Efforts by Republican lawmakers to pass a tax reform bill in the coming weeks suffered a setback over the weekend, courtesy of a major trade association.

On Saturday, the National Association of Home Builders (NAHB), which had said it would support a bill that included changes to the mortgage interest deduction as long as a tax credit took its place, announced it could not support the bill after GOP leaders said the measure would not include the credit.

“All the resources we were going to put into supporting are now going to go into opposing the plan,” NAHB CEO Jerry Howard told Politico on Saturday.

The association had worked with lawmakers on a plan to repeal deductions for mortgage interest and property taxes and put a new kind of tax credit in their place. Instead, House GOP leaders said they would keep the property tax deduction intact, while weakening the mortgage deduction.

According to Howard, House Speaker Paul Ryan (R-WI) told him that NAHB’s recommended approach would face challenges among rank-and-file members, though Howard said it had support from the White House.

“I don’t think it’s fair of the speaker to take a concept that his own committee chair is in favor of and deep-six it without vetting it with the conference,” he said in his comments to Politico.

Associations raise Ubit concerns

NAHB’s about-face comes as the association community is voicing concern about the impact of tax reform on the ability of nonprofits to carry out their missions.

On Saturday, ASAE sent a letter to the leaders of the House and Senate Finance Committees, noting that “potential changes to UBIT  [unrelated business income tax] are of chief concern to the association community.” UBIT is paid on revenue that associations generate from activities unrelated to their tax-exempt purpose, such as advertising or product sales.

The letter was signed by more than 300 associations, including the National Association of Realtors, the Consumer Technology Association, and the American Institute of Architects, as well as many other large and small organizations at the national, state, and local levels.

“Depending on various changes that may be considered, associations could be forced to make stark changes related to their activities and income sources, and may have difficulty continuing the work they do in communities across the country,” the associations stated in the letter. “Most associations depend on income from passive royalties to advance their tax-exempt purpose, and changes in this area could have broad and negative ramifications for the entire association community.”

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