April Public Policy Update: New Tax for Employee Transit Benefits; Census 2020

April 18, 2018

With the Washington State Legislature adjourned until 2019, all eyes are now on the U.S. Congress as it works to close out the next few months before its summer recess. Below are key issues for your organization to be aware of:

Comment to the IRS on New UBIT Charge for Employee Transit Benefits

One result of the Tax Cuts and Jobs Act passes by Congress is that employee transportation benefits are now considered as Unrelated Business Income that is subject to taxes paid by the nonprofit organization or the employee. As the National Council of Nonprofits illustrates:

So, your nonprofit wants to encourage employees to take public transportation because it’s good for the environment, perhaps even mission-critical. Or maybe it’s a recruitment tool because job candidates in your area expect that benefit from the best places to work, like yours. As a result, let’s say your nonprofit has in the past provided financial assistance to make it easier for employees to commute to work (such as contributing to the cost of a mass-transit pass or parking). Guess what? Because of the new federal tax law, your nonprofit must now pay a penalty tax (UBIT) for providing those incentives, even if employees pay for them through pre-tax contributions via a qualified plan. This short articleand podcastwill give you the background and explain the new tax treatment that is effective right now — regardless of when your nonprofit’s tax year starts.

This new development is highly problematic for nonprofit organizations and their employees. Washington Nonprofits has joined with the National Council of Nonprofits to urge the IRS to delay implementation and study this issue further in the hope of removing this new burden from organizations. We encourage you to analyze what this changes means for your organization and join us in filing comments to the IRS explaining how this new tax will impact your nonprofit and its workforce. (See our comments here) You can also use this as a template:

[Your organization] is requesting that the IRS postpone the effective date of implementation of the unrelated business income tax (UBIT) rules enacted new Internal Revenue Code Section 512 (a)(6) and (a)(7) until the Service issues guidance clarifying the new tax liability triggered by new those sections. Absent urgently needed IRS guidance, charitable nonprofits will not be able to file accurate reports, are likely to make insufficient or inaccurate payments, and suffer other adverse tax consequences that can and will be avoided once the IRS provides the nonprofit sector the necessary clarity.

Census 2020: Your Chance to Weigh in on the Citizenship Question

The U.S. Census is a critical project undertaken by government to count all people residing within the United States. The data gathered through the Census is used for a number of civic purposes, including the allocation of federal funds to states for key programs implemented by nonprofits. Because of this, it is critical that the count be accurate. The 2020 Census is slated to include a potentially problematic question regarding respondents’ citizenship. We noted in our January letter to Congress that the citizenship question “creates unnecessary fear across the country among immigrant communities and will deeply limit participation by those communities,” which will lead to an undercount of already hard-to-count populations. If there is a depressed response to the 2020 Census, there will be serious ramifications for how federal resources are distributed to communities across Washington State for programs implemented by nonprofits or used by the people we serve.

On May 8, 2018, the House Oversight and Government Reform Committee will hold a hearing to address the citizenship question, which gives the public the opportunity to weigh in. We will provide an update on how best to submit comments to the committee so that your organization’s voice can be heard on this critical issue.

Additionally, please make sure to review the National Council of Nonprofits’ 2020 Census resource page for action steps that your organization can take. Lastly, please let us know if you have census coalition information we can share on your behalf or if you are looking to get connected to groups organizing a “Get Out the Count” campaign.

Public Service Loan Forgiveness Program Update

The Public Service Loan Forgiveness program received a funding increase in the omnibus spending bill signed on March 23, 2018. This is an important development because many current nonprofit employees use this program to manage their student debt. According to Independent Sector:

Thanks to a coalition of public service professionals educating policymakers about why PSLF is a critical investment, the program received a $350 million increase in the recent omnibus bill. The new funds are intended to help eligible employees learn more about how to take advantage of the program. The bill also included provisions to improve program implementation.

Unfortunately, PSLF isn’t out of the woods yet. Many policymakers may work to eliminate the program in the future to pay for other priorities. To preserve this critical program, we need you to educate your policymakers about why it helps you serve your community. To join the fight to protect PSLF, please visit preservepslf.com to sign onto their letters to Congress and take action.

To help our advocacy on this issue, please email David Streeterwith your story about how PSLF impacts you or your workforce.

For background information, you can review the resources from the Coalition to Preserve PSLF. Also, please encourage your employees and colleagues to look into the program and enroll if eligible so that they may be grandfathered into the program, should it change. Or, if employees and colleagues think they are enrolled, make sure they verify their enrollment with their loan servicer. Additional information about the program is available at http://www.studentloans.gov.

April Advocacy Tip: Tell Stories When Advocating

(This month’s advocacy tip comes straight from a congressional staff member) When holding a meeting with an elected official or their staff, make sure that you are weaving a story into your talking points. This will help make the issue real for your audience and drive home the reason for your desired policy change. Your storytelling will be even more compelling if the person (ideally a constituent from the official’s district) sincerely shares their own experiences or emphasizes how the issue impacts them personally. If your meeting is just a general meet and greet, then your storyteller should be someone who can tell a personal story about why they support your organization or how it has helped them. So before your next appointment with a public official, search for someone within your nonprofit’s network — a client, board member, staff member, key supporter — whose story would be a good addition to your next advocacy meeting delegation.

Application window now open for new Washington State Women’s Commission

(From House Democrats Press Release) “The newly-established Washington State Women’s Commission is now accepting applications from individuals interested in working to address problems that contribute to inequality for women in the workplace and society. …The commission will have 13 members: four state lawmakers (one from each caucus) and nine members appointed by the governor that consists of a balanced and diverse distribution of ethnic, geographic, gender, sexual orientation, age, socioeconomic status, and occupational representation.” Click here to learn more and apply.

Upcoming Opportunities to Connect with Officials