Funds from accounts organized under Internal Revenue Code Section 529
should be allowed to go toward expenses for curriculum, books and online educational materials, the coalition said in a letter to Senate Majority Leader Mitch McConnell, R-Ky., and House Minority Leader Kevin McCarthy, R-Calif. Expanding Section 529 savings accounts would help families dealing with financial hardship because of the pandemic, the nonprofits said."Expanding 529s should be part of the solution to helping Americans get through the pandemic by providing assistance to students and families across the country," the coalition said.
The coalition also highlighted lawmakers' efforts to urge support for the policy change. Last week, lawmakers led by Rep. Bryan Steil, R-Wis., sent a letter to McConnell, McCarthy and the Democratic leaders of the House and Senate, urging them to support expanding Section 529 savings accounts.
Steil asked for a change in the law so that 529 funds could be used to pay for home school expenses without penalty, in the next legislation lawmakers develop to respond to the health and economic crises caused by the pandemic.
Sen. Ted Cruz, R-Texas, failed in his efforts last year to include an expansion of the tax-advantaged educational savings accounts in a retirement savings bill that President Donald Trump later signed into law as part of a year-end legislative package.
The offices of McCarthy and House Speaker Nancy Pelosi, D-Calif., didn't immediately respond to requests for comment.
While Republican lawmakers and nonprofit coalitions are promoting expansions to college savings accounts, Democratic lawmakers have asked for more funding for state and local health care efforts so they can provide resources to front line workers such as first responders.
Democrats have also inquired to the U.S. Department of the Treasury about delays in coronavirus stimulus payments and the decision to include Trump's name on paper checks being sent to some Americans.
Trump signed the Coronavirus Aid, Relief and Economic Security Act
in March, legislation that cost more than $2 trillion to help families and businesses endure the economic hardships caused by the COVID-19 pandemic. The law makes several temporary changes to the tax treatment of business losses and suspends limitations on business interest deductions, as well as offer an employer-based wages-paid tax credit.The law directs the Internal Revenue Service to send $1,200 to individuals and $2,400 to couples filing joint tax returns. The payments are reduced for those with incomes above $75,000, or $150,000 for couples, and eliminated for those with incomes of more than $99,000, or $198,000 for couples.
The law also establishes a refundable payroll tax credit for 50% of employer wages for companies fully or partly prohibited from operating during the crisis. It waives the 10% early withdrawal penalty for retirement fund distributions up to $100,000 made on or after Jan. 1, 2020, and before Dec. 31, 2020.
Additionally, the legislation limits corporate stock buybacks and executive pay for airlines that receive grants or loans from the federal government in order to stay afloat. It also fixes the so-called retail glitch created by the 2017 federal tax overhaul, allowing retailers to immediately write off expenses related to physical improvements instead of depreciating them over 39 years.
The law also allows businesses to carry back losses from 2018, 2019 and 2020 for up to five years. Net operating losses temporarily will not be subject to a taxable income limit, meaning they can fully offset income.
--Additional reporting by Stephen Cooper. Editing by Neil Cohen.
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