What's New In Washington TechServe Alliance submits timely comments, letters, and testimony to the White House, Congress, and federal agencies to advocate on behalf of our industry. We may also join coalition letters and participate in issue-related coalition advocacy campaigns. Read more about our work below. Click here for TechServe's Spring 2019 Washington Report: The Legislative/Regulatory Update for the IT & Engineering Staffing and Solutions Industry. January 30, 2019 DHS Regulation Delays Implementation of H-1B Visa Electronic Registration: Adopts Revised Selection Process On January 30, 2019, less than 30 days after the comment period closed, the Department of Homeland Security/U.S. Citizenship and Immigration Services (USCIS) announced the finalization of a regulation to create an electronic pre-registration system for the H-1B visa lottery and to revise the H-1B visa selection process. TechServe Alliance on January 2, 2019 submitted comments on the proposed rule. In a major victory, the final regulation suspends the proposed electronic registration requirement for the FY 2020 cap season to complete user testing and ensure the system and process are fully functional. The business community, including TechServe, expressed strong opposition to implementing an untested registration system for the FY 2020 cap season. January 18, 2019 BREAKING NEWS: IRS Releases Final Regulations on 20% Pass-Through Deduction On January 18, 2019, the Internal Revenue Service (IRS) released the final regulations on the 20% Pass-Through Deduction. This deduction was included in the Tax Cuts and Jobs Act of 2017, P.L. 115-97. The TechServe team is reviewing the final regulations, which were expected by December 31, 2018, and we will issue an update to this alert. We will also announce a new date for our webinar, “The Pass-Through Deduction: Eligibility of IT & Engineering Staffing Firms.” The webinar was postponed from its originally scheduled date of January 24, 2019 due to agency delays as a result of the government shutdown. [UPDATE: The webinar was held on January 31, 2019; the recording, PowerPoint, and supplemental information are posted on the TechServe member-only section of this website.] TechServe believes the proposed rule made clear that member firms that operate as sole proprietorships, limited liability corporations, partnerships, or S corporations would be eligible for the full 20% pass-through deduction. To ensure that field agents had no questions regarding what constitutes “consulting,” TechServe urged the IRS to include clarifying examples in the final regulations. Our preliminary review of the final regulations is quite favorable, as the IRS accepted our suggestions regarding staffing examples. January 2, 2019 TechServe Alliance Files Comments Opposing Proposed Changes to H-1B Visa Lottery Process TechServe Alliance CEO Mark B. Roberts on January 2, 2019 submitted comments opposing proposed changes to federal regulations that could jeopardize the upcoming H-1B visa lottery and disadvantage many IT and engineering staffing firms. On December 3, 2018 the Department of Homeland Security, U.S. Citizenship and Immigration Services (USCIS) proposed a pre-H-1B lottery electronic registration system and significant changes to the H-1B visa lottery selection process. TechServe opposed a 2011 draft rule that had some similar elements. The 2011 proposed rule was never finalized. While fully supporting the development of an online H-1B visa application system in principle, TechServe identified several concerns with the 2018 Proposed Rule, including: potentially limiting access to the H-1B visa program for small IT staffing firms; significant questions that remain unanswered about the electronic registration process; and insufficient analysis of the impact of the new selection process which could result in unintended consequences. Roberts said, “TechServe Alliance urges USCIS to extend the comment period for at least 60 days and delay any changes to the registration and selection process until the following year at the earliest. Significant, last-minute, untested changes to the H-1B visa lottery have the potential to jeopardize the availability of scarce technical talent and could result in companies cancelling U.S. based projects and sending the work offshore.” Read more >> October 16, 2018 TechServe Alliance Testifies at IRS Public Hearing on Pass-Through Deduction TechServe Alliance’s tax counsel Kent Mason of Davis & Harman, LLC represented the association at the Internal Revenue Service’s October 16 public hearing on proposed regulations to implement the Tax Cuts & Jobs Act of 2017. Twenty-four witnesses appeared before a panel of top IRS and Treasury Department staff. Mason expressed TechServe’s appreciation for proposed regulations that made it clear that member firms that operate as sole proprietorships, limited liability corporations, partnerships, or S corporations would be eligible for the full 20 percent pass-through deduction. To ensure that field agents had no questions regarding what constitutes “consulting,” Mason urged the IRS to include clarifying examples in the final regulations. Read more >> October 1, 2018 TechServe Alliance Files comments on 20% Pass-Through Deduction Proposed Regulations TechServe Alliance on October 1, 2018 filed comments with the Internal Revenue Service on Proposed Regulations to implement the 20% Pass-Through Deduction included in the Tax Cuts & Jobs Act of 2017, P.L. 115-97. The comments documented the association’s interpretation of the law and Proposed Regulations as making IT/Engineering staffing firms fully eligible for the deduction, which was intended to spur business development and investments for certain sole proprietorships, limited liability corporations, partnerships, or S corporations. CEO Mark Roberts also submitted a request for TechServe’s tax counsel, Kent Mason of Davis & Harman LLP, to testify at the October 16, 2018 public hearing. Mason will primarily focus on TechServe’s recommendation to clarify Proposed Regulations examples related to the definition of “consulting.” Read more >> August 17, 2018 IT and Engineering Staffing Firms Eligible for STEM OPT Again In an email notification, U.S. Citizenship and Immigration Services (USCIS) clarified STEM OPT participants may engage in a training experience that takes place at a site other than the employer’s principal place of business as long as all of the training obligations are met, including that the employer has and maintains a bona fide employer-employee relationship with the student. Previously, USCIS had appeared to change its policy on STEM OPT through a change to its website by requiring the practical training to take place on the staffing firm’s own premises---a requirement that is inconsistent with the staffing model. Read more >> January 2016-Present TECHNICAL TALENT SHORTAGE: Timeline of H-1B Legislative & Regulatory Actions/Call to Action! While Congress has not enacted legislation that would reform the H-1B program, including proposals to impede or bar our industry from accessing H-1B visas, the Administration has moved full-speed ahead to implement the Buy American/Hire American (BAHA) Executive Order (EO). BAHA directs the Secretaries of Homeland Security, State, and Labor, and the Attorney General to review regulations that allow H-1B beneficiaries to work in the United States. Over the past few months, each department has acted to carry out BAHA and other executive orders intended to limit immigration and restrict access to H-1Bs as detailed in this Timeline. Read more >> September 27, 2017 TechServe Alliance Responds to DOL Request for Information on Revised Overtime Regulations TechServe Alliance, on behalf of its member firms, responded to the Department of Labor’s (DOL) Request for Information (RFI) intended to facilitate future rulemaking to replace the Obama Administration’s overtime regulation. The comments, filed on September 25, 2017, stake out TechServe’s long-held position that the Fair Labor Standards Act (FLSA) does not give DOL legislative rulemaking authority to impose a salary requirement on computer professionals or narrow the scope of the exemption for those employees who satisfy the “duties” test. More than 160,000 comments were submitted in response to the RFI.