Making Cents: How Tax Reform Could Impact the Fire Service

Jul 13, 2016, 17:03 PM
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Summary : The 114th Congress is off to a fast start, with the House Ways and Means Committee and the Senate Finance ...
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Date : Mar 2, 2015, 05:48 AM

The 114th Congress is off to a fast start, with the House Ways and Means Committee and the Senate Finance Committee already talking about delivering a tax-reform bill by summer.

While terms like "FICA withholding" and "minimum staffing" aren't often used in the same sentence, they could be, depending on what Congress includes in their tax-reform proposals. Much of Congress' focus is on corporate tax rates, but the IAFC is pushing Congress to include provisions to support volunteer recruitment and retention and the installation of automatic fire-sprinkler systems.

The Volunteer Responder Incentive Protection Reauthorization Act (VRIPRA) will soon be reintroduced by Senators Charles Schumer (D-N.Y.) and Susan Collins (R-Maine) in the Senate as well as by Rep. John Larson (D-Conn.) in the House of Representatives.

If passed, VRIPRA would reauthorize a provision of the tax code which waived income taxes on all property tax-based incentives and up to $360 in other incentives given to volunteer emergency responders.

Additionally, VRIPRA would increase the tax-exclusion for nonproperty-based incentives from $360 to $600.

Protecting these meager benefits for volunteer firefighters and EMS personnel is a crucial component of any approach to address the recruitment and retention challenges faced by fire departments across the nation. The IAFC hopes that VRIPRA can be included in any tax-reform legislation passed by Congress.

Potential changes to Section 179 of the Tax Code, which permits the deduction of business expenses from taxes, is also up for Congressional consideration. Business may only expense items that are specifically classified in Section 179 as business expenses.

The IAFC will continue to push Congress to add fire-sprinkler systems to the list of permissible Section 179 expenses.

As of January 1, 2015, each taxpayer may deduct a maximum of $25,000 of Section 179 expenses. Due to the current cap, classifying fire sprinklers as a Section 179 expense would mostly help owners of low- and mid-rise buildings, such as restaurants and nightclubs, pay for retrofitting their buildings with a fire-sprinkler system. The IAFC believes this is a key demographic to target, especially in light of the tragic 2003 fire at the Station Nightclub in West Warwick, R.I.

The IAFC anticipates that a Fire Sprinkler Incentive Act will be introduced later this year.

Lastly, Congress is also working to codify the 2014 IRS decision to exempt volunteer emergency responders from the Patient Protection and Affordable Care Act's requirement for certain employers to offer health insurance to full-time employees.

While the IRS's decision is still valid, Representative Lou Barletta (R-Pa.) and Senator Pat Toomey (R-Pa.) introduced the Protecting Volunteer Firefighters and Emergency Responders Act (H.R. 33/S. 420), which would prevent this rule from being changed by future presidential administrations. The House passed this legislation on January 12 in a 401-0 vote; however, the Senate has not yet considered the bill. S. 420 currently has 22 cosponsors.

Tax policy is a hot topic in Washington and is unlikely to cool off anytime soon. As the 114th Congress continues trying to be the first to overhaul the tax code since 1986, the IAFC is working to make sure the fire and emergency service stays on their minds.

If you're interested in contacting your member of Congress, visit the IAFC's Government Relations webpage and see how to get involved!

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