General Conference Issues Memo on American Tax Bill

Spectrum Website
#1

In response to the American tax bill that received congressional approval this week, the General Conference of Seventh-day Adventists has issued a memo about its impact on Adventist employees and organizations. Issued jointly by the GC’s Office of General Counsel and the Public Affairs and Religious Liberty department, the memo discusses changes that “particularly impact the Adventist Church and its employees,” as well as addressing proposed changes that ultimately did not pass.

Though written specifically for church employees, the memo summarizes changes that impact many American Adventists, including charitable contributions, tuition programs, graduate tuition waivers, student loan interest, and more.

Read the memo in full below:

The United States House and Senate passed, and the President is expected to sign into law, H.R. 1 formerly known as the "Tax Cuts and Jobs Act," which makes certain changes to the United States Internal Revenue Code. Below is a summary of some of the changes that particularly impact the Adventist Church and its employees. It also addresses changes that were proposed but not ultimately passed.

Certain of the changes are permanent and others are set to expire. Given the uncertainty surrounding future tax code changes we have not differentiated between permanent and temporary changes.

This summary is for informational purposes only and should not replace qualified tax counsel. Adventist organizations that have particular questions regarding tax law and its impact on the church can contact Tom Wetmore of the Office of General Counsel.

Moving Expenses

Under current law employers are allowed to pay for and reimburse certain qualified moving expense. In addition, employees are allowed to take an above the line deduction for certain, qualified unreimbursed moving expense.

This bill makes those payments and reimbursements taxable. Starting in 2018, when a denominational employer pays to move an employee, that will have to be reported as taxable income.

Tuition Assistance

The taxability of Tuition Assistance remains unchanged. The House version of the bill would have taxed Tuition Assistance for education employees at all levels. However, the final bill did not include this change.

Those who receive the Tuition Assistance but do not work for an educational system are taxed on this benefit and will not be affected.

Johnson Amendment

Current tax law prohibits non-profits (including churches) from opposing or supporting a candidate for elected office. This provision has been called the Johnson Amendment after then Senator Lyndon Johnson who introduced the provision.

The House version would have allowed all non-profits to support or oppose candidates as long as it was in the "ordinary course" of business and was not more than a de minimis expense. The final bill did not include this change.

Charitable Contributions

Charitable contributions are not changed except that the percentage of income limitation for cash contributions has been raised from 50% to 60%. Some in the nonprofit community have been concerned that the roughly doubling of the standard deduction ($12,000 for individuals and $24,000 for married couples) will decrease the number of people who itemize and therefore decrease the value of the charitable deduction. What impact this will have on tithe and other charitable giving is unknown.

Section 529 Qualified Tuition Programs

Currently section 529 of the Internal Revenue Code allows for tax free savings plans for post-secondary education. This bill extends the eligible expense to primary and secondary education. This change could have a potential benefit for Adventist education and should be further explored and promoted.

Graduate Tuition Waivers

The non-taxability of tuition waivers for graduate students remains unchanged. The House version included a provision that would have taxed the "free tuition" graduate students get in exchange for teaching or research. However, the final bill did not include this language.

Student Loan Interest

The deductibility of student loan interest remains unchanged. Student loan interest can be deducted, up to $2,500-depending on Modified Adjusted Gross Income. The House version of the bill would have removed this provision, the final bill did not include this change.

Classroom Expense Deduction

Current law allows K-12 educators to take an above the line deduction up to $250 for unreimbursed classroom expenses. The House version of the bill would have removed this provision, the final bill did not include this change.

Unreimbursed Business Expenses

Current law allows for the deductibility of certain unreimbursed business expense subject to a 2% floor of Adjusted Gross Income. Certain church employees, especially those with significant travel, take a deduction for the difference between the allowed IRS per diem and mileage rates and those allowed by church policy.

This bill no longer allows the deduction of certain miscellaneous expense, including unreimbursed business expense listed above.

Parsonage Allowance/Exclusion

The "Tax Cuts and Jobs Act" did not, at any stage, make changes to the parsonage allowance/ exclusion. The final bill also makes no change to this benefit.

However, recently a federal judge in the Western District of Wisconsin, in Gaylor v. Mnuchin, held the parsonage allowance and exclusion from income to be unconstitutional. But, she stayed her decision until 180 days after the appeal process is complete. Her ruling will not have any immediate impact on this issue.

The Adventist Church is actively monitoring this case. We are also likely to become involved as amici curiae in the appeals. We anticipate this issue will eventually be resolved by the United States Supreme Court.

This memo originally appeared in the North American Division NewsPoints newsletter.

Alisa Williams is managing editor of SpectrumMagazine.org.

Photo by Jomar Thomas on Unsplash

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This is a companion discussion topic for the original entry at http://spectrummagazine.org/node/8461
#2

one does wonder how long any of these tax changes are going last if the dems regain the house and the senate in 2018…if this happens, i would think the first order of business would be trump’s impeachment, followed by a reinstatement of the individual mandate for health coverage and a repeal of corporate tax cuts…but there are a number of other changes that are conceivable unless of course the dems go bernie, and forfeit all legitimacy while they have the votes…

#3

I would say the Church is going to benefit from this tax plan, as certain nameless donors will have additional money to give away. Even Fox News concedes that the new tax plan disproportionately benefits the wealthiest Americans.

