Mega Tax Bill Introduced  in the U.S. House
Yesterday evening, House Ways and Means Committee Chair Kevin Brady (R-TX) released a 297-page tax bill that Republican leaders plan to take to the House floor for a vote on Friday, November 30. Big picture, the bill includes disaster tax measures, retirement provisions, a handful of technical corrections to the Tax Cuts and Jobs Act, an IRS reform package (Taxpayers First Act), and renewal of expired for-profit business tax breaks. The cost of the bill (the "score") has not yet been made available.

On a call this morning, Republican leadership staff stressed that many of the bill's provisions have bipartisan support and expressed confidence that the bill will overwhelmingly pass in the House on Friday.

Senator Ron Wyden (D-OR), ranking member of the Senate Finance Committee, made clear through his spokeswoman, however, that the Senate reception will not be so rosy: "There was no communication from [Brady's] staff, including a heads up that something was coming. That is not how you negotiate."

So far, our colleagues at the National Council of Nonprofits have identified four provisions in the bill of direct interest to charitable nonprofits:

Disaster Relief

T emporary tax relief for victims of hurricanes Michael and Florence, typhoons Mangkhut and Yutu, the recent wildfires in California and other disasters.
  • Employment Tax Credit
Section 203 (page 47) would grant for-profit employers in the natural disaster areas a 40% income tax credit for retaining and paying employees (up to $2,400 credit per employee). Because the credit can only be applied to income taxes, as currently written, nonprofit employers in the disaster area would not be able to benefit from the provision.

Temporary Lifting of AGI Cap

Section 204 (page 73) would remove the cap on charitable giving that individuals can claim as itemized deductions this year when donations are sent to relief work in the designated disaster areas. Taxpayers would only be able to utilize the temporary provision (i.e., deduct more than 60% of Adjusted Gross Income) if they obtain from the nonprofits contemporary written acknowledgments that the contributions were used or will be used for relief efforts. The special break would not be allowed for donations to supporting organizations or donor advised funds.

Tax Administration Provisions
  • Mandatory Electronic Filing
Section 3101 (page 288) would mandate that all nonprofits filing the Form 990 must file the return electronically. The measure calls for an effective date of the first tax year after the date of enactment, but provides an additional year for small organizations to comply. Small organizations are defined as those with gross receipts for the year of less than $200,000 and aggregate gross assets of less than $500,000.

Notice Before Revocation for Failing to File Returns

Section 3102 (page 291) requires the IRS to send a heads-up notice to nonprofits warning that they will lose their tax-exempt status for failing to file returns in three consecutive years. The notice would be sent after two years of no returns.

Adapted from information provided by the National Council of Nonprofits