Congress Tax Deal

Association Agenda: Tax-Deal Treasures

Package brings good news for the association community.

It was easy to miss, but buried in the massive $1.1 trillion end-of-year spending and tax deal that Congress cleared just before the holidays were several provisions of great interest to associations.

Among the most significant is a two-year delay of the 40 percent nondeductible excise tax on high-cost, employer-based health plans. Postponing the start of the so-called Cadillac tax from 2018 to 2020 should lessen the incentive for employers to make immediate changes to their benefit plans and give opponents additional time to rescind the tax altogether.

Dislike of the Cadillac tax has become pervasive among Republican and Democratic lawmakers alike, as it would likely result in a reduction of benefits for millions of Americans. ASAE filed two sets of comments on the impending tax with the IRS last year, suggesting that employers would look to make changes to their benefit plans in order to avoid the tax. Changes would likely have reduced benefits and transferred the cost of insurance to employees through increased deductibles, reduced covered services, use of private exchanges, and the reduction or elimination of flexible spending accounts, ASAE argued.

Another provision in the budget deal prohibits the IRS from issuing a final rule governing the political activities of 501(c)(4) nonprofit organizations. The IRS released draft rules in late 2013 that would have expanded the definition of candidate-related political activity to include candidate forums, meet-and-greets, and voter registration activities. The IRS had suggested that any final rule should be broadened to apply to a wide range of tax-exempt organizations, including 501(c)(6) associations.

The deal also makes dozens of expired, temporary tax provisions permanent, including a tax break for individuals who donate to charities from qualified retirement accounts, a tax deduction for food inventory donated to food banks, and a deduction for land donated for conservation.

Both parties reported wins in the budget deal, and with the inclusion of these provisions, 2016 is off to a good start for the association community.

(Andrew Pons)

Chris Vest, CAE

By Chris Vest, CAE


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