Washington Update

March 23, 2018 Washington Update This Week in Congress . House – The House passed the “Omnibus Appropriations Bill” (H.R. 1625); the “Alleviating Stress Test Burdens to Help Investors Act” (H.R. 4566); the “Trinkett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2018” (H.R. 5247); the “Surface Transportation Security Improvement Act of 2018” (H.R. 5131); the “Strengthening Aviation Security Act of 2018” (H.R. 4467); and the “Strengthening Local Transportation Security Capabilities Act of 2018” (H.R. 5089). Senate – The Senate passed the “Omnibus Appropriations Bill” (H.R. 1625); the Secret Service Recruitment and Retention Act” (H.R. 3731); the “Veterans Health Administration Leave” (S. 899); the “Allow States and Victims to Fight Online Sex Trafficking Act of 2017” (H.R. 1865); and the “Childhood Cancer STAR Act” (S. 292). The Senate confirmed Kevin K. McAleenan to be Commissioner of U.S. Border Protections; Thomas E. Workman to be a Member of the Financial Stability Oversight Council; and Anne Marie White to be Assistant Secretary of Energy. Next Week in Congress . House – The House is in recess until April 10. Senate – The Senate is in recess until April 9. TAX Congress Moves $1.3 Trillion Spending Bill . No timetable for decision on tax extenders. to President’s Desk, A Couple Tax Items Included Table of Contents Taxes 1 Key Points: Financial Services 2 . Included is $11.43 billion for the IRS which Energy & Environment 6 includes $320 million for upgrades and $350 Defense 7 million for cybersecurity and other items. Health 9 . Republicans and Democrats made a deal to Transportation & Infrastructure 11 add corrective language for the “grain glitch” Technology 14 and add a provision that increases the low- Trade 22 income housing tax credit. ceiling by 12.5 percent. ____________________________________________ ©2018 Williams & Jensen, PLLC 701 8th Street, N.W. Suite 500 Washington, D.C. 20001 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com Williams & Jensen – Washington Update March 23, 2018 Congress passed a $1.3 trillion spending bill Other TJCA technical changes were not early Friday morning with Thursday’s House included in the bill, though technical passage by a 256-167 vote and an early Friday corrections to prior tax bills were included. Senate of 65-32. Included in the omnibus is Likewise, temporary tax provisions known as $11.43 billion for the Internal Revenue tax extenders were not included in the omnibus Service– of which $320 million is allocated for bill. After hearing from industry groups during upgrades to schedules, forms, and systems a March 14 hearing, House Ways and Means necessary for implementing the recently passed Committee’s Tax Policy Subcommittee Tax Cuts and Jobs Act (TCJA). An additional Chairman Vern Buchanan (R-FL) will $350 million is appropriated towards IRS announce a strategy for analyzing the value of customer support, fraud prevention, and the extenders. cybersecurity. For more information about tax issues you may email Also included in the spending bill is corrected or call Christopher Hatcher at 202-659-8201. Nick language for the “grain glitch” related to Karellas, Henry Homans, and Ryan Schnepp cooperatives and the new passthrough 20% contributed to this section. deduction. The TCJA mistakenly gave a competitive advantage to farmers who sell to FINANCIAL SERVICES cooperative grain suppliers under the section 199A passthrough business income deduction. Congress Passes $1.3 Billion Omnibus The adjustment will allow farmers to continue Spending Package to get a 20 percent passthrough deduction without any change when selling to Key Points: independent operators. When selling to a . The omnibus spending package would fund the cooperative, farmers would now receive a 20 SEC at $1.652 billion and the CFTC at percent deduction reduced by amounts the $249 million for FY2018. farmer would have had to reduce it under the . The package also includes regulatory reforms former 199 deduction. Cooperatives can pass for business development companies, including through some or all of the deduction to increasing the leverage limit from 1:1 to 2:1. patrons, as they did with the former 199 deduction. This week Congress passed a $1.3 trillion omnibus spending package, which would fund The modified provision will increase revenue the federal government through September 30, by $108 million if FY 2018 through 2027 2018. The spending package would fund the according to the Joint Committee on Taxation Securities and Exchange Commission (SEC) at (JCT), which also provided a technical $1.652 billion for Fiscal Year (SEC) 2018, description of the changes. Democrats were which is $47 million above the FY17 level. The able to add a provision that boosts the state spending bill would fund the Commodity housing credit ceiling by 12.5 percent in the Future Trading Commission (CFTC) at $249 low-income housing tax credit for tax years million for FY2018, which is $1 million below 2018, 2019, 2020, and 2021. That LIHTC its FY17 level. provision reduces