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Courtesy of U.S. Chamber of Commerce and ASAE Inroads

 WASHINGTON UPDATE:

U S CHAMBER OF COMMERCE 

Reminder: Important Changes to HSAs

Before the close of the 109th Congress, several important improvements were made to Health Savings Accounts (HSAs) that will make it easier for employers and employees to open and fund them. The changes were included in The Tax Relief and Health Care Act of 2006.
 
Among the improvements are: allowing rollovers from Flexible Spending Accounts and Health Reimbursement Arrangement into an HSA; a one-time, tax-free rollover from an IRA into an HSA; and repeal of the annual plan deductible limit on HSA contributions.  The bill also allows individuals to make the maximum contribution to an HSA regardless of when the plan began and allows employers to make higher contributions for lower-wage workers.
 
Health savings accounts are tax-free savings accounts that anyone with a qualified high-deductible health insurance plan can open and fund to pay for future medical expenses. Introduced in 2004, HSAs lower health insurance costs for small businesses and expand health care access to previously uninsured small business employees.

 Improvements become effective January 2007. 

American Society of Association Executives
1.  SENATE MOVING FORWARD ON LOBBYING REFORM BILL: As the Senate began work this week on a comprehensive lobbying and ethics reform bill (S. 1), Senate Majority Leader Harry Reid (D-NV) offered an amendment Jan. 9 that would address gifts and privately-paid travel in much the same manner as the rules changes passed by the House last week.

Reid’s proposal would prohibit lobbyists as well as companies or other organizations employing or retaining registered lobbyists from buying gifts for senators or paying for their travel. Like the House, however, there would be an exception in the travel rules allowing lobbying organizations to pay for a one or two-night trip to give a speech or otherwise attend an event pre-approved by the Senate Ethics Committee as related to official duties of office.

The amendment would also strengthen disclosure of earmarks in spending or tax bills, and more controversially, would ban senators’ use of corporate jets unless they pay the full charter fare. Current rules allow senators to pay the cost of a first-class commercial seat for travel on a private plane.

ASAE delivered a letter to all Senate offices Jan. 8 urging the Senate to preserve legislators’ ability to travel to an association meeting or conference to give a speech, participate in a panel, or otherwise engage in dialogue with an association’s members on a variety of issues pertinent to the construction of strong legislation. ASAE endorses a pre-approval process for privately-paid congressional travel, as well as full disclosure of these trips.

ASAE will be closely monitoring the progress of this legislation as the Senate is expected to continue a floor debate aimed at improving S. 1 through next week. It appears, however, that Senate leaders are moving toward adopting new rules that would allow some congressional travel to legitimate association events and programs outside Washington, DC. Reid’s provisions on travel are identical to those endorsed by Sens. Russ Feingold (D-WI) and Barack Obama (D-IL) earlier this week.

Whereas the House approved ethics reform as rules changes last week, the Senate bill is more comprehensive, addressing the Senate’s own ethics rules as well as statutory changes to lobbying disclosure requirements. Reid has indicated the Senate will focus on ethics and lobbying reform without attaching electronic disclosure provisions or other campaign finance issues at this time. Any bill passed by the Senate would need to be reconciled with the House and signed by the president before it becomes effective.

2.  HOUSE DEMS PUSH MINIMUM WAGE INCREASE, WITHOUT AHPs: The House passed a bill Jan. 10 raising the minimum wage from $5.15 to $7.25 an hour in three stages over 26 months.

Part of the House leadership’s “100 hours” agenda, the bill (H.R. 2) was moved with no amendments. House Republicans had offered a proposal that paired the minimum wage hike with association health plan (AHPs) legislation and other incentives to help small businesses shoulder increased payroll costs, but House Democrats elected to proceed with a clean minimum wage bill. The bill calls for an increase to $5.85 an hour 60 days after it’s signed into law, then $6.55 an hour one year later, and then to $7.25 an hour one year after that.

The Senate is expected to move quickly on its own minimum wage bill, but the author of small business health plan (SBHP) legislation in that chamber, Senate Health, Education, Labor and Pensions ranking member Mike Enzi (R-WY), said this week that he is not in favor of offering SBHPs as an amendment to the Senate minimum wage bill. There will likely be some “sweeteners” for small businesses added to that bill, however, in order to get the 60 votes needed to end debate. Among the small business tax breaks that could be added to the wage increase is an expansion of Section 179 small business expensing limits. Although the House passed its own bill, House Majority Leader Steny Hoyer (D-MD) said the House may consider accepting the Senate version to avoid a conference committee.

