Congress Passes Tax Reform Legislation Including NVFC-Supported Provisions
December 20, 2017
Congress has passed H.R. 1, the Tax Cuts and Jobs Act, which is expected to be signed into law and will overhaul the U.S. Tax Code for the first time in more than three decades. The final conference report, which was released on December 15 and modified slightly on December 19 contains several provisions that will benefit the volunteer fire service.
Included in the conference report is language from the LOSAP Cap Adjustment Priority (LOSAP CAP) Act (H.R. 1720/S. 1239), which would double the limit on annual contributions into an individual’s length of service award program (LOSAP) from $3,000 to $6,000. It would also establish a mechanism tied to inflation whereby the contribution limit can be increased in the future. LOSAP CAP was added to H.R. 1 by the Senate Finance Committee based on a request by Susan Collins (R-ME), the author of S. 1239.
“I’d like to thank Senator Collins for her work getting this important piece of legislation added to H.R. 1,” said National Volunteer Fire Council (NVFC) Chair Kevin D. Quinn. “I’d also like to recognize and thank Senator Ben Cardin (D-MD) for his support as the lead Democratic co-sponsor of S. 1239, as well as Representatives Peter King (R-NY) and Bill Pascrell (D-NJ) for introducing and building support for H.R. 1720. The cap on annual contributions into a LOSAP has not been adjusted in over 20 years. Over that time we have seen the number of volunteer firefighters and EMTs continuing to serve into their 50s and 60s increase. Passage of this bill will give agencies flexibility to offer higher contribution levels if they choose to.”
H.R. 1 also makes “fire protection systems” an eligible property under section 179 of the tax code, which means that business owners will be able to receive a tax credit for the cost of installing fire sprinklers and fire alarms in commercial structures. This language was included in the Senate version of H.R. 1 and the NVFC asked House and Senate conferees to maintain it in the final version of the bill.
The conference report does not include language that had been part of the House-passed version of H.R. 1 that would have made interest payments on private activity bonds taxable. The NVFC opposed this language and asked conferees to remove it from the final bill. Currently, many nonprofit volunteer fire departments use private activity bonds to raise money to purchase apparatus and to build or remodel fire stations. The NVFC identified 21 states in which private, nonprofit fire departments use private activity bonds for this purpose and are able to obtain a rate that is 1-1.25 points lower because the interest payments are untaxed.