Despite February being a shorter month, lawmakers in Washington, DC have kept busy between the Senate impeachment trial of former President Trump and the budget reconciliation process to enact President Biden’s $1.9 trillion American Rescue Plan ahead of the March 14 deadline. Here is an overview of the latest legislative issues impacting nonprofits during these challenging times:
American Rescue Plan Moves Forward
Lawmakers are working against the clock trying to pass the next COVID-19 relief bill before the March 14 deadline, when federal unemployment benefits are set to expire. On February 19, the House Budget Committee released the combined work product of nine previous committee markups before passing the bill on February 22. See our topline analysis of the legislation and Independent Sector’s summary. The bill is now referred to the Rules Committee before being brought up for a vote on the House floor. Once passed by the House, likely at the end of the week, the bill could bypass Senate committees and go straight to the Senate floor.
A focus of the upcoming Senate consideration will be whether the minimum wage increase to $15 per hour in the House bill can survive in the Senate. It may not have enough support from moderate Democrats like Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ). Senate rules require that measures passed under reconciliation must have budgetary effects, and it isn’t clear that raising the minimum wage will be considered permissible. The nonpartisan parliamentarian of the Senate determines which measures are eligible to pass under reconciliation.
Reintroduction of the Charitable Giving Tax Deduction Act
On February 15, Representatives Chris Smith (R-NJ) and Henry Cuellar (D-TX) reintroduced the Charitable Giving Tax Deduction Act (H.R. 1081) that would create a universal charitable deduction, available to all taxpayers whether they itemize their taxes or not.
Reintroduction of the Legacy IRA Act
On February 5, Senators Kevin Cramer (R-ND) and Debbie Stabenow (D-MI) reintroduced the Legacy IRA Act, legislation to increase the tax incentive of retirement-age middle-class Americans to give to charity. The senators introduced this bill in the last Congress.
The Legacy IRA Act gives middle-income seniors more flexibility to make gifts to charities through their individual retirement accounts (IRAs). It would expand the IRA Charitable Rollover by enabling seniors age 65 and over to give up to $400,000 annually tax free to an annuity held by the charity of their choice.
Senators Warren and Whitehouse Write to Secretary Yellen on Tax-exempt Political Groups
On February 3, Senators Sheldon Whitehouse (D-RI) and Elizabeth Warren (D-MA) wrote a letter to Treasury Secretary Janet Yellen saying that tax exemptions granted by the Internal Revenue Service (IRS) are being exploited, with some nonprofits appearing indistinguishable from political action committees. The lawmakers, both members of the Senate Finance Committee that oversees the IRS, urged Yellen to increase disclosure requirements on donors and probe inconsistencies in their expenditure reports.
Independent Sector Letter to President Biden
As part of ongoing engagement with the administration, on February 11, Independent Sector sent a letter addressed to President Biden communicating the urgency for relief policies targeted to the specific needs of nonprofit organizations, which during this difficult time have seen an increase in demand of their services while revenue streams continue to decline. The letter also included information requested by the Biden-Harris team about the challenges nonprofits continue to face and specific ways that policymakers can help the sector. To provide this information, Independent Sector surveyed nonprofits about how policymakers can best help them in the next six months. Over 900 organizations completed the survey.
