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NRCA issues a statement about the Bipartisan Budget Act of 2015

November 2015

The two-year Bipartisan Budget Act of 2015 approved by Congress and signed into law by President Obama this past week contains several provisions that may be of interest to NRCA members. Following is a brief summary based of these provisions based on a preliminary analysis of the legislation by NRCA staff.

The two-year deal provides for $80 billion in additional spending above current budget caps equally split between defense and domestic programs for the next two fiscal years. The bill also raises the federal debt limit through March 2017, averting a potential default by the government as early as Nov. 3. The bill was negotiated by outgoing House Speaker Boehner, House Minority Leader Pelosi, Senate Majority Leader McConnell, Senate Minority Leader Reid and top administration officials.

New Partnership Rules

To offset the increased spending levels in the budget deal, a number of revenue raisers were included in the package. One provision that may be of importance to some NRCA member companies that operate as partnerships is the new streamlined IRS auditing rules. These rules would eliminate two auditing techniques—the "TEFRA" and "Electing Large Partnership" rules—and replace them with a new entity-level audit process that will allow the IRS to assess and collect the taxes against the partnership, not the partners. This reportedly is designed to target larger partnerships such as hedge funds and private-equity firms. Small partnerships with fewer than 100 partners could exempt themselves from the new regime, which will begin in 2018. Additionally, the new proposal doesn't subject partners to joint and several liability for taxes determined at the partnership level. Through these increased compliance measures, the Treasury Department is estimated to bring in more than $11 billion during the next decade.

Repeal of ACA Provision

Another revenue raiser in the budget deal repeals a provision of the Affordable Care Act (ACA) that would have required employers with more than 200 employees (as defined in the ACA) to automatically enroll new full-time employees into a qualifying health plan if offered by the employer and to automatically continue enrollment of current employees. Employees would have had the option to opt out of coverage, but they would have been the ones to take the necessary steps to do so. NRCA endorsed legislation to repeal this automatic enrollment provision of the ACA in 2013.

OSHA Civil Penalties

The bill also includes the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, which amends federal law to require all agencies with civil monetary penalties to update these penalties based on inflation since 1996. The increase in penalties that results from this inflation adjustment calculation is capped at 150 percent The provision also requires all agencies to adjust their civil monetary penalties annually in the future based on changes in the Consumer Price Index. These inflation adjustment provisions apply to civil penalties levied under the Occupational Safety and Health (OSH) Act, which previously were excluded from inflation adjustment requirements applicable to most other federal laws. Occupational Safety and Health Administration (OSHA) civil penalties have been adjusted for inflation only once since initial passage of the OSH Act in 1970, when Congress made a one-time adjustment in 1990. Under the provisions in the Bipartisan Budget Act, OSHA civil penalties may be increased dramatically by the agency. For example, under one preliminary analysis, the current maximum penalty for "serious" OSHA fines could increase from $7,000 to $12,476, and the maximum fines for "willfull" or "repeat" penalties could increase from $70,000 to $124,768. These inflation adjustments in civil penalties are expected to be implemented by Interim Final Rule on or before July 1, 2016.

NRCA will provide further information regarding these provisions and resulting regulations as it becomes available. Click here to view a section-by-section summary of the Bipartisan Budget Act.

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