Want to stay up to date, but need the short version? We’ve got you covered. Here are the major federal policy updates from Washington, DC that may impact nonprofit work this month.
Optimism, but No Budget Deal Yet
Despite encouraging signs, leaders on Capitol Hill and the White House have not yet been able to strike a deal to lift strict budget caps on defense and domestic spending. Such a deal is necessary before legislators will be able to complete work on Fiscal Year 2020 spending bills for federal agencies. This impasse has not kept one chamber of Congress from beginning to move its legislation, with the House Appropriations Committee advancing 10 of its 12 bills past the subcommittee level and clearing 8 past the full committee.
Bipartisan UBIT Repeal Legislation Introduced in the Senate
On May 2, Senators Ted Cruz (R-TX) and Jeanne Shaheen (D-NH) introduced the Preserve Charities and Houses of Worship Act, which would repeal both of the onerous Unrelated Business Income Tax increases enacted in 2017. More specifically, it would retroactively eliminate the requirement for nonprofit organizations to pay a 21 percent income tax on expenditures for employee transportation fringe benefits (like parking lots or transit payments), as well as the requirement that unrelated income streams be calculated separately. Independent Sector was proud to partner with members and allies on research quantifying the resources that these provisions are diverting away from charitable missions nationwide.
Take two minutes and use our Action Center to ask Congress to support #MissionNotTaxes.
Independent Sector Comments on Overtime Regulations
Independent Sector and many other charitable organizations submitted comments to the U.S. Department of Labor on a proposed rule that would update the salary level at which employees may be exempt from overtime requirements under the Fair Labor Standards Act. This proposal would boost the standard salary level from $455 per week to $679 per week (equivalent to $35,308 per year). Above this salary level, eligibility for overtime varies based on job duties. Independent Sector’s comments note in part that:
The charitable sector’s outsized role in the economy is worthy of special recognition, but it also brings unique responsibility. In order for all people to thrive, they must have the opportunity to earn a life-sustaining wage, and charitable organizations are called to achieve a balance between effectively advancing their missions while striving to pay wages that allow employees to provide adequately for their families.
The comments request phased-in implementation of the proposed rule as well as revision of federal grants, contracts and reimbursements to reflect these increased costs. Furthermore, they request an open process for any revisions to the duties test and more specific guidance for nonprofit organizations.
CHARITY Act Reintroduced in the Senate
Senators John Thune (R-SD) and Bob Casey (D-PA) reintroduced the Charities Helping Americans Regularly Throughout the Year (CHARITY) Act on May 15, joined by Senators Pat Roberts (R-KS) and Ron Wyden (D-OR). The legislation contains a number of provisions that impact the charitable community: simplifying the private foundation excise tax, correcting the severely outdated volunteer mileage rate, making donor advised funds eligible for the IRA charitable rollover, and requiring electronic filing of annual 990 information returns.
Charitable Giving Legislation Adds Cosponsors
Representatives Chris Smith (R-NJ) and Henry Cuellar (D-TX) continue to add cosponsors to H.R. 651, which would create a universal charitable deduction that is available to all taxpayers whether they itemize their taxes or not. They are now joined on this bill by 10 Democrats and 7 Republicans. Ask your Representative to cosponsor today!
Retirement Legislation Passes House of Representatives
Just before departing town for the Memorial Day recess, the U.S. House of Representatives passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act, legislation that aims to help workers of all ages more effectively save for retirement. The bill could also impact the IRA charitable rollover, which Independent Sector and its members worked for years to make permanent. The current maximum age of 70 ½ for traditional IRA contributions would be repealed, which could enhance Americans’ ability to make charitable rollovers. However, language was added to the bill at the last minute that would strictly curtail this enhancement by effectively disallowing the rollover exclusion for every dollar contributed to the IRA after age 70 ½. Independent Sector continues to monitor developments on this issue.