revenue by $2.72 billion in FY 2018 through 2027. The provision also The omnibus incorporates the Small Business adds a new form of average income test used to Credit Availability Act (H.R. 4267), which determine if one qualifies for the credit. passed the House Financial Services Williams & Jensen, PLLC 701 8th Street, N.W. Suite 500 Washington, D.C. 20001 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com Page 2 of 24 Williams & Jensen – Washington Update March 23, 2018 Committee on November 15, 2017, by a vote Drug Trafficking, and Organized Crime.” of 58-2. The legislation, introduced by Chairman Stevan Pearce (R-NM) noted that Representative Steve Stivers (R-OH), includes large transnational criminal organizations several regulatory reforms for business (TCOs) cross borders to further their profits development companies (BDCs), including and they generate over $870 billion annually, increasing the leverage limit from 1:1 to 2:1, which allows them to influence governments in and requiring the SEC to streamline the the most vulnerable countries. He thanked offering, filing, and registration processes for Representative David Kustoff (R-TN) for his BDCs. bill, the “National Strategy for Combatting the Financing of Transnational Criminal Additionally, the omnibus includes the Small Organizations Act” (H.R. 4768). Pearce Business Access to Capital After a Natural explained the bill would require the Disaster Act (H.R. 4792), which would direct development of a national strategy to combat the SEC’s Advocate for Small Business Capital TCOs. Ranking Member Ed Perlmutter (D- Formation to identify any unique challenges to CO) stated according to the United Nations small businesses in areas affected by hurricanes Office on Drugs and Crime, drug trafficking or other natural disasters when identifying accounts for all the revenue of TCOs. He problems that small businesses have with stated the opioid epidemic spans coast to coast securing access to capital. The bill, introduced and in 2016 there were over 4,200 opioid by Representative Nydia Velazquez (D-NY), related deaths in the U.S. Perlmutter suggested passed the House by voice vote on January 29, Congress must work to shut down those that 2018. are responsible for the availability of these drugs. The bill would also extend the National Flood Insurance Program (NFIP) through the end of Chairman Pearce noted he has received July 2018. briefings that ISIS is no longer getting as much money from the sale of oil. Celina Realuyo House Financial Services Examines (National Defense University) stated financial Transnational Criminal Organizations targeting has been successful in regards to ISIS, noting that by going after the entire supply Key Points: chain, there has been a decline of 80 percent in . Chairman Stevan Pearce (R-NM) explained ISIS profits. She stated this disruption has not that large transnational criminal organizations allowed ISIS to be able to pay their foreign (TCOs) earn over $870 billion annually, fighters. Chairman Pearce also asked about the which allows them to influence governments in need for coordination between the different the most vulnerable countries. agencies. Derek Maltz (Pen-Link, Ltd.) stressed . Representative David Kustoff (R-TN) has the need for basic cooperation between the introduced the “National Strategy for agencies and accountability when information Combatting the Financing of Transnational is not shared. Ranking Member Ed Perlmutter Criminal Organizations Act” (H.R. 4768). (D-CO) noted concern over the role Russia has been playing and he asked about the Russian On March 20, the House Financial Services Mafia. Louise Shelley (George Mason Committee’s Subcommittee on Terrorism and University) explained as drugs began to flow Illicit Finance held a hearing entitled out of Afghanistan Russia began to become “Exploring the Financial Nexus of Terrorism, more involved in the drug trade. She stated Williams & Jensen, PLLC 701 8th Street, N.W. Suite 500 Washington, D.C. 20001 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com Page 3 of 24 Williams & Jensen – Washington Update March 23, 2018 there is an unusual confederation of political leaders and criminal organizations in Russia. Key Point: Realuyo expressed hope that more sanctions . The Committee favorably reported legislation will be levied against Russia and the “tentacles” related to the supplementary leverage ratio, the of the Russian Mafia investigated. Joseph Volcker Rule, SEC registration requirements, Humire (Center for a Secure Free Society) small bank examinations, and derivatives. explained that the Russian Mafia is “rampant” in Latin America. He stated the Department of On March 21, the House Financial Services Defense’s “four plus one” strategy could be Committee held a markup and approved the utilized in South America as well. following eight financial services bills. House Passes Legislation Exempting Non- . The Protecting Veterans Credit Act of Banks from Stress Tests 2017 (H.R.

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