NASAA Notes: November 2017

November 7, 2017

Appropriations Process in Holding Pattern, Tax Reform on Agenda

With only a few working weeks left on the schedule before Congress plans to adjourn for the year, members of the House and Senate are working at a furious pace on several vital pieces of legislation they hope to wrap up before 2018. Taking priority has been tax reform legislation. This is a key pillar in President Trump’s campaign platform, and Republicans in Congress have taken the most significant steps toward passing substantial changes to federal tax policy since 1986.

The bill, known as the Tax Cuts and Jobs Act, would significantly alter the IRS code for corporations and individuals filing taxes in the United States. While NASAA is not taking a formal position on this legislation, we are monitoring its progress closely, as some provisions could impact arts organizations moving forward. Of primary importance: the legislation preserves both the IRA rollover for charitable giving as well as the charitable deduction for filers who itemize their tax returns. A complicating factor in the legislation, however, is that one of the key tenets of the bill is that the standard deduction for individuals and married couples would nearly double. The thinking is that more Americans would likely opt to use such a deduction rather than itemize their returns. The authors of the legislation hope that this increased deduction, coupled with lower overall rates, will free Americans to contribute funds to charities as they see fit. It is also worth noting that for individuals who still itemize their returns, the bill would increase the limit on charitable deductions for cash gifts.

While the pathway to passage for this bill remains uncertain, the fact that it has been introduced and appears to have significant Republican support represents a significant step forward for the bill. It also means that much of the oxygen in Washington for other issues is being consumed. One clear example of this is the appropriations process, which had been on course to be finalized before December 8, the deadline by which current funding for the federal government is set to expire. While a government shutdown is not a concern at this time, Congress may have to resort to another short-term continuing resolution to keep the National Endowment for the Arts (NEA) and other agencies funded while key members of Congress in both chambers focus their efforts on the tax bill. In fact, a few weeks ago, it appeared as though the Senate would soon introduce and pass its funding bill for the NEA. That bill has been delayed and there is no news at this time as to when it may be up for consideration.

As Congress continues work on tax legislation as well as the appropriations bill, NASAA will keep you up to date. In the meantime, please do not hesitate to let us know if you have any questions or concerns.

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