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NATIONAL SHRM- Federal Legislative Action Alert
Posted on Nov. 16, 2012

This is Utah SHRM Legal-mail no. 2012-22 prepared for Salt Lake SHRM, the Human Resources Association of Central Utah (HRACU), the Northern Utah Human Resources Association (NUHRA), the Color Country Human Resources Association (CCHRA), the Bridgerland Society for Human Resource Management and Utah at-large members of the national Society for Human Resource Management (SHRM).

YOUR ASSISTANCE IS NEEDED TO SAVE EMPLOYER PROVIDED EDUCATION ASSISTANCE! Please write your representative and ask him/her to co-sponsor the Employee Educational Assistance Act of 2012, H.R. 4137, introduced by Representatives Sam Johnson (R-TX) and Richard Neal (D-MA). H.R. 4137 will make employer provided education assistance (Section 127 of the Internal Revenue Code) a permanent provision.

Please Take This Action:
Ask your Representative to co-sponsor the Employee Educational Assistance Act of 2012, H.R. 4137, using SHRM’s HRVoice program, following these steps:

  1. Log onto the SHRM Advocacy Action Center by clicking HERE
  2. Personalize your message with your own story
  3. Be sure to include your complete home mailing address.

Congress has returned for a “lame duck” session against the backdrop of the impending financial crisis, the “Fiscal Cliff.” With the 2012 budget deficit totaling $1.2 trillion dollars and the U.S. national debt hovering around $16 trillion dollars, tax reform and efforts to lower the deficit are a priority for Congress and the White House. Employee benefits are the largest annual loss in revenue to the federal treasury due to their tax-deferred status. As a result, it is anticipated that public policy efforts to reform the tax code and reduce the federal deficit will involve an examination of employer-sponsored fringe benefits, including retirement plans, health care benefits and educational assistance programs.

Background
Section 127 of the Internal Revenue Code allows an employee to exclude from income up to $5,250 per year in assistance provided by their employer for any type of educational course at the associate, undergraduate and graduate level. Employers are not required to provide assistance under Section 127 to their employees. However, if an employer chooses to do so, the benefit must be offered to all employees on a nondiscriminatory basis that does not favor highly compensated employees. Congress has extended Section 127 ten times since it was created in 1978, most recently in 2010. Section 127, which was part of the Bush-era tax cuts, will expire at the end of this year unless Congress acts to renew it or make it permanent.

Issue
Providing tax-free educational assistance is an important tool for employers. Section 127 helps to build and maintain an increasingly skilled workforce, and positions the United States to remain competitive in the global economy. Almost 20 percent of Section 127 recipients are pursuing science, technology, engineering and mathematics (STEM) degrees. More than 35 percent of all degrees pursued by Section 127 beneficiaries are master’s degrees, and, according to the National Postsecondary Student Aid Study of the most recent data, use of Section 127 benefits has doubled since 1994. Today, more than 1 million employees use Section 127 benefits.

Status
Over the past few years, there were several attempts to make Section 127 benefits permanent. Trying to extend or make permanent any tax reductions will be difficult in the current political environment due to concerns about the rising federal deficit. An extension of Section 127 would likely need to be part of a larger tax reform package. SHRM supports the provisions in the Employee Educational Assistance Act of 2012, H.R. 4137, as either a stand-alone bill or as part of any legislative package that extends the Section 127 benefit for employees.

SHRM Position
SHRM chairs the Coalition to Preserve Employer Provided Education Assistance, a broad-based collection of groups representing business, labor and education groups. SHRM strongly supports the permanent extension of Section 127 for associate, undergraduate and graduate degrees. We believe that providing tax-free educational assistance is an important tool for employers to attract the best employees, build a skilled workforce and position the U.S. economy to compete globally.

Questions?
Should you have any questions about SHRM's efforts on tax and benefits regarding this resolution, please contact Kathleen Coulombe, SHRM’s Senior Associate, Government Relations, at kathleen.coulombe@shrm.org.

If you encounter any problems with this site, please contact David Lusk, SHRM’s Senior Associate, Member Advocacy, at 703-535-6158.

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Author

mikeAttorney Michael
Patrick O'Brien

Mike O’Brien is an experienced and accomplished employment attorney, media lawyer and courtroom litigator.  He is active in SHRM and has received the highest possible reviews from rating services like Martindale - Hubbell (AV rating), Chambers USA, Utah Business Legal Elite, Best Lawyers in America, Who’s Who Legal USA, and SuperLawyers.  HR Executive Online has named him as one of America’s most powerful 100 employment lawyers, but keep in mind, this does not mean he is good at moving heavy furniture.

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Chambers 2011 Attorney

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Michael Patrick O'Brien
 

Best Lawyers In America, “Salt Lake City Best Lawyers Employment Law Lawyer Of The Year,” 2011-2012

Best Lawyers In America, First Amendment Law, Labor And Employment Law, 2005-2012

Chambers USA, Labor & Employment, 2003-2011

Employment Lawyer Of The Year, Utah State Bar, 2001

Human Resources Executive, Nation’s Most Powerful Employment Lawyers In America, 2010

Mountain States Super Lawyers, 2007-2012

Utah Business Magazine, Legal Elite, Labor And Employment, 2006-2012