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Federal Legislative and Regulatory Update forACEC-Pennsylvania

Katharine Mottley

Director of Tax & Regulatory Affairs

ACEC

March 11, 2015

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Tax ReformFormer Chairman Camp’s legislation may provide ideas but new committee leaders want to pursue their own approaches to tax reform

Need to read the tea leaves from the President, new Ways and Means Chairman Paul Ryan (R-WI), and new Senate Finance Chairman Orrin Hatch (R-UT)

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Tax Reform: President’s BudgetPriorities: HTF, corporate tax reform, tax relief for lower/middle income people

Key provisions• Tax on overseas profits to help pay for $478 billion

highway bill• No proposal for long-term financing of HTF• Provides for lowering top corporate rate from 35 to

28 percent; no equivalent drop in tax rate for passthroughs

• Cash accounting expansion

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Tax Reform: President’s BudgetKey provisions

• R&D tax credit permanent• Section 179 expensing permanent at $1 million• Section 179D permanent• SECA tax on owners/partners of professional

services S corps and partnerships• Eliminates oil and gas benefits, reinstates

Superfund excise taxes• Expands estate tax, increases taxes on high-

income individuals

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Tax Reform: Senate FinanceChairman Hatch: comprehensive tax reform a top priority

Established bipartisan working groups• Business income; individual income; savings &

investment; international; community development & infrastructure

• Currently receiving input• Directed to provide legislative recommendations

by end of May• Timeframe suggests short-term HTF extension

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Tax Reform: Ways and MeansChairman Ryan stated a preference for comprehensive tax reform

Ryan: addressing the individual side of the tax code not possible this year, but business tax reform possible if finished by the summer (presidential election cycle)

Unclear what business tax reform means

No gas tax increase and no repatriation outside of tax reform – unclear how HTF will be funded

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Tax Reform: ACEC PrioritiesComprehensive tax reform that treats all business structures equally

Sustainable financing for HTF

Protect key provisions, such as cash accounting, Section 199

Defend against tax increases such as the S corp payroll tax

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SEC Municipal Advisor RuleSection 975 of Dodd-Frank requires “municipal advisors” to register with the SEC and the MSRB

Municipal advisors provide advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products (e.g. derivatives) or the issuance of municipal securities, including advice with respect to structure, timing and terms

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SEC Municipal Advisor RuleFirms can choose to register, and comply with associated regulations

Firms can rely on the exemptions in the rule• Engineering exemption• General information• Responding to RFP/RFQ• Independent registered municipal advisor

exemption

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FLSA Overtime Pay RulePresident directed DOL to update rule that determines which employees must be paid time and a half for hours worked over 40 per week

Current threshold below which overtime must be paid: $455 per week/$23,660 per year

Expected threshold: between $40,000 and $50,000 per year

Rule may limit the use of exemptions (e.g. professional, administrative, executive) unless 50% of employee’s duties are covered by an exemption

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AASHTO audit guideUpdated 2015 National Compensation Matrix published by the joint AASHTO-ACEC NCM Taskforce (http://audit.transportation.org/) -- 3% escalation on the 2014 NCM

2016 NCM will be full refresh with new survey data

ACEC currently engaging with AASHTO on full-scale update to the 2012 Audit Guide -- major issues include (but not limited to) treatment of uncompensated overtime, bonuses, vehicle costs, and labor testing

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AASHTO audit guide

2015 AASHTO Audit Subcommittee Conference July 19-22 in Portland, OR

Questions and issues can be directed to Vivian Moeglein at vmoeglein@acec.org or 202-682-4369

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Questions

Q&A

Contact information:

Katharine Mottley

Director of Tax & Regulatory Affairs

American Council of Engineering Companies

kmottley@acec.org

(202) 682-4306