Should we expect anything different when $3 billion is spent annually on lobbying, which is a whopping $6 million per each individual in congress? It all comes down to lines in the tax code. Of the close to 11,000 lobbyists in Washington, more than 6,000 reported that they were involved with writing tax law in 2017. Our government is for sale; it’s been a long history of pay-for-play, and nothing has changed since November 8 2016. Even so, there are SDAs who will still insist that the swamp is rapidly getting drained. Dream on.

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#4

The reality of this bait and switch tax scheme is that poor Americans will lose billions of dollars worth of federal benefits under the Senate GOP tax bill, according to a new Congressional Budget Office report.
This is largely because the legislation would eliminate the individual mandate, which requires nearly all Americans to get health insurance or pay a penalty. This would result in 13 million fewer people having coverage in 2027, the CBO found. Many of the folks who would forgo coverage would have lower or moderate incomes and would have qualified for Medicaid or federal help paying their premiums or out-of-pocket health expenses, CBO found. Those earning less than $40,000 a year would be worse off in 2025, when the bill’s provisions would mostly be in effect, according to the report released Sunday. On the flip side, those with higher incomes would enjoy tax breaks. The Adventist church should represent and speak up for the poor and the disadvantaged who will be hurt the most by this tax law.

In contrast to our “memo” GC comment look at what the US Conference of Catholic Bishops just said:
Catholic bishops say the G.O.P.-backed tax reform plan is “unconscionable” and “unacceptable,” pointing to “fundamental structural flaws” that they say “will raise income taxes on the working poor while simultaneously providing a large tax cut to the wealthy.” In a letter sent to members of the House of Representatives, three U.S. bishops who head committees on domestic justice, international justice and Catholic education examined the tax proposal, which cleared a key procedural hurdle on Nov. 9, saying that the proposal did not meet moral criteria “centered on care for the poor and concern for families. The bishops charged that the G.O.P. tax proposal “appears to be the first federal income tax modification in American history that will raise income taxes on the working poor while simultaneously providing a large tax cut to the wealthy.”

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#5

How disappointing that the first response of the GC is an analysis of what is in this for us rather than an analysis of what it will take away from those most in need among us.

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#6

Why is the General Conference issuing this release, and is it now going to release commentary on all tax changes regardless of where they occur in the world. I would have thought that the rightful conveyor of this message would have been the North American Division.

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#7

In the spirit of separating church and state the “memo” put forward is just as it should be. It simply states what is the reality relating to the church and it’s entities without taking a political slant. The Catholics are very much in favour of the joining of church and state and their statement reflects that… Our church has always been there to help those in need and we will continue to do so.

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#8

Exactly RobEskelson. The LAST thing the Church needs to do is get into the partisan job of arguing about various tax bills. This memo states simply how the new laws will affect the Church, without dipping in to politics.
The unholy amalgamation of Church and State ALWAYS hurts BOTH. As individual Christians living in a democracy, we have a duty to be involved in politics. But the Church brings together Republicans, Democrats, Libertarians, Green Party, Tea Party, and Independents. In the pews we are all one in Christ, and can leave the politics outside, where it belongs.

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#9

Donald and Rob, I think you are confused about the meaning of the separation of church and state. It means that the state has no power to dictate belief or religious practice, but it does not mean that churches have no right to speak out when the state does something that is grossly immoral–such as further empowering the rich at the expense of the poor. Jesus spoke out very directly about this in Matthew 25–those “nations” are condemned who fail to feed the hungry, clothe the naked, and welcome the stranger. Similar admonitions came from many of the Old Testament prophets.

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#10

My thoughts exactly! The GC has no business using its resources in making pronouncements on American tax laws. That should be the role of the NAD! Didn’t the NAD just get a separate office to prove that it was indeed capable of handling its own affairs without the pronouncements of big brother. They have now failed at the first hurdle.

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#11

“When the Son of Man comes in all His glory,” will He reward and punish corporately or individually?

#12

Tax bills are just a ploy to achieve gaining support from certain voters and lobbyists. Each govt. party plays with the ploy when they are in control. The only fair tax is a flat tax and governments won’t do that because then they lose a ploy to play with.

#13

The economic and class basis for this tax law is clear. It seeks to give those who have, even more and the those who don’t have less. The bible does have something to say about this, The Virgin Mary herself speaks about the rich/versus the poor. Her take on it in regards to the child she will bear is telling. Of course the SDA is silent on this. But is not hesitant about the role of women in the church or sexual orientation. The SDA Church plunges right in. But when the rich write laws to benefit themselves at the benefit of those who are poor and less fortunate we hear only crickets. This is NOT a matter of politics. The treatment of the poor and less fortunate is one of the foundations of the gospel of Jesus Christ.