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January 2016  

Omnibus Includes Cadillac Tax Delay, Other Priorities

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Courtesy of ASAE's Public Policy Department
For those who missed it, the huge omnibus spending and tax package that Congress passed late last month addresses a number of issues on ASAE's radar, including the so-called Cadillac tax on high-cost health plans, impending political activity rules from the IRS, and provisions that provide significant incentives for charitable giving. 

Among the most significant provisions in the package is a two-year delay of the 40 percent non-deductible excise tax on high-cost, employer-based health plans. Postponing the start of the Cadillac tax from 2018 to 2020 should lessen the incentive for employers to make changes now to their benefit plans and give opponents additional time to rescind the tax altogether. 

Dislike of the Cadillac tax has become pervasive among Republican and Democratic lawmakers alike, as it would likely result in a reduction of benefits for millions of Americans. ASAE has filed two sets of comments with the IRS this year, suggesting that employers will look to make changes to their benefit plans to avoid the tax. These changes will reduce benefits and transfer the cost of insurance to employees through increased deductibles, reduced covered services, use of private exchanges, and the reduction or elimination of FSAs, ASAE argued. 

Another provision in the budget deal would prohibit the IRS from issuing a final rule governing the political activities of 501(c)(4) nonprofit organizations. The IRS released draft rules in late 2013 that would have expanded the definition of candidate-related political activity to include candidate forums, meet-and-greets and voter registration activities. The IRS has also suggested that any final rule should be broadened to apply to a wide range of tax-exempt organizations including 501(c)(6) associations. 

The deal also makes dozens of expired, temporary tax provisions permanent, including a tax break for individuals that donate to charities from qualified retirement accounts; a tax deduction for food inventory donated to food banks; and a deduction for land donated for conservation. 

Another provision in the package would create parity in commuter benefits for people who drive to work and those who take public transportation – an important win for employees in large metropolitan areas.

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