Washington Snapshot: Treasury Pushes Ahead with Priority Guidance Despite Backlog from Tax Reform
In This Week's Edition of Snapshot…
- Another House Ways & Means Member Departs Congress
- Bill Introduced to Increase Charitable Driver Mileage Rate
- Treasury Solicits Input for Priority Guidance Amid Rollout of Tax Reform Regulations
- In the States: Pay Equity, Employment Law Changes Advance in the States; California Considers Crowdfunding Legislation
Last Friday, Rep. Pat Meehan (R-PA) announced he would resign from Congress, effective immediately. Mr. Meehan had announced in March that he would not seek reelection amid allegations of inappropriate behavior with an aide—which resulted in severance payment of $39,000 to the former staffer. “I have decided that stepping down now is in the interest of the constituents I have been honored to serve,” he said in a press release.
Mr. Meehan’s resignation is significant because it leaves an open Republican seat on the House Ways and Means Committee. It has not yet been announced who will replace Mr. Meehan, but according to BGov, two Georgia Republicans are the most likely contenders to fill the seat: Reps. Drew Ferguson and Karen Handel. The article also notes that others being considered for the seat include Reps. Jodey C. Arrington (R-TX), Barbara Comstock (R-VA), Mike Johnson (R-LA), and Brad Wenstrup (R-OH).
As for filling the congressional seat for Pennsylvania’s 7th district, Pennsylvania Gov. Tom Wolf announced yesterday that the election to replace the Congressman will happen on Nov. 6 in conjunction with the general election.
Last Friday, Rep. Rick Nolan (D-MN) introduced the Volunteer Driver Tax Appreciation Act of 2018 (H.R. 5662). This bill would increase the standard mileage rate for charitable drivers (for purposes of the driver to calculate the appropriate charitable deduction to claim) from the $0.14 to $0.545 (which is the rate determined by the U.S. Department of Treasury for trade or business expenses).
This bill builds on a provision included in the CHARITY Act (S. 1343/H.R. 2916) which would grant authority to the Treasury Department/IRS to determine this rate—stipulating that it may not be less than the determined rate for medical purposes (which was $0.17 for 2017), but does not go so far as to propose what the rate should be increased to.
In a press release, Rep. Nolan stated, “The fourteen cents per mile reimbursement rate for charitable drivers is simply too low. It’s unfair, it discourages charity, and it doesn’t nearly reflect the true cost volunteers incur when they use their vehicles to help non-driving friends and neighbors get from place to place. As a result, many volunteer drivers are simply unable to continue their charitable and much needed work.”
The U.S. Department of Treasury/Internal Revenue Service (IRS) recently released Notice 2018-43 to invite public comments (due by June 15) on recommendations for the 2018-2019 Priority Guidance Plan. Every year, Treasury releases this list to identify and prioritize tax issues that the agency aims to address through regulations or revenue rulings, revenue procedures, notices, and guidance throughout the upcoming year.
Unlike most years, Treasury was not able to tackle a number of issues that were included in the 2017-2018 Priority Guidance Plan due to the superseding need to produce regulations and guidance related to the implementation of the tax code overhaul. “As a result [of the new law], the Treasury Department and the [Internal Revenue] Service do not expect to be able to complete a number of the guidance projects on the 2017-2018 Priority Guidance Plan, but they currently expect that many of these projects will be carried over to the 2018-2019 Priority Guidance Plan,” the notice states.
Two of those Treasury/IRS projects that resulted from the passage of tax reform are to publish guidance for tax-exempt organizations on the issues of unrelated business income tax (UBIT) and the new excise tax on executive compensation. At the recent Georgetown University Legal Conference for Representing & Managing Tax-Exempt Organizations, Department of Treasury Office of Tax Policy Attorney-Advisor Elinor Ramey shared that, “These are things that are definitely being worked on, and we’re trying to get guidance out as quickly as we can, recognizing that it really is important to people.” The goal is to publish guidance on these two issues by the end of June, according to TaxNotes.
Despite Treasury’s aim for a timely delivery of this crucial guidance, some in the sector have called for a delay in the effective implementation the new UBIT provisions. National Council of Nonprofits recently sent a letter to Treasury/IRS requesting that charitable organizations not be subject to compliance with these provisions until one year after the final rules (which, unlike the forthcoming guidance, must go through a formal rulemaking process).
Exclusive from our colleagues at the National Council of Nonprofits.
Pay Equity, Employment Law Changes Advance in the States
With Congress not expected to address long-simmering employment law issues, the states continue their promotion of stronger and innovative workplace policies. New Jersey has enacted what is billed as the toughest pay-equity law in the country. The law, among other things, permits employee victims of pay discrimination to recoup up to six years of back pay and allows court awards of three times any monetary damages for unlawful employment practices, including pay discrimination against a protected class. It prohibits an employer from restricting an employee or potential employee from discussing or disclosing compensation with others and sets guidelines to determine equity. A bill before the New York City Council would provide a private right of action to employees denied sick leave under the Earned Sick Time Act (ESTA). Both of those measures apply equally to for-profit and nonprofit employers. In Maryland, Governor Larry Hogan approved a bill that allows 501(c)(3) organizations the option of buying into the state employee health insurance program. It also establishes a study of health insurance purchasing by state and local governments and nonprofits.
California Considers Crowdfunding Legislation
A bill before the California Assembly would create rules for charitable crowdfunding solicitation to address issues such as obtaining the written consent of an organization prior to using its name, timelines for distribution of funds, and other definitional questions. Similar legislation in other states is anticipated. While many nonprofits have successfully raised funds through crowdfunding platforms (PayPal, GoFundMe, Indiegogo, Network for Good, Facebook, etc.), there is growing concern that donations are not getting to designated nonprofits. For instance, one lawsuit alleges that the PayPal giving platform re-directs funds to foundations or charitable organizations other than those designated by donors without informing donors. There are also reports that scam artists are raising money supposedly for nonprofits but taking the money themselves, that platforms are taking large undisclosed cuts of donations, and so forth. CalNonprofits, the state association of nonprofits, has created a seven-question survey to hear more about the experiences of nonprofits and donors.