Weekly Legislative Update - February 11, 2019

199A Pass-Through Deduction Rules Finalized
Treasury has issued the final rules on 199A. You can read the rules and accompanying guidance here:
You can also read a terrific "how does it all work" review published in Forbes. As the writer notes:
 

I believe in giving credit where credit is due, and I'll be damned if the IRS doesn't deserve some serious credit. It was less than 13 months ago that Congress dumped 500 pages of sloppy statutory language on the Service in the form of the Tax Cuts and Jobs Act, and somehow, in that span the IRS has managed to provide final regulations on the most controversial, convoluted and complicated provision of the new law: Section 199A, better known as the "20% pass-through deduction." It required a Herculean effort, particularly when you consider that, you know...most of the government had been on unpaid leave.

Estate Tax Legislation
Last week, TIA attended a Family Business Coalition meeting to discuss the prospects of Estate Tax repeal in the 116th Congress. TIA is currently supporting the efforts in Washington to repeal the Estate Tax. We are lobbying for co-sponsors on the Death Tax Repeal Act. Recently, Senator Sanders introduced a bill that TIA is strongly opposing that would raise the Estate Tax to unreasonable levels.

The administration is supporting efforts to repeal the Estate Tax and at the meeting we met with Paul Teller, Special Assistant to the President for Legislative Affairs.

Below is a comparison of the introduced Estate Tax bill so far in the 116th Congress:

Comparison of Introduced Estate Tax Bills:
Proposal Sponsor Exemption Base tax rate Additional tax rates Top Tax Rate
Death Tax Repeal Act: H.R. 218 Congressman Jason Smith Repeal Repeal Lowers gift tax rate to 35% 0%
Death Tax Repeal Act: S. 215 Senator John Thune Repeal Repeal n/a 0%
Estate Tax Rate Reduction Act: S. 176 Senator Tom Cotton $11 million 20% n/a 20%
For the 99.8% Act:
S. 309
Senator Bernie Sanders $3.5 million 45%
50% over $10 million
 
55% over $50 million
 
77% over $1 billion
77%
 
Other details
 
Death Tax Repeal Act:
 
-Maintains step-up basis.
 
Estate Tax Rate Reduction Act:
 
-Maintains step-up basis.
 
For the 99.8% Act:
 
-Hikes gift and generation skipping tax rate to 45% and lowers gift tax and generation skipping tax exemption to $1 million, not indexed for inflation.
-Lowers annual gift limit to $10,000.
-Weaken Grantor Retained Annuity Trusts by increasing minimum holding time from 2 to 10 years.
-Requires consistent basis reporting requirements (This was already passed into law).
Ends valuation discounts on nonbusiness assets.
-Maintains step-up basis.
-Increases conservation easements limit to $2 million and allow farmers to lower farmland values by up to $3 million.

Renewed Efforts in the 116th Congress:
Organizing & Executing the Next
White House Conference on Small Business (WHCSB)
The White House Conference on Small Business (WHCSB) was a series of three conferences that occurred in 1980, 1986, and 1995. They were convened by presidents Jimmy Carter (originating by Executive Order 12091), Ronald Reagan (originating from Congressional authorization of P.L. 98-276) and Bill Clinton (originating from Congressional authorization P.L. 101-409) in an effort to foster better relationships with members of the business community, Congress and the White House to develop innovative policy solutions to economic problems. President Carter and President Clinton presented the 1980 and 1995 Conference's keynote addresses, respectively. A November 2015 Congressional Research Service (CRS) report provided an analysis of the three Conferences to date. C-SPAN covered the concluding day of the five-day 1995 Conference.
 
All three Conferences shared similar organizational formats and activities performed, with differences generated in process and outcomes. To their credit, each of the three Conferences issued 60 policy recommendations for Congress and the Administration to consider. In addition, the 1995 Conference delegates elected regional implementation teams which worked closely with Small Business Administration (SBA) officials in monitoring congressional and executive branch action on the 1995 Conference's recommendations after the Conference had ended. The SBA attributed much of the 1995 Conference's implementation "success rate" to the efforts of these implementation teams. CRS noted that the 1980 Conference included participation from over 200 small business and trade associations.
 
A critical piece to the success of the WHCSB is the utilization of state conferences to ensure broad and equitable representation of the very diverse small-business community. Through the state conferences, which feed into the regional conferences and then into the national conference, small-business owners can develop, enhance and fully embrace the key issues facing small businesses nationwide. In addition to building consensus, growing small-business networks and nurturing future small-business leaders, the state conferences and broad participation of small businesses lend credibility to the final list of recommendations.
 
Despite action and success on a variety of issues impacting small business, there has not been a White House conference in more than two decades. That is far too long to go without giving voice and a forum to America's small businesses which account for 99 percent of U.S. private sector employers and 64 percent of net new private sector jobs. The 115th Congress should reunite the wide variety of voices within the small business community to help educate Congress and the White House on issues that matter most to small businesses. Just as in 1995, we can leverage the collective strength and voice of small business, to make it easier to do business with the federal government, create jobs and prosperity for our country.
 
ACTION REQUESTED:
In the 116th Congress, we urge Representatives to introduce an updated version of H.R. 6446, the "White House Conference on Small Business Act of 2018," from the 115th Congress. We urge Senators to introduce companion legislation authorizing a White House Conference on Small Business (WHCSB). This legislation is necessary in the near-term to ensure that small business issues remain at the forefront of policy discussions and also to ensure small business has a voice at the highest levels of the American government.