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Key Legislative and Regulatory Issues

For more information about any of these issues, contact NFDA's Advocacy Division staff:

John Fitch, senior vice president, Advocacy Division, 202-547-0441, jfitch@nfda.org
Lesley Witter, vice president, Advocacy Division, 202-547-0877, lwitter@nfda.org


Updated: June 2014

Introduction

 

With the exception of confirming the nomination of Sylvia Burwell to be the new HHS Secretary, the furor over the Affordable Care Act has been overtaken in Congress by the appointment of a Special House Committee to investigate the Benghazi attack, the scandal involving the Veterans Administration Health System, the recent EPA regulations setting new emission standards for coal-fired power plants, the prisoner swap involving Sgt. Bergdahl, the infighting to replace Eric Cantor (R-VA) as Majority Leader and the most recent situation in Iraq. As a result, not much else is getting any attention. The Appropriations Committees continue to work on the various spending bills but that's about it. With very little legislative days left until their August recess and even fewer available after they return before adjourning for the November elections, it is a good bet that any work that needs to be done will happen in the lame duck session after the election and before adjournment at the end of the year.

In the meantime, NFDA continues to be involved in several issues that will impact funeral service and small business. Set forth below is a brief summary of these current issues.

Legislative Issues
 

Funeral Rule Improvement Act of 2014 (H.R. 4213) – Introduced at the request of NFDA, the bill would amend the definitions of "Funeral Provider" and "Funeral Services" in the FTC Funeral Rule to include all for-profit sellers of funeral or final disposition goods or services. The bill has been referred to the House Energy and Commerce Subcommittee on Commerce, Manufacturing and Trade. To date, H.R. 4213 has 12 House co-sponsors (7 Republicans and 5 Democrats). Still no word yet from the Subcommittee staff on possible hearings on the bill. In addition, we have met with several Senate offices about introducing a Senate version of H.R. 4213. The staffs of these offices are reviewing the bill to determine if their Senator would be interested in sponsoring or co-sponsoring a bill. We continue to work with them to answer any questions they may have on it or the need for it.

Health Insurance Tax (H.R.763/S.603 and H.R. 3367) – NFDA has joined 35 other small-business groups in supporting and actively advocating for passage of legislation to repeal or delay the onerous health insurance tax created by the Patient Protection and Affordable Care Act.

H.R.763, entitled the "Jobs and Premium Protection Act of 2013," has been introduced in the House and now has over 226 co-sponsors from both sides of the political aisle. A companion bill, S.603, has been introduced in the Senate and has more than 26 co-sponsors and supporters from both parties as well. (NOTE: it takes 217 votes in the House to pass a bill and 51 votes in the Senate unless Cloture is invoked. It then would require at least 60 votes.) H.R. 3367 simply delays the imposition of the tax for two years.

Beginning this year, the tax will be imposed on insurance companies that offer fully insured coverage. The tax will be assessed on the net earned health insurance premiums as a percentage of their total premiums.

The Congressional Budget Office (CBO) has stated that the tax "would be largely passed through to consumers [small and family-owned businesses] in the form of higher premiums for private coverage."

A recent study by Oliver Wyman Company found that on average, across all states from 2014-2023; premiums will increase $2,794 for small-business employees with an individual plan and $6,883 for those with a family plan. In 2014, the first year of the new tax, the average increase in premiums will range from 1.9 to 2.3 percent. By 2023, the expected increases will range from 2.8 to 3.7 percent.

While there is such strong support for these bills, it is now very problematic that any of them will be considered this year as stand alone bills. However, we do believe that either the repeal bill or the delay bill may be included as part of the compromise budget or tax agreement now being developed and probably introduced later this year but not actively considered until after the election in a Lame Duck Session. NFDA will keep members updated as these bills progress through the legislative process.

