NAICU Washington Update

NAICU Revamps IRC Sec. 127 Coalition

July 10, 2010

A bill to make employer-provided education assistance permanent has been introduced in the House.  On June 25, Reps. Earl Pomeroy (D-N.D.) and Sam Johnson (R-Texas) introduced legislation that would make the Internal Revenue Code Sec. 127 – employer-provided education assistance - permanent for both graduate and undergraduate course work. 

The bill, H.R. 5600, was going to be introduced by Sander Levin (D-Mich.).  When Levin was appointed Chair of the Ways and Means Committee, he asked Pomeroy to carry the bill for him.  (The tax committee chairmen tend to not introduce stand-alone bills.)  Levin remains very supportive of the measure.

Originally enacted in 1978, Sec. 127 has expired and been extended many times.  It allows employers to offer up to $5,250 annually in tuition assistance to employees.  The employee does not have to pay taxes on the amount, plus the amount is deductible to the employer and free from FICA taxes.

Sec. 127 has enjoyed wide support from the education, employer, and labor communities, and has wide bipartisan support on the Hill.  It was extended for 10 years as part of the large 2001 estate tax repeal bill.  It’s currently set to expire on December 31, 2010, unless extended or made permanent.

NAICU co-chairs the Sec. 127 coalition, along with the Society for Human Resource Management (SHRM).  A tremendous amount of work lay behind the introduction of the bill, including rebuilding the coalition of 100+ organizations that support the provision and will advocate for it.   The coalition hadn't been reactivated since working on passage of the 2001 bill.  The newly-updated coalition boasts representatives from more than 50 private colleges - including NAICU member presidents - as well as from all sectors of higher education, K-12 groups, manufacturing, labor unions, and more.

NAICU also has updated its research on the use of the benefit for our advocacy efforts.  This report, once finalized, will be included on a new coalition website that is under construction. 

In the Senate, legislation making Sec. 127 permanent is included in S. 2851, introduced by Sen. Charles Grassley (R-Iowa).  It’s unclear when Congress will turn its attention to the myriad of tax provisions expiring this year, given that they still haven't completed action on extending the tax provisions that expired at the end of 2009.

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