Treat Businesses Like Individuals Under SALT Cap Regs, NEA Says

January 31, 2019

Internal Revenue Service
CC:PA:LPD:PR (REG-107431-19)
Room 5203, PO Box 7604
Ben Franklin Station
Washington, DC 20044

To Whom it May Concern:

On behalf of our 3 million members, the National Education Association (“NEA”) is submitting the following additional comments on the SALT guidance released by the Treasury Department (“Treasury”) and the Internal Revenue Service (“IRS”). In particular, these comments are in response to the request for comments contained in Regulation 107431-19, “Treatment of Payments to Charitable Entities in Return for Consideration.” NEA is the nation's largest professional employee organization and is committed to advancing the cause of public education. NEA members work at every level of education — from pre-school to university graduate programs, serving 50 million students. NEA has affiliate organizations in every state and in more than 14,000 communities across the United States.

NEA submitted comments on Oct. 11, 2018 and July 11, 2019 regarding the proposed SALT guidance and the safe harbors and testified at the IRS hearing on Nov. 5, 2018. NEA continues to support the “quid pro quo” standard but remains concerned that this standard does not apply to businesses. In particular, we are concerned that the recent guidance will allow individuals to organize as a pass-through entity to avoid the impact of the quid pro quo standard that would apply to them if they were donating directly as individuals. We continue to maintain that the right approach is to treat businesses, regardless of how they are organized, the same way as individuals are treated under the guidance. This would avoid attempts by taxpayers to circumvent the rules and put all taxpayers in the same position. If this is not possible, we respectfully request that you clarify your guidance, particularly Example 2 of 1.162-15(1)(2)(ii), to ensure that individuals are not allowed to ensure that individuals are not allowed to generate tax deductions through a partnership, by using a state tax credit, that they would not be allowed to take as individuals.

In conclusion, NEA looks forward to continuing to work with Treasury and IRS as further guidance on the SALT limitation guidance or new guidance on the federal tax treatment of payments to state tax credit voucher programs is released.

Sincerely,

Marc Egan
Director of Government Relations
National Education Association
Washington, DC