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.
Universal Charitable Deduction
Representatives Chris Smith (R-NJ) and Henry Cuellar (D-TX) introduced a universal charitable deduction bill in the House of Representatives, the Charitable Giving Tax Deduction Act (H.R. 5771). The bill would allow all taxpayers, regardless of whether they itemize or not, to take the charitable deduction. Recent estimates show that as little as 5 percent of Americans may be itemizing after the new federal tax law, leaving 95 percent of taxpayers unable to take the charitable deduction – leading to a small number of wealthy individuals guiding charitable giving in our communities. You can learn more about this topic in a recent interview our president and CEO, Dan Cardinali, did with Rep. Smith.
In other giving news, Steve Taylor, senior vice president and counsel for public policy at IS member, United Way Worldwide, recently wrote an editorial in The NonProfit Times calling on nonprofit board members to adapt to changes in charitable giving following the passage of last year’s Tax Cuts and Jobs Act.
General Data Protection Regulation (GDPR)
You may have noticed a lot of emails coming into your inbox recently from companies updating their Privacy Policies – and you’re likely to get a few from nonprofits, too. The GDPR went into effect last week and applies to any organization that collects data of European Union (EU) residents. The law aims to update data privacy laws and protect citizens data privacy. Nonprofits that that collect personal data from EU residents (defined as “any information relating to an identified or identifiable natural person”), even if they are U.S.-based nonprofits and focus on domestic programs, will need to comply with GDPR to avoid the risk of being fined by the EU.
Public Service Loan Forgiveness
The Department of Education recently released information about its temporary expansion of the Public Service Loan Forgiveness program aimed at helping those who qualify for forgiveness, but were enrolled in the wrong repayment plan. The FY2018 budget included a $350 million increase to alleviate various issues that would prevent individuals from receiving forgiveness after 10 years of qualifying payments for public servants (including most nonprofit employees). The Department has announced it will reconsider eligibility for an expanded list of plans, including graduate repayment, extended repayment, consolidated standard repayment, and consolidated graduated repayment – after individuals have made 120 on-time payments. The forgiveness of these plans will be made on a first-come, first-served basis, until the $350 million runs out.
The FY2019 House Financial Services and General Government appropriations bill was released last week, increasing spending on the Internal Revenue Service (IRS) budget following the passage of the tax law last December. Similar to previous years, the bill includes a rider to prohibit the IRS from using funds to enforce the Johnson Amendment. Despite increased funding to the department, the IRS would be banned from using this funding to deny tax-exempt status to churches that engage in political campaigns. Last year, the rider was not kept in the final spending bill. There is concern about what this would mean to the nonprofit sector at large, not limited to just churches. Take just a minute to email your members of Congress today and urge them to protect the Johnson Amendment.
State and Local Tax (SALT) Deductions
States across the country are creating workarounds for residents, following the new tax law, in order to ease tax burdens in states with high taxes. One of the most common workarounds is allowing taxpayers to make their tax payments to charitable organizations that are led by local governments, in order to take the charitable deduction to avoid the new $10,000 cap on SALT deductions in the federal tax law. Various states including New York, New Jersey, California, and Connecticut have been engaged in these conversations. The IRS and Treasury Department have said new rules will be released soon — cautioning states to reconsider workarounds.
You can read the impact that this would have on the charitable deduction and revenue for charities here: Pass the SALT?