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Capitol Correspondence - 07.01.19

Tax Package Holding UBIT Repeal in For the Long Haul

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ANCOR is sharing this article by ASAE, of which we are members, because the new 21 percent tax on non-profit employee parking / fringe benefits included in changes to the unearned business income tax (UBIT) has been particularly burdensome for disability supports. While all non-profits have suffered from having money removed from their missions with this new tax, disability supports are struggling with a 44 percent yearly staff turnover rate – the new tax is further affecting providers’ ability to recruit and retain staff. ANCOR has advocated to Congress and the Administration for full repeal of the changes as part of its work with the UBIT Coalition.

As written by ASAE:

“Negotiations over a tax package that passed the House Ways and Means Committee last week are likely to draw out over the summer as lawmakers debate whether and how to offset the cost of various provisions.

The Ways and Means Committee last week advanced four tax bills, including a measure to repeal the 21 percent tax on the value of so-called fringe benefits, such as free parking and mass transit assistance, that nonprofit employers offer or are required to provide to employees. ASAE and its UBIT Coalition have been advocating for repeal of this tax since it was enacted as part of the 2017 Tax Cuts and Jobs Act.

Repealing the tax has bipartisan support but House Democrats included UBIT repeal in a tax bill that also expands the Earned Income Tax Credit and makes the Child Tax Credit fully refundable.

All of the tax bills passed out of the Ways and Means Committee last week with just Democratic support, and Democrats’ insistence so far on finding a way to pay for tax extenders by raising taxes elsewhere is a non-starter for Republicans. The tax extenders bill is offset by ending higher exemption levels for the estate tax at the end of 2022 instead of 2025 as currently scheduled, and that is unlikely to win support from Senate Republicans should it pass the House.

For now, no timeline has been set on when the tax bills could see a vote by the full House of Representatives and it’s possible that negotiations with Senate Republicans stretch past the August recess.”