The House and Senate will continue their efforts to address appropriations for the 2019 fiscal year before it starts on Oct. 1, 2018. At this point, the Senate has passed nine of the 12 appropriations bills in the form of three “minibus” that represent 90% of the federal discretionary funding.
The plan is to negotiate full-year appropriations for as many agencies as possible and then use a continuing resolution (CR) to fund the remaining agencies at their existing levels through December. Republican leadership is clearly hoping that the President will be willing to wait to continue the border wall funding fight until the planned CRs run out in December.
Tax Reform 2.0
At the end of July the House Ways and Means Committee released a two-page outline of a new package of tax bills (being referred to as “Tax Reform 2.0”) that Committee Chairman Kevin Brady was hoping to have ready to be introduced in the House in September and voted on before the mid-terms.
Recently, the Chairman announced that his Committee plans to start mark-up on the package next week with the intent that it will be voted out of the Committee before the end of the month. Speaker of the House Paul Ryan (R-WI) also stated this week that, once it is voted out of the Ways and Means Committee, the Republican leadership plans to bring the package to a vote before the election. These developments will come as unwelcome news to some members facing difficult races because Tax Reform 2.0 is expected to include provisions to make the very divisive provision limiting the deduction for state and local taxes (SALT) permanent.
Senate Republican leaders have been hesitant to bring a tax bill for a vote in the Senate before the November elections. Because it is expected that Tax Reform 2.0 package will be making a number of the temporary provisions of the 2017 tax bill permanent, it is very unlikely that such legislation could be passed using the reconciliation process (under which the 2017 tax bill was able to pass with a simple majority in the Senate).
Executive Order on Multiple Employer Plans (MEPs)
President Trump has signed an Executive Order directing the Secretaries of Labor and Treasury to consider regulations and guidance to expand the availability of Multiple Employer Plans (commonly referred to as MEPs). Although not expressly stated in the Order, a key focus of the proposed regulations that arise from this Order will be on eliminating, or significantly scaling back, the nexus requirement, which presently requires companies to have some sort of nexus or preexisting commonality before they can join together and participate in a MEP.
This idea of “open MEPs” that aren’t subject to a nexus requirement, is a significant part of the bi-partisan Retirement Enhancement Savings Act (RESA) that we have previously reported on and that is still pending in the Senate and may be a part of the House’s Tax Reform 2.0. The President is hoping that these agencies will be able to circumvent the need to involve Congress on this issue. However, as it took over a year for the Department of Labor to go through the full process of proposing and finalizing its rules on Association Health Plans (which were similar in that they loosened the restrictions on which associations could band together to sponsor health plans together), it is still possible that Congressional action will come first. Regardless, while the train towards change is in forward motion, whether through legislation or regulation, it will be some time before it reaches its destination.
Bi-Partisan Protecting Taxpayers Act Would Expand EPCRS
The bi-partisan Protecting Taxpayers Act (S.3278) was recently introduced by Senators Ben Cardin (D-MD) and Rob Portman (R-OH) and is “designed to make the IRS more responsive and accountable to taxpayers.” If passed it would usher in a number of structural and procedural changes for the IRS, including, among other things, reforming the IRS Oversight Board, streamlining S corporation elections, overhauling the IRS appeals process, and improving IRS’s IT infrastructure. This bill also includes a significant expansion of the IRS’s Voluntary Correction Program, specifically the Employee Plain Compliance Resolution System (EPCRS) program. Under the bill, plan administrators could use EPCRS to self-correct any inadvertent qualified retirement plan violation and Treasury would be directed to further expand EPCRS to include new safe harbors for correcting inadvertent failures. Given the limited bandwidth that the Senate has in the next few months, it is unlikely that this bill will move as quickly as we would hope, but the SBLC will be making efforts to support the bill and help move it forward in the lame duck session.
Senate Dems Introduce Resolution of Disapproval on Short Term Health Plan Regs
On August 29, 2018, Senator Tammy Baldwin (D-WI) together with 30 co-sponsors, introduced a Joint Resolution to rescind the Trump Administration’s new regulations on limited duration health plans. The regulations, which were finalized and published on August 3, 2018, would expand the maximum length that a short-term health plan (also known as “skinny plans”) could be offered to an individual from three months to three years. These skinny plans, which were intended to help individuals bridge gaps in employer or other coverage, are not required to meet many of the Affordable Care Act (ACA) coverage requirements – meaning that they typically cover significantly fewer medical services and are cheaper. Proponents of the ACA have viewed these new rules as another effort by the Administration to undermine and attempt to derail the ACA.
The Democrats will now look to moderates who have sided with them before on ACA issues to support the resolution and get them their majority vote. However, even if the resolution passes, President Trump is almost guaranteed to veto it and it is very unlikely that there will be sufficient support to override the veto. Rather, the bigger impact of the Resolution will be to force members to consider and vote on the issue before the election.
White House Conference on Small Business Legislation Introduced
Representatives Rod Blum (R-IA), Al Lawson (D-FL) and Stephanie Murphy (D-FL) introduced a bill (H.R. 6446) to authorize another White House Conference on Small Business. The SBLC has been active in the coalition working to jump start a new White House Conference and the introduction of the bill presents a meaningful step forward in that process. The coalition is working with members of the Senate to introduce a companion bill and we expect the formal rollout of the House bill, and hopefully its Senate companion, will occur this fall.
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