Tax Reform (No Bill Yet) – Ways and Means Committee Chairman Dave Camp (R-MI) has announced his draft comprehensive tax reform proposal to both applause and boos. In these efforts, there are always winners and losers. On the corporate side, many of the small business proposals NFDA has reviewed seem to be beneficial to NFDA members. In that regard, NFDA has submitted comments to the chairmen of the House Ways and Means Committee and the House Small Business Committee supporting several provisions contained in the draft small-business tax reform proposal. However, several of the Subchapter S provisions appear to be detrimental to those pass-through entities. A considerable number of NFDA members fall into this category. As a result, NFDA has joined the Subchapter S Corporation Coalition to work with other groups on these issues. On the individual side, there seems to be much more controversy as the proposal eliminates or reduces many of the very popular exemptions and deductions in the current tax code and retains a much higher top tax rate then on the corporate side.

NFDA continues to actively monitor ongoing Congressional discussions as they mature and progress through the internal and external discussion stages; however, it appears that there is no political will in this election year to officially introduce this draft proposal and move it through the legislative process. However, certain sections or provisions of the larger tax reform bill may be extracted and inserted in the FY 2015 Budget and tax discussions now underway. We will keep you advised as this process proceeds.

Estate Tax (No Bill) – Just when we thought this issue had finally been resolved, President Obama included a provision in his FY 2015 budget that would reduce the current law to 2009 levels. Currently, the estate tax law provides a $5 million exclusion ($10 million for couples) and a tax rate of 40% above the exclusion. The exclusion is indexed for inflation and includes a stepped-up basis and spousal transfer. The President's proposal would reduce the exclusion to $3.5 million ($7 million for couples), and it would not be indexed for inflation. While NFDA understands there is little, if any, political support for the President's proposal from either Republicans or Democrats, it is nonetheless in play during the upcoming budget and tax negotiations and could be included in any of these bills as a way to reduce expenses.

As a side note, the Ways and Means Tax Reform proposal does not recommend any changes to current estate tax law. In addition, a bill to repeal the estate tax altogether has been introduced as H.R. 2429, the "Death Tax Repeal Act of 2013". Even with 218 co-sponsors, this bill is more symbolic than reality. While it may pass the House at some point, it has no chance of passing the Senate. Our best strategy remains to advocate keeping the current law. NFDA will continue monitor this issue and act with other members of the Family Business Estate Tax Coalition to oppose any effort to roll back the current law.

Compensatory Time Option for Private Employers and Employees (H.R.1406) – Under current law, only public-sector employees can receive compensatory time off in lieu of monetary overtime compensation. With certain exemptions for those serving in an executive, administrative or professional capacity, and this right does not extend to the private sector. Any violation of this law carries significant penalties.

H.R.1406, the Working Families Flexibility Act of 2013, allows all employers to offer their employees the choice of paid time off, or comp time, in lieu of cash wages for overtime. Under this bill, no worker could ever be forced to take paid time off, just as no business owner would be forced to offer it. This bill does not change the 40-hour work week or how overtime pay is calculated. The same protections that have been a part of labor law for decades remain. But for some workers and businesses, comp time could be a valuable option to include in a benefits package. Specifically, H.R.1406 provides:

• Receiving paid time off, or "comp time," for working overtime hours is completely voluntary. An employee who prefers to receive cash payment for overtime hours worked is always free to do so.

• Requires the employer and employee to complete a written comp time agreement. An employee can withdraw from this agreement at any time and receive his or her accrued comp time in cash wages.

• Comp time is accrued at the same rate as overtime cash wages. Employees who work more than 40 hours a week will accrue paid time off at a rate of one and one-half hours for each overtime hour worked.

• Workers can cash out their accrued comp time whenever they choose and receive the equivalent in cash wages. Employers are required to provide cash wages within 30 days of receiving an employee request.

• Explicitly prohibits an employer from "directly or indirectly intimidating, threatening or coercing or attempting to intimidate, threaten or coerce an employee" into taking or not taking comp time.

• An employer who violates these anti-coercion provisions will be liable to the affected employee for "double damages," which includes both the amount of comp time owed and an equal amount in cash wages.

• In addition to new provisions prohibiting coercion, H.R.1406 ensures that all existing enforcement remedies – including action by the U.S. Department of Labor – are available to workers if an employer fails to pay cash wages for overtime hours worked.

