Independent schools are taking a wary look at provisions of both the GOP House and Senate tax reform bills that have been proposed over the last week.
In a joint letter sent November 10 to more than 400 House tax staffers, NBOA and NAIS expressed particular concern about four elements of the House bill (H.R. 1), calling on Congress to act as follows:
School Groups Outline 5 Key Issues Involving Tax Overhaul
Interest on Tax-Exempt Debt Could Increase in 2018
Tax Overhaul's Impact on Independent Schools Still Uncertain
Tax Bills Extend 529-Type Plans to K-12
Schools Encouraged to Speak Out on Tax Proposals
GOP Tax Reform Jeopardizes Tax-Exempt Financing for Independent School
Connect discussion on tuition remission
Connect discussion on learning differences schools
The Senate plan was released November 9. On November 14, NBOA and NAIS sent a related joint letter to 100 targeted Senate tax staffers.
In comparing the two plans, NBOA and RSM noted the Senate's silence on these items of concern in the House version:
This could mean that the Senate version keeps intact existing treatments of tuition remission and other education or housing incentives, along with the medical expense deduction. Additionally, the House Ways and Means Committee amended the proposal to keep non-qualified deferred compensation plans in place as structured. This is a "win" for 457 plans, but it should be monitored as both the House and Senate proposals progress. On the question of private activity bonds, the Senate proposal appears to grandfather in drawdowns on already-issued bonds as tax-exempt.
Finally, not already discussed in NBOA's previous alerts is the proposed taxation of royalty income for the licensing of school names and logos. Additionally, unrelated business income would be calculated separately for each activity unrelated to the school’s exempt mission (meaning that a loss from one activity cannot be used to offset revenue from another).
Numerous discussions on NBOA Connect (NBOA members only) point to additional areas of concern in the Republican tax proposals. See NBOA's analysis of the House bill, and download the joint NBOA-NAIS advisory on the House plan.Download the joint NBOA-NAIS advisory on the Senate plan.
Other helpful articles about the GOP tax legislation:
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