Berger updates members on tax issues; NAFCU pushes Hill for fixes
NAFCU President and CEO Dan Berger, in an email Wednesday to members, updated credit unions on the latest tax reform developments, including the recently released House tax extenders and fixes package, H.R. 88, and NAFCU's ongoing efforts to protect credit union interests.
In his update, Berger noted the association's work to protect credit union interests following the enactment of the Tax Cuts and Jobs Act (TCJA), including meeting with Capitol Hill leaders and the IRS. NAFCU has also opposed efforts to require all credit unions file a Form 990-T and continues to seek relief for credit unions from the new 21 percent excise tax imposed on certain not-for-profits.
Also yesterday, NAFCU Vice President of Legislative Affairs Brad Thaler wrote the Joint Committee on Taxation (JCT) urging that a technical fix be provided to "grandfather" those employment contracts entered into on or before Nov. 2, 2017, for tax-exempt employers. The TCJA contained a provision allowing for-profits to grandfather in binding contracts in effect before that date, but did not include the same clause for not-for-profit tax-exempt organizations. The bipartisan JCT is generally responsible for identifying potential tax code fixes.
The House is expected to consider H.R. 88 on the floor as early as today. Although the legislation does not contain a fix to the excise tax issues, it does include an extension ensuring that mortgage debt that has been forgiven by a lender will be excluded from the borrower's personal income. It also includes an extension of the treatment of mortgage insurance premiums as qualified residence interests, allowing a borrower to deduct the cost of the premiums from income taxes.
Senate Finance Committee Chairman Orrin Hatch, R-Utah, has indicated that the Senate may craft their own version of the bill. House Ways and Means Committee Chairman Kevin Brady, R-Texas, also has indicated that there may be additional efforts to enact fixes to the TCJA.
Berger in January wrote to the IRS requesting that the agency support legislation to provide technical corrections on the excise tax. NAFCU has also asked for clarifications to credit unions on how they should comply with the new excise tax on certain nonqualified deferred compensation plans.
Responding to Berger's letter in March, the IRS indicated its plans to address implementation of the excise tax, including allowing them to submit to the IRS Form 4720 – rather than Form 990-T, which is more complicated – in order to comply with the requirement.
NAFCU will continue to monitor tax reform efforts and ensure credit unions' concerns are heard.
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