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S-Corporation Association (S-CORP)
Note from Jim Kendzel, ASA VP, Advocacy – Many ASA members are S-Corporation category businesses and it is imperative for the ASA Advocacy Team to keep up on legislation and policy initiatives impacting S-Corps. One of way ASA provides value to our members is through our membership in the S- Corporation Association (S-CORP). The following article was published in the March 14, 2019 edition of the S-CORPS Washington Wire. I hope the information is of value.
Last week, Bloomberg published a report that got our attention. Entitled, "IRS May Knock down New York, Connecticut SALT Workarounds," the article says the IRS is "likely" to issue regulations that invalidate SALT workarounds.
The reference to New York didn't surprise us. It's no secret the IRS is targeting the charitable workaround adopted by New York and other states - they already issued guidance last fall throwing sand in the gears of that one. But the pass-through SALT parity bills passed by Connecticut and Wisconsin are entirely different, both legally and politically.
Why can C corporations deduct all their SALT while individual pass-through business owners are subject to a $10,000 cap on their SALT deductions? It's patently unfair and the reason the S Corporation Association and our Main Street Employers coalition has spent the last year pressing states to adopt a pass-through SALT parity bill to level the playing field.
So exactly what does the IRS have in mind for Connecticut and other states looking at adopting pass-through parity? Bloomberg doesn’t say, but here’s what we do know:
- The current treatment of SALT deductibility for pass-through businesses is unpopular and a source of uncertainty for businesses and states alike.
- Treasury added “Guidance on applying the state and local deduction cap under §164(b)(6) to pass-through entities” to their priority list last November, suggesting that something is in the works.
- Treasury and the IRS would have to issue guidance on this topic regardless of state activity. The uncertainty surrounding the application of the SALT cap to pass-through business would require clarifying guidance either way.
- Whether this guidance might attempt to block companies from deducting their entity-level state taxes is entirely unclear, as is the legal basis for doing so.
The Republican-led Senate voted 59-41 to cancel President Donald Trump's declaration of a national emergency at the southern border. Twelve Republicans voted with Senate Democrats in favor of the disapproval resolution. Trump issued the first veto of his presidency, rejecting the resolution. Neither the House nor the Senate is expected to have the votes to override the veto.
- President Trump signed a memo telling the Environmental Protection Agency to lift summertime fueling restrictions on E15 gasoline containing as much as 15 percent ethanol. On Tuesday night, Trump underscored the policy change at a rally in Iowa, the nation’s top producer of both ethanol and the corn used to make it. (Reuters)
- The U.S. government intends to reduce Iranian crude oil exports to under 1 million barrels per day starting in May through the threat of sanctions on importers of Iranian oil, according to two sources briefed by the Trump administration, who said the United States was likely to renew existing waivers to most countries buying that oil in exchange for promises to cut combined purchases to below the 1 million bpd figure. Sources added that the administration might deny waivers to countries that have not recently purchased Iranian oil. (Reuters)
- Trade unions are firing back against the progressive "Green New Deal" agenda and, in doing so, are revealing a split between left-leaning labor and climate advocates in the House and Senate. The "Green New Deal" is “not achievable or realistic," read a letter from AFL-CIO energy committee heads Cecil Roberts, president of the United Mine Workers of America, and Lonnie Stephenson, president of the International Brotherhood of Electrical Workers. (Washington Examiner)
- Senate Majority Leader Mitch McConnell (R-Ky.) set a procedural vote on the Green New Deal resolution in the chamber for the week of March 25.
- The Senate voted 54-46 to end U.S. support for the Saudi-led military campaign in Yemen. The move is the latest rebuke of the Trump administration's embrace of Saudi Arabia's monarchy amid growing frustration among lawmakers with its actions on the world stage. (The Washington Post)
- Reps. Lloyd Smucker (R-Pa.) and Francis Rooney (R-Fla.) have introduced the Workforce for an Expanding Economy Act, legislation that would help alleviate the worker shortage in the construction industry by establishing a market-driven visa system to help employers find more laborers.
- Sens. Kaine and Portman introduced this year’s version of the JOBS Act: funding for community college job training programs that lead to industry credentials – including programs offered in community college noncredit continuing education divisions that are shorter than a semester. This is an important proposal that has a good chance of being included in any reauthorization of the Higher Education Act and ASA, along with other industry partners have been supporting.
