Earlier this week, the U.S. Senate voted 52-48 along party lines to begin debate on tax reform legislation. Senate Republican leaders are hopeful they will be able to pass the legislation before the end of the week.
Any differences between the final versions of the Senate and U.S. House of Representatives bills would have to be reconciled, likely through a formal conference committee. The other less likely option would be for the House to pass the Senate legislation and then send it to President Trump’s desk. Either way, the House and the Senate would eventually have to pass the same legislation before President Trump could sign it into law.
The Big “I” analysis of the current versions of the House and Senate tax bills is available to members who log in to the government affairs webpage. At press time, additional changes to the Senate bill are expected, so please check back regularly for continued updates to these documents.
Throughout the process, the Big “I” has led a coalition including organizations such as the National Association of Insurance and Financial Advisors and the Council of Insurance Agents & Brokers in sending letters to the House and Senate to express concerns about the bill’s treatment of some small businesses. Since that effort began, both the House and Senate bills have been significantly improved to allow more small businesses to receive tax relief. The Big “I” continues to advocate for more revisions to the legislation that would provide more tax relief to members and additional improvements to the Senate bill are expected.
In addition to concerns regarding the impact of tax reform on Big “I” members, the legislation includes a provision to subject royalty income derived from the licensing of a tax-exempt organization’s name or logo to the unrelated business income tax. This tax would leave the Big “I” and its state associations with a significant new financial burden. Royalties have historically been treated as passive income, meaning the organization has entered into a licensing arrangement for use of its name or logo but is not actively involved in the marketing or administration of the product or service connected with the arrangement.
In response to this provision, the Big “I” has been working closely with the American Society of Association Executives and a select group of other trade associations to address the issue. The Big “I” and multiple state associations also sent letters to key Senate offices. The Big “I” government affairs staff in Washington, D.C. has also acted upon a multifaceted advocacy effort on Capitol Hill to eliminate the provision through contacts with numerous Senate offices as well as leadership in the House.
Wyatt Stewart is Big “I” senior director of federal government affairs.