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The Department of the Treasury has recently published detailed information about the Biden Administration’s tax proposals for fiscal-year 2022. This 114-page publication is traditionally called “The Green Book” by the tax community.  Given the number of environmental provisions, this “Green Book” is even greener than usual.  Of course, Congress institutes tax law, so…

 

SITUATION

Denali Christian College (DCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are required to file Form 990 annually.

The CFO at DCC called us to ask about what they had been hearing about future tax proposals by the Biden Administration.

“The ‘Green Book’ – a summary of those plans – was released recently,” we answered.  “To summarize, the proposal consists of two main parts, the ‘American Jobs Plan’ and the ‘American Families Plan.’”

“Is there anything in there to encourage charitable giving or help higher education institutions?”

“Good question. There do not appear to be any overt encouragements for charitable giving.  There is a provision for ‘School Infrastructure Bonds’ – basically enhanced Tax-exempt bonds – that could be of benefit.  We will have to navigate possible “religious” restrictions (as we’ve recently seen in HEERF allowable expenditures?).  Also, there is a proposed ‘Disaster Mitigation Tax Credit’ that would be nonrefundable tax credit for homeowners and businesses in areas that have seen a Federal disaster declaration in the past ten years.  It would be equal to 25% of qualified disaster mitigation expenditures capped at $5,000.  It is currently unclear whether this may be of advantage to your institution.”

Several highlights:

American Jobs Plan

  • Raise the Corporate Income Tax Rate to 28%
  • Impose a 15% Minimum Tax on Book Earnings of Large Corporations
  • Expand the Low-Income Housing Credit
  • Provide Neighborhood Homes Investment Tax Credit
  • Prioritize Clean Energy

American Families Plan

  • Increase the Top Marginal Income Tax Rate for High Earners
  • Make Permanent the American Rescue Plan Expansion of Premium Tax Credits
  • Make Permanent the Expansion of the EITC for Workers Without Qualifying Children
  • Make Permanent American Rescue Plan Changes to the Child and Dependent Care Tax Credit
  • Reform the Taxation of Capital Income
  • Repeal Deferral of Gain From Like-Kind Exchanges
  • Increase Oversight of Paid Tax Return Preparers
  • Enhance Accuracy of Tax Information

“Okay.  Can you send us links?”

“Sure.  The Table of Contents is ‘clickable,’ so you can easily navigate the 114-page document to find out more on specific proposed measures.”

General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals (treasury.gov)

 

RULES

From U.S. Department of the Treasury,  “General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals”:

To accompany the Administration’s Budget, Treasury releases the “General Explanations of the Administration’s Revenue Proposals” which provides an explanation of the Administration’s revenue proposals for that fiscal year.

The American Jobs Plan includes revenue proposals that reform corporate taxation, support housing and infrastructure, and prioritize clean energy. Reforms to the corporate income tax aim to collect sufficient revenue, build a fairer tax system, and reduce tax incentives that encourage profit shifting and offshoring. Housing and infrastructure tax credits would support low-income housing, economic development, and public school and transportation infrastructure. The American Jobs Plan would eliminate all fossil fuel subsidies that linger in the Code, while substantially expanding tax incentives that encourage clean energy sources, energy efficiency, carbon sequestration, and electric vehicle adoption.

The American Families Plan includes revenue proposals that strengthen the taxation of high-income taxpayers, expand tax credits for low- and middle-income workers and families, and invest in improved taxpayer compliance and service. Income tax rates for those with the highest incomes would increase, and loopholes, such as the carried interest preference and the like-kind real estate preference, would be eliminated for those with the highest incomes. Reformed taxation of capital income would even the tax treatment of labor and capital income and eliminate a loophole that lets substantial capital gains income escape taxation forever. The economic security of families and workers would be supported through more generous child tax credits, an expanded earned income tax credit, expanded child and dependent care tax credits, and more generous premium tax credits. Finally, transformative investments in taxpayer compliance would provide the Internal Revenue Service with the resources and information that it needs to build a fairer and more efficient tax administration system.

 

BOTTOM LINE

  • The new “Green Book” proposals are for the 2022 tax year.
  • These are just proposals – Congress will ultimately wrestle to “ink” a new tax law.
  • There may be some future opportunities for green/environmental credits for your institution.
  • “School Infrastructure Bonds” may be beneficial to your institution – depending upon possible “religious” restrictions.

Specific questions? Email Dave Moja > dave@mojacpa.com

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.

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