Enzi did vow to continue to push for SBHP legislation this year, even as Senate HELP Chairman Edward Kennedy (D-MA) said this week that Congress should extend Medicare to all Americans in order to provide coverage to the millions of uninsured. Enzi said Jan. 10 he is committed to working toward a bipartisan solution to the nation’s health care crisis, and told Congress Daily that “small business pooling power is an important component of any health reform effort.”

3.  DC COUNCILMEMBER REINTRODUCES DC NONPROFIT ACT: DC Councilmember Phil Mendelson introduced the latest draft of his “Nonprofit Organization Oversight Improvement Act” yesterday, which does incorporate many of the proposed edits suggested late last year by ASAE and other members of the District’s nonprofit community.

However, Mendelson’s new draft is considered a starting point for discussion on revising laws governing nonprofit organizations incorporated in the nation’s capital, and there is talk of moving an alternative, “bare bones” bill drafted by the Office of the Attorney General of DC that raises fewer concerns within the District’s nonprofit sector.

Following numerous objections from ASAE and others to language in the original bill introduced last fall, Mendelson has committed to a more deliberative vetting of this legislation this year. Once it is determined which version of the bill will be advanced, Mendelson has said he will hold a public hearing on the issue, and look for full Council approval probably in March or April. If the Council approves the bare-bones version, it is ASAE’s understanding that the city’s “Nonprofit Corporation Act” will then be comprehensively reviewed by the DC Council with input from the nonprofit community, and updated in the next one to two years.

4.  HOUSE PASSES PAY-GO RULES, ALONG WITH EARMARK REFORM: On its second day in session, the House passed pay-go rules Jan. 5 that requires the chamber to pay for any tax cuts or increased spending by raising taxes or finding offsets elsewhere in the budget.

The procedural change, along with a requirement that legislators disclose the sponsors of earmarks in spending bills, was approved by a vote of 280-152.

House leaders had promised restoration of pay-go rules before the start of the 110th Congress as part of an effort to reduce the federal deficit. In a key point, the rule change would allow tax increases on a simple majority vote instead of the three-fifths requirement that has stood for more than a decade.

House Speaker Nancy Pelosi (D-CA) said on the television program “Face the Nation” Jan. 7 that Democrats may consider raising individual taxes for those earning more than $500,000 per year to offset tax credits for college tuition and repeal of the alternative minimum tax (AMT).

The House-passed rule requiring disclosure for all legislative earmarks continues the ethics reform initiated by House leaders on their first day in session, when the House imposed a broad ban on gifts from lobbyists and restricted privately-funded congressional travel.

5.  SENATE BILL WOULD MAKE INTERNET TAX BAN PERMANENT: A bill introduced in the Senate Jan. 4 would make permanent the federal ban on taxes on Internet access and online sales that is due to expire in November this year.

The bipartisan “Permanent Internet Tax Freedom Act” (S. 156) was introduced by Sens. Ron Wyden (D-OR), John McCain (R-AZ) and John Sununu (R-NH) and would prohibit taxes on Internet access, double taxation (by two or more states, for example) on a product or service purchased over the Internet, and discriminatory taxes that treat Internet sales differently from in-store sales.

Wyden said without this ban, Internet users would face as much as a 17 percent increase in their costs for Internet access and businesses engaged in online sales would face a number of discriminatory taxes.

“State and local politicians should not be allowed to use the popularity of the Internet as an opportunity to broaden their tax base,” Sununu said. “Simply put, taxing consumers for accessing the Web discourages Internet use, reduces investment, stifles innovation, and limits the services available to consumers.”

6.  HOUSE BILL WOULD PREVENT UNSOLICITED POLITICAL CALLS: A bill introduced in the House this week would prohibit pre-recorded political phone calls to individuals who add their phone numbers to the national do-not-call registry maintained by the Federal Trade Commission (FTC).

When the do-not-call registry was created in amendments to the Telephone Consumer Protection Act (TCPA) in 2003, commercial telemarketers were banned from calling numbers registered with the FTC, but an exception was made for calls from nonprofit groups, including most political organizations.

A bill (H.R. 248) introduced by Rep. Virginia Foxx (R-NC) would apply the do-not-call registration to unsolicited politically-oriented recorded calls, which she says were far too prevalent during the mid-term elections last fall.

“During campaign season, households are bombarded with robotic political calls that advertise, campaign, and solicit donations for or against political candidates or issues,” Foxx said. “Anyone who wants to continue to receive automated political calls will be able to receive them. I believe people should have this choice.”