CBO report projects a recession in 2013 unless Congress acts
The Congressional Budget Office (CBO) reported May 22 that a recession will likely result in early 2013 if lawmakers fail to prevent a “fiscal cliff” of scheduled tax increases and spending cuts at the end of the year. The CBO projected that the marginal tax rates set to rise next year and the $109 billion in automatic spending cuts mandated by the Budget Control Act will cause gross domestic product to contract by 1.3% in early 2013, but would reduce the deficit by $607 billion in 2012 and 2013.

Camp calls for “fast track” tax reform
Recently, House Ways and Means Committee Chairman Dave Camp (R-MI) said that in addition to extending the 2001 and 2003 tax cuts, he hopes to enact a "fast-track" procedure that would compel Congress to act on comprehensive tax reform in 2013. Camp said House Republicans are reviewing examples of similar fast-track procedures in federal law and could have a proposal ready before the August recess. House Speaker John Boehner (R-OH) has said he plans to hold votes on the tax cuts this summer.

Independent Sector participates in House Ways and Means Subcommittee hearing
IS president and CEO Diana Aviv testified May 16 at a House Ways and Means Subcommittee on Oversight hearing on tax exempt organizations. Read Independent Sector’s statement for the record. Click here to learn more about the hearing and read the other witness' testimony.

House votes to stop cuts to defense spending
On May 10 the House voted 218-199, along party lines, to replace defense spending cuts mandated by the Budget Control Act with further reductions to domestic spending. The Sequester Replacement Reconciliation Act of 2012 (H.R. 5652) would  replace the defense spending cuts, set to take effect in January 2013, with $328 billion in spending reductions to food stamps and other mandatory social programs. Senate Majority Leader Harry Reid (D-NV) has said the Senate will not take up the bill, which President Obama has threatened to veto, calling instead for a “balanced approach that shares the pain as well as the responsibility.”

Hatch tells IRS to investigate potential leak of non-profit’s confidential tax information
On May 8 Senate Finance Committee Ranking Member Orrin Hatch (R-UT) wrote to IRS Commissioner Douglas Shulman regarding the agency’s possible role in the disclosure of the National Organization for Marriage’s confidential donor information that was published earlier this year by the Human Rights Campaign and the Huffington Post. In the letter, Hatch demanded a comprehensive IRS and Attorney General review, noting that “the unauthorized public disclosure of return information is strictly prohibited by law." Read the letter.

Ways and Means Subcommittee holds hearing on tax extenders
On April 26 the House Ways and Means Select Revenue Measures Subcommittee held a hearing on the expiring and expired tax extenders, which include the IRA charitable rollover and other charitable giving incentives. Testimony was limited to House members who had introduced or co-sponsored legislation related to the tax provisions during the 112th Congress. Several House members testified in favor of the charitable tax extenders. Read the IS statement and learn more.

Senate passes postal reform legislation
On April 25, the Senate voted 62-37 to pass legislation (S. 1789) to reform the U.S. Postal Service, after considering several amendments and waiving a point of order that the $34 billion cost of the legislation violated the 2011 Budget Control Act. The Senate bill as amended would maintain the current nonprofit postage discount rate, unlike legislation (H.R. 2309) that has been approved by the House Oversight and Government Reform Committee. Learn more.

Senate hiring proposal would include nonprofits
Senate Majority Leader Harry Reid (D-NV) has introduced legislation that would provide a tax credit to employers who increase payroll in 2012. The Small Business Jobs and Tax Relief Act, which closely mirrors a proposal included in President Obama’s FY 2013 budget proposal, offers a temporary tax credit equal to 10 percent of up to $5 million in wages (maximum credit $500,000) for employers who hire new employees or increase wages. Nonprofit employers would be eligible for the credit. Sen. Charles Schumer (D-NY) said yesterday that he expects the Senate to hold a vote on the measure in the coming weeks.

House adopts FY 2013 budget resolution
On March 29, the House adopted the fiscal year 2013 budget resolution. The plan proposes replacing the current six rate personal income tax rate structure with a two level structure, set at 10 percent top and 25 percent, and repealing the alternative minimum tax. The top corporate tax rate would be reduced to 25 percent. The blueprint sets discretionary spending at $1.028 trillion, roughly $19 billion below the $1.047 trillion cap set by the Budget Control Act, and would instruct committees to find ways to avoid sequestration – the automatic spending cuts triggered by the Super Committee’s failure to recommend $1.2 trillion in deficit reduction measures. Learn more.