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Friday October 31, 2014

Washington News

Washington Hotline

Individual Mandate Effective March 31

With the highly publicized problems of the Affordable Care Act and the website, the White House has been under pressure to change the deadline for the individual mandate to purchase health insurance.

White House Press Secretary Jay Carney indicated that the White House will be publishing a new deadline of March 31, 2014 for the requirement to purchase health insurance. This is intended to enable all individuals to purchase insurance after the healthcare exchanges have been upgraded with functional software.

Sen. Jeanne Shaheen (D-NH) sent a letter to President Obama and requested an additional delay for the mandate. She stated, "Given the existing problems with the website, I urge you to consider extending open enrollment beyond the current end date of March 31, 2014. Allowing extra time for consumers is critically important so they have the opportunity to become familiar with the website, survey their options and enroll."

Sen. Joe Manchin III, (D-WV) also supported a delay. On a national media appearance, Machin stated, "It should be a transition year, for one year. There should be no fines, and let's work through the problems." He recommended deferring the individual mandate until January 1, 2015.

Sen. Charles Grassley (R-IA) and Sen. Orrin Hatch (R-UT) are the former and current ranking members of the Senate Finance Committee. They requested information from four large health insurance companies about the enrollment process.

Grassley stated, "News reports show extensive frustration signing up online for healthcare. Now we are seeing reports of bad data going to insurance companies when people do manage to register themselves. Is the bad data the reason the administration is being so vague about how many people have signed up?" Grassley and Hatch are attempting to understand the number of individuals who have had problems with the website.

Editor's Note: At a hearing in Washington, representatives of the companies building the websites expressed hope that the software upgrades would be completed before the end of this year.

Tax Reform Expectations

Both the House Ways and Means Committee and the Senate Finance Committee have been involved in a two year process that is expected to lead to proposed tax reform bills.

House Ways and Means Chair Dave Camp (R-MI) continues to work with his staff on drafts of a proposed bill. Chairman Camp has repeatedly stated he hopes to introduce a bill for "markup" before the end of this year.

Sen. Max Baucus (D-MT) faces a more substantial challenge. While Chairman Camp controls his committee and is expected to produce a revenue-neutral bill, Sen. Baucus is attempting to resolve a major difference in perspective. The Democratic leadership seeks a tax reform bill that would include approximately $1 trillion in new revenue. The Republican members of the Senate Finance Committee agree with their House colleagues that the bill should be revenue-neutral.

Sen. Baucus now indicates that there will be discussion drafts by the end of the year. His spokesman Shawn Neary stated that Baucus "hopes to release discussion drafts of tax code revisions" this year.

A prediction of the likelihood of a House or Senate tax bill this year was made by the Tax Reform Business Barometer Survey issued jointly by The Tax Council and Ernst & Young LLP. They surveyed business and tax professionals and asked whether or not they expected to see actual legislation from the committees.

The survey indicated that there is a 70% probability that Chairman Camp and the Ways and Means Committee will produce a detailed plan.

However, the likelihood that the Senate Finance Committee will produce a bill is only 35%. Lynda Walker, Executive Director of the Tax Council, stated, "Most business tax professionals think there is a strong likelihood of progress toward tax reform even with the significant uncertainty about the federal budget." She also suggested that prospects for completing tax reform by the end of 2014 were a relatively low 20%.

Editor's Note: America is still quite a long distance from tax reform. Majority Leader Harry Reid indicated in a Nevada radio program that the conflict between the $1 trillion Democratic goal and the revenue-neutral Republican goal is not likely to be resolved in the next year. However, if actual language is released, it is likely to reflect a reduction in rates and specific changes to itemized deductions. This bill language could easily be incorporated in an eventual tax reform act within the next two or three years. Therefore, it still is of great importance to philanthropy to focus on the potential for changes that affect charitable gift deductions.

Published October 25, 2013

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