Key Issues

House Releases Text of Tax Reform Bill Gutting Sections 117(d) and 127

For the latest news and information about tax reform, visit CUPA-HR's Tax Reform page.

NOVEMBER 2, 2017 (WASHINGTON INSIDER ALERT) - Today, House Ways and Means Committee Chairman Kevin Brady (R-TX) released the long-awaited text of tax reform legislation, the “Tax Cuts and Jobs Act,” that his committee plans to mark up next week. The committee issued a section-by-section summary accompanying the text of the bill.

Key Issues of Importance to Higher Ed

The bill proposes elimination of Section 117(d) (qualified tuition reduction) and Section 127 (employer-provided educational assistance program). Section 117(d) allows institutions to provide tax-free tuition at no or reduced cost to employees, spouses or their dependents. Graduate student research and teaching assistants also benefit in that the tuition remission they receive is not subject to taxation. Section 127 allows employers to provide up to $5,250 per year in assistance tax-free for any type of educational course at the undergraduate or graduate level.

The House and Senate cleared the way for the tax reform debate to officially begin when the House narrowly passed the Senate Budget Resolution last Thursday by a vote of 216 to 212. The House Ways and Means Committee and the Senate Finance Committee were instructed to draft and introduce tax reform legislation that would allow for $1.5 trillion in tax relief over the next 10 years and allow the Senate to bypass a Democratic filibuster and pass a bill with only a simple majority of 51 votes.

Resources and Call to Action

CUPA-HR and its higher ed association partners have created a web page with resources on every tax reform issue of importance to colleges and universities. This Tax Reform and Higher Education website will have links to resources from CUPA-HR and all the other associations in our Tax Working Group. It will also be a central higher ed resource for detailed bill summaries and analysis that some of the community tax consultants will be drafting. In the days to come, the site will include a “Contact Congress” tool where you or the appropriate person on your campus can contact your members of Congress expressing your concern on a few of these specific issues.

We encourage you to reach out to your presidents, business officers and government affairs staff to assess the impact the legislation could have on your institution and to coordinate the best advocacy approach. Though passage of major tax reform legislation is far from certain, leaders from every higher ed institution should let their members of Congress know how the legislation would impact their institution and their institution’s employees.

Timing of Next Actions From Congress

As far as timing, we expect the House Ways and Means Committee to move quickly with a several-day markup of the bill beginning Monday, November 6. From there, House leadership is saying it hopes to pass the bill out of the House before Thanksgiving. Senate Finance Committee Chairman Orrin Hatch (R- UT) has not released specifics on when the Senate will begin considering tax reform legislation. It has been reported that the Senate will release the text of its bill on Wednesday, November 8.

However, Hatch’s spokesman has only offered that Sen. Hatch "intends to lay down a mark for the committee to advance in the coming weeks. Details will be released when finalized." We do expect the process in the Senate to be somewhat more bipartisan, potentially allowing for more amendments from both sides of the aisle.

Watch for Updates

We continue to work with other higher ed associations in the Tax Working Group, as we have since last year’s election, to voice the importance of these tax provisions to Capitol Hill leaders. In addition, we are carefully reviewing the language of the 400+-page House bill to evaluate if there are other issues impacting higher ed HR that we may want to weigh in on.

We will keep you posted on the progress of tax reform in the days to come, and we encourage you to frequently check the Tax Reform and Higher Education website for updates.