H.R.1406 passed the House on May 8, 2013 and is currently pending in the Senate. Passage of this bill in a Democrat controlled Senate is problematic especially in an election year. However, stranger things have happened! NFDA submitted a letter of support for passage of H.R. 1406 to the Chairman of the House Committee on Education and Workforce. A similar letter was also submitted to the Chairman of the Senate Health, Education, Labor and Pensions Committee.

We will keep members updated if this bill becomes active.

Various Regulatory Reform Bills (H.R.2542, 2122,1493 and 2641) – All of these bills seek to reform and streamline the federal regulatory process especially as it impacts and relates to small business. NFDA, along with over 100 other small business groups, signed letters to House members urging their support for all these bills. All bills have been favorably reported out of Committee and placed on the Calendar for future floor consideration. The only exception to this is H.R. 2641 which has passed the House and is pending in the Senate. NFDA will continue to advocate for the passage of these bills.

Dignified Interment of Our Veterans Act of 2014 (H.R. 4446/S.1755) – These bills would require the Secretary of Veterans Affairs to conduct a study on matters relating to the identification, claiming, and interring of unclaimed remains of veterans, including: (1) estimating the number of unclaimed remains; (2) assessing the effectiveness of the procedures of the Department of Veterans Affairs (VA) for claiming and interring unclaimed remains of veterans; (3) assessing state and local laws that affect the ability of the Secretary to identify, claim, and inter such remains; and (4) recommending appropriate legislative or administrative action. Last Congress, NFDA supported enactment of legislation to require the VA to work with VSOs and other groups as well as funeral directors to assist in identifying the unclaimed cremated remains of veterans held by funeral homes. Once identified, VA would arrange for those remains to be interred at a national cemetery and provided with appropriate honors if they qualified. H.R. 4446 and S.1755 would require VA to conduct a study to determine how that program was working and make recommendations to improve its effectiveness. NFDA strongly supports these bills and have submitted letters of support to their House and Senate sponsors.

The Protect Small Business Jobs Act of 2014 (S. 2216) - Requires a federal agency, before any enforcement action is taken on any sanction on a small business for any violation of a rule or pursuant to an adjudication, to: (1) notify the small business that it may be subject to a sanction at the end of a six-month grace period following such notification; (2) delay further action for 15 days after such notification; (3) defer further action for the six-month period (allowing an additional three-month period upon application by the small business demonstrating reasonable good-faith efforts to remedy the violation or other conduct giving rise to the sanction); (4) make a further determination at the end of the applicable grace period as to whether the small business would still be subject to the sanction; and (5) upon a negative determination, waive the sanction. Makes the grace period inapplicable with respect to a violation that puts anyone in imminent danger, as defined by the Occupational Safety and Health Act. Renders any sanction imposed in violation of the requirements of this Act as having no force or effect. NFDA strongly supports this bill and has sent a letter of support to its sponsor Senator Rand Paul (R-KY).

Regulatory Sunset and Review Act of 2013 (H.R. 309) – requires all federal agencies to review existing regulations to determine whether they should be continued without change, modified, consolidated with another rule, or terminated. The legislation would require agencies to consider comments of the public, the regulated community, and the U.S. Congress regarding the costs and burdens of rules being reviewed and whether the rules are obsolete, unnecessary, duplicative, conflicting, or inconsistent. Furthermore the continuance of a rule would have to meet all the legal requirements that would apply to the issuance of a new rule. NFDA continues to monitor this bill but there is little chance any action on it will happen this Congress.

Small Business Tax Reform Act of 2014 (H.R. 4457) – This bill would restore the IRC Section 179 direct expensing provision for small business back to the $500,000 level from the current $25,000 amount. At the end of 2013, the temporary $500,000 amount expired and reverted back to the permanent $25,000 level as of January 2014. H.R. 4457 would restore the $500,000 amount, make it permanent and index it to inflation. It would also make it retroactive to January 2014. This provision is extremely important to funeral service and small businesses who want to upgrade and improve their business operations. NFDA, along with many other small business associations, actively supports this bill. H.R. 4457 passed the House in June and is awaiting Senate action.

