesky Budget
>> Federal: Roadmap for Action – December
>> Consider This: Unintended Consequences
>> Top Reads: Final Senate Bill Provides Little For Nonprofits
This week, both the House and Senate approved motions to advance their respective tax bills in what is known as a conference committee, where lawmakers from both chambers will iron out their differences to come to an agreement on a final bill. You may be asking, what’s a conference committee? Well, we’re here to help you understand.
The two tax bills that passed the House and Senate have a lot of differences, and only one version can go to the President’s desk for a signature. So, a conference committee serves as a forum for lawmakers from both chambers and both sides of the aisle to reconcile the differences between their respective tax bills and come out with a final bill that can pass both houses of congress. It’s part of the “regular order” that Republican lawmakers have been promising for the past couple years.
Leaders in both chambers choose conferees – lawmakers who will take part in the negotiations – and these folks will negotiate with what they can stand to give up and what they can’t stand to lose. We expect an initial meeting of the conferees to happen this week with negotiations (mostly behind closed doors) playing out over the next few weeks. As of this writing, the President expects a bill on his desk no later than December 19, though Congress could take until Christmas to get something done. And as always, things can change at any minute, so stay tuned…
The Senate passed their version of H.R. 1, the Tax Cuts and Jobs Act, by 51-49 in the early morning hours on Saturday, December 2. The bill included several identical provisions (but for the sunset dates) that would affect the charitable sector. These provisions are all but certain to be included in the final product because conferees only negotiate the differences between the two bills:
- Increased standard deduction to $12,000 for singles and $24,000 for marrieds (Senate sunsets after 2025)
- Increased AGI limits to 60 percent for cash contributions to public charities and certain private foundations (Senate sunsets after 2025)
- Repeal of Pease limitation (Senate sunsets after 2025)
- Doubled estate and gift tax exemption amounts (Senate sunsets after 2025)
- Twenty percent excise tax on tax exempt executive compensation over $1 million
- Repeal of charitable contribution substantiation exception for contributions reported by the donee charitable organization
However, there are several other related provisions that were only included in either the House or Senate bills. These are on the table for conferees to negotiate.
- Streamlined 1.4 percent private foundation excise tax – House provision
- 1.4 percent excise tax on private college and university investment income if assets are valued of at least $500,000 per full-time student ($250,000 per student in the House) – Senate provision
- Requirement of DAF sponsoring organizations to disclose their policies for inactive funds, as well as the average amount of grants made from their DAFs – House provision
- Estate and gift tax repeal after six years — House provision
- Temporary Johnson Amendment repeal until 2023 – House provision
- Adjusted charitable mileage rate for inflation – House provision
This week, President Trump encouraged lawmakers to finish their conference as soon as possible and indicated he expects a bill on his desk as early as next week but no later than December 19. Getting something signed next week is ambitious but not impossible. ACR will be contacting lawmakers about our priorities, and we encourage you to do the same. See more in the Roadmap section below.
House conferees include Reps. Kevin Brady (R-TX), Greg Walden (R-OR), Rob Bishop (R-UT), Devin Nunes (R-CA), Peter Roskam (R-IL), Diane Black (R-TN), Kristi Noem (R-SD), Don Young (R-AK), John Shimkus (R-IL), Richard Neal (D-MA), Sandy Levin (D-MI), Lloyd Doggett (D-TX), Raul Grijalva (D-AZ) and Kathy Castor (D-FL).
Senate conferees include Finance Chairman Orrin Hatch (R-UT), and Senators Mike Enzi (R-WY), Lisa Murkowski (R-AK), John Cornyn (R-TX), John Thune (R-SD), Rob Portman (R-OH), Tim Scott (R-SC), and Pat Toomey (R-PA), Finance Ranking Member Ron Wyden (D-OR), Maria Cantwell (D-WA), Debbie Stabenow (D-MI), Bob Menendez (D-NJ), Tom Carper (D-DE), Bernie Sanders (I-VT) and Patty Murray (D-WA).
Tax reform isn’t the only big ticket item on the agenda this month either. Back in September, Congress faced a looming government funding deadline of September 30. However, in an unexpected deal with Democrats, President Trump negotiated a three-month extension of funding and a temporary debt ceiling suspension that would get the government to early December. Well, we’re there now, and this week lawmakers again faced a funding deadline of December 8 (today).
Yesterday, they punted that deadline to December 22, after which another short-term punt is expected to get Congress into January. President Trump is expected to sign the extension today. The punt(s) will allow lawmakers more time to work on a longer funding agreement that could tackle thorny issues like immigration, health care and the debt ceiling.
The second extension will get them to January, at which point they’ll try to pass an omnibus spending package for the remainder of Fiscal Year 2018. As a reminder, if leaders fail to get enough votes to pass funding legislation, the government will shut down until they can come to an agreement. We don’t expect this to happen while tax reform is being negotiated, but we’re not ruling it out.
At the ACR Summit for Leaders in March, we presented a Roadmap for Action – a 12-month plan to engage with lawmakers and your community.
We then hosted a webinar in April for those who may have missed the Summit.
December’s action item is to call the chief of staff in your congressman’s DC office to talk about tax reform. You can call Senate offices too. Let them know what you like and what you don’t like in the tax bills, and encourage them to keep the charitable sector top-of-mind in final negotiations. You can call the Capitol switchboard at 202-224-3121 to be connected to your member’s office.
We also want to share in your successes! November’s action item was to write a letter to the editor of your local news outlet. If your letter was published, please share the link with us by emailing it to email@example.com. Some examples of how to share on social media can be found here.
The House and Senate have now passed their versions of tax cuts and are working to reconcile their differences. They’d like to get a bill to the President’s desk by Christmas and they appear to be on track to do so.
It’s a mixed bag for our sector. One silver lining for us (in a perverse sort of way) is that the bills were written more hastily than is usual and with fewer sets of eyes on its various provisions. That means mistakes – and lots of them. As Politico reported, “The more you read, the more you go, ‘Holy crap, what’s this?’” said Greg Jenner, a former top tax official in George W. Bush’s Treasury Department. “We will be dealing with unintended consequences for months to come because the bill is moving too fast.”
Congress will be working to fix those unintended consequences almost as soon as the ink is dry on whatever final bill they send to the President’s desk. And that presents an opportunity for us to continue weigh in with lawmakers to make our case on what the unintended consequences might be for our sector and why those effects need fixing.
We also expect the House to pivot quickly to welfare reform and we will surely be part of that conversation. As always, we will keep you posted.
- National: Final Senate Bill Provides Little For Nonprofits
- National:Donors boosting charitable giving ahead of tax reform
- National: Senate Republicans Pass Tax Reform Bill After Late Night Vote
- National: From Tax Rates To Deductions: Comparing The House & Senate Bills To Current Law
- National: New U.S. tax law could curb charitable donations
- National: IRS and Treasury Department Release Notice Regarding Donor Advised Funds
- National: Giving Tuesday: Here are the most – and least – charitable states, report says
- Opinion: How the tax package could sap the flow of charitable giving
- Opinion: The ‘wild richness of American philanthropy’ is a marvel
- Opinion: As Congress focuses on tax reform, charitable deduction in jeopardy
- Local: School board approves new rule for anonymous donations
- Local: How new tax plan could impact local nonprofit organizations
- ACR Blog: Economic Growth (Probably) Won’t Make Up for Lost Charitable Giving
- ACR Blog: Charitable Giving is Not a “Tax Dodge”
Please feel free to email us at firstname.lastname@example.org if you have any questions, stories or topics you would like us to include in our newsletter.
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