The House and Senate are in session.
- The White House is submitting its proposed budget which includes significant funding cuts for most government agencies, but boosts funding for programs to address the opioid crisis and provide medical care for veterans. According to the White House, the budget proposes $80 billion in fiscal 2020 - a 10 percent jump from fiscal 2019 - for veterans' health care. (Bloomberg)
- The Senate is expected to vote on a House-passed resolution to terminate Trump's national emergency declaration before leaving town this week for the St. Patrick's Day recess. In the House, lawmakers are set to consider a resolution calling for the release of special counsel Robert Mueller's report about his investigation into Russian meddling in the 2016 election and ties to Trump's campaign.
| || NEWS FROM STATE AND LOCAL |
NY S 4462: Require lead testing of drinking water in schools.
NY S 4479: Relates to the creation of the strategic investment in workforce development program
PA HB 796: An Act establishing the Schools-to-Work Program; and providing for powers and duties of the Department of Education.
NC HB 330: For every major facility construction or renovation project of a public agency, will require a 30% reduction in water use vs. previous 20%.
RI SB 552: Establishing Appliance and Equipment Energy and Water Efficiency Standards Of 2019 (Establishes minimum energy and water efficiency standards for appliances and specified equipment purchased or installed after July 1, 2020.)
HI SB 1323: Relating to Appliance Efficiency Standards; ASA has submitted comments in opposition to the lowering of flow-rates and flush volumes for plumbing fixtures below the EPA WaterSense standards. Update activity: Passed second Rrading as amended in HD 1 and referred to the committee(s) on CPC with Representative(s) Okimoto voting aye with reservations; none voting no (0) and Representative(s) McKelvey, Nakamura, Quinlan, Takumi excused (4)..
Amazon’s ad business is growing fast—faster than Facebook and Google when they were at comparable sizes, according to third-party data and an analysis of company filings. If this continues, it could fuel criticism from political circles about Amazon’s expanding tentacles in different businesses.
The U.S. government cut its oil production forecast for the first time in six months as drillers scale back in smaller shale plays and the U.S. Gulf of Mexico.
While crude output is still expected to reach record levels, the Energy Information Administration trimmed its 2019 forecast to 12.3 million barrels a day -- 110,000 barrels-a-day lower than it had forecast previously. In 2020, production is expected to reach 13.03 million barrels a day -- 170,000 barrels a day lower than last month’s estimate.
National Home Builders Association
Connecticut, Texas, Illinois and Nebraska are among the states that are considering tax proposals on home repairs, renovations and labor.
NAHB and HBAs across the nation oppose such revenue-raising measures for a number of reasons. A sales tax on such services is regressive in nature, and could discourage home owners in older neighborhoods from making needed safety-related repairs.
Seventy-seven percent (77%) of voters believe that America’s political system is badly broken. However, a ScottRasmussen.com national survey also found that 57% believe that America’s best days are still to come. That combination of pessimism about our political system and optimism about the nation mirrors the message of Scott Rasmussen’s latest book–The Sun is Still Rising: Politics Has Failed But America Will Not. Such a perspective may seem unusual to those who believe politics lead the nation forward.
s employers grapple with a new federal overtime rule proposal, the business community has described the salary threshold as fair, but worker advocates say the proposed level isn't high enough.
On March 7, the Department of Labor (DOL) announced its plan to raise the salary threshold to $35,308—which falls between the current $23,660 cutoff and the $47,476 threshold approved by President Barack Obama's administration but blocked by a federal judge.
Americans might be getting lower tax refunds this year, but it probably won’t affect how they vote in the 2020 presidential race, according to a new Morning Consult/Politico poll.
Some people have taken to social media, using the hashtag #GOPTaxScam, after early Internal Revenue Service data suggested that the average tax refund in the first full tax season since the 2017 Republican-led tax overhaul would be lower compared to last year.
The New York Times
The United States and China are pushing for a summit meeting in late April to complete a trade deal, while negotiators are still grappling over its terms and how they should be enforced.
Although much remains unsettled, one thing is becoming clear: The Trump administration will continue to hold the threat of tariffs over Beijing to ensure that it lives up to whatever commitments it agrees to in the final deal. That approach is prompting concern among American businesses that the economic damage and uncertainty caused by President Trump’s trade war could persist even once negotiations are resolved.
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