S Corporation Permanent Tax Relief Act of 2014 (H.R. 4453) – This bill would make permanent the 5-year recognition for built-in gains allowing S corporations access to capital much faster than under the 10-year rule. Under current law, an S corporation is subject to an entity-level tax at the highest corporate rate on certain built-in gains of property that it held while operating as a C corporation. The tax applies to gain recognized within ten years from the date that the C corporation elected to be an S corporation, and in the past, Congress has shortened that period to five years. This bill would make permanent the five year period, eliminating a significant deterrent that often discourages closely held C corporations from electing S corporation status, thus subjecting them to double tax.

In addition, the bill would make permanent the basis adjustment to stock of S corporations that make charitable contributions of property which would help bring consistent treatment between flow-through businesses such as partnerships and would allow S corporations to be more active and supportive of much-needed charitable activities. NFDA, along with other members of the S Corporation Coalition, strongly support H.R. 4453. In that regard, H.R. 4453 passed the House in June and awaits Senate action.

Regulatory Issues
 

Mass Fatality Management – At the direction of the Commanding General of NORTHCOM, the Federal Government has constituted an interagency Mass Fatality Management Working Group and an Executive Steering Committee to develop and implement a federal mass fatality management plan. NFDA has been asked to serve on the Working Group as the only private sector funeral service organization representing all of funeral service in this process. The stated Purpose of the Working Group is "To bring together FM SMEs (Subject Matter Experts) from DoD, Federal, local and private sector agencies to brain-storm a logical approach to developing a FM framework strategy to create a CONOPS ( Concept of Operations) which can be used to provide FM planners across the U.S. a planning and source document." .

The Working Group had its first meeting of 2014 in March at the Department of Defense to review where we are in this process and how and who should take responsibility for moving this effort forward. The next face –to-face meeting will be held later this spring at the Pentagon. It is now clear that the federal government is serious about proceeding with this effort. Several conference calls have been scheduled to discuss issues related to this process and more in-person meetings are scheduled for later this year. NFDA is much energized about this effort, as it has been a priority for us since 2005! It has been a long time coming, but all involved are hopeful this will finally result in a comprehensive mass fatality plan that clearly sets forth the roles, duties and responsibility of all federal, state, local and private sector entities involved in mass fatalities.

Separately, NFDA has been meeting with Officials at the Department of Health and Human Services to craft an outline of specific functions that must be addressed in any mass fatality plan. We plan to present that to the DOD Working Group as a template in moving forward on a comprehensive federal plan.

Department of Labor – In March, President Obama directed the DOL to draft changes to the federal wage and hour regulations to require that certain salaried employees currently exempt from the overtime rules be paid overtime. This June, the Department of Labor has indicated that the Notice of Proposed Rule Making is now scheduled for November, 2014. This Rule Making has been designated as Economically Significant and is in the Proposed Rule stage. Needless to say, NFDA is concerned that the proposed changes may impact many of our members especially those in Tiers 4, 5 and 6. We will keep a close eye on this situation and be prepared to review the proposed changes and comment on them as appropriate.

OSHA - The Occupational Safety and Health Administration (OSHA) has notified the SBA Office of Advocacy (Advocacy) and the Office of Information and Regulatory Affairs (OIRA) within OMB that it intends to convene a Small Business Advocacy Review (SBAR) panel under the Small Business Regulatory Enforcement Fairness Act (SBREFA) for its Infectious Diseases rule. In the proposed rule, mortuaries are specifically mentioned as one of the businesses that would be affected by this rule which has been designated "economically significant". The OSHA infectious disease standard, which is being contemplated, could have a serious impact on how funeral service is practiced and in the cost of compliance in much the same way as the enactment of the OSHA blood borne pathogen standard. NFDA has accepted an invitation from the SBA Office of Advocacy to participate in the SBREFA process and will be providing input on the potential impact this rule could have on funeral service and recommending appropriate changes.