Terrorist Labels, Gun Silencer Tax Breaks Tucked Into GOP Bill

Beyond the headline business and individual breaks in the House Republicans’ massive tax package, the almost-400-page bill includes a slew of provisions that would affect tax-exempt entities, preparers, recording studios, and more.

The bill, which GOP leaders are aiming to move to the House floor next week for passage, would extend popular breaks for businesses from the GOP’s 2017 law, enact President Donald Trump’s campaign promises of no taxes on tips and overtime, and repeal many energy tax credits.

But less publicized proposals are tucked into the bill. Here are some you might have missed.

Heightened Treasury Power Over Nonprofits: The Treasury secretary would gain the power to suspend the tax-exempt status of terrorist-supporting organizations. It expands an existing provision that allows the government to suspend the status for terrorist organizations, which is defined under multiple laws, such as the Immigration and Nationality Act, or designated by an executive order pursuant of two other international relations laws.

The IRS has suspended the status of nine organizations using this provision. The proposed change would create a new category for terrorist-supporting organizations, which is designated by the secretary as having provided “material support or resources” to a terrorist organization.

The measure was included in another GOP bill that passed the House last year. It comes as the Trump administration seeks to crack down on nonprofits it deems hostile to its agenda.

National Council of Nonprofits CEO Diane Yentel said in a statement the expansion gives too much power to the Treasury secretary and allows the official “to punish organizations that do not fall in line with the administration’s ideology by labeling them as terrorist-supporting groups without due process.”

Firearms Silencers: A $200 excise tax on firearm silencers, first enacted in 1934, would drop to zero dollars. Supported by gun rights activists, Republican lawmakers earlier this year introduced bills to remove some regulations related to silencers.

Tanning, Recording Studios: Recording studios would get the same tax deduction as film, television, and theater productions, which aims to encourage the domestic entertainment industry. Plus, a 10% excise tax on indoor tanning services, first enacted in former President Barack Obama’s signature healthcare law, would be repealed.

Tax Return Leakers: This proposal increases penalties for the unauthorized disclosure of taxpayer return information. The maximum fine would increase to $250,000 from $5,000 and the maximum sentence would double to 10 years. The House approved a similar bill last year, which gained traction after an IRS contractor admitted to leaking thousands of tax returns from rich Americans, including President Donald Trump.

Contingency Fees: House Republicans want to prevent Treasury from regulating, prohibiting, or restricting the use of contingency fees for tax returns, refund claims, or similar documentation. The proposal comes after Treasury proposed rules late last year that would classify the use of certain contingent fee arrangements by practitioners as disreputable conduct.

Investment Managers, Millionaires Exempt: Despite Trump’s advocacy for eliminating the carried interest tax break, one of the most controversial loopholes in the US tax code remains unchanged in the draft legislation. House Republicans also omitted a proposal to raise the tax rate on multimillionaires.