President Proposes Limiting the Value of Charitable Deductions
President Obama transmitted his fiscal year 2011 budget to Congress, and the budget document once again includes a provision that would limit the value of tax deductions for charitable donations made by families earning more than $250,000 a year. The Partnership has joined with over 20 national organizations to urge President Obama to reconsider this and any similar proposals. In a letter sent to the President this week the groups said, “As charities struggle to meet increased demands for their services and raise additional funds, we need to encourage all individuals, regardless of income and wealth, to be more charitable. Limiting the value of the charitable deduction does the exact opposite and would fundamentally alter the tradition of charitable giving that has made America one of the most generous nations in the world.”
Lawmakers May Soon Consider Extension of IRA Charitable Rollover
Senate leaders are currently drafting job creation legislation that could potentially include a one-year retroactive extension of the IRA Charitable Rollover provision that expired on December 31. A vote on the underlying job creation legislation could take place on the Senate floor as early as this weekend.
Senator Baucus Favors Retroactive Estate Tax Extension
Senate Max Baucus (D-MT), Chairman of the Senate Finance Committee, said he expects to draft estate tax legislation that will re-impose the 2009 estate tax retroactively to the start of 2010 but that timing for such legislation remains uncertain. According to press reports, the timing of action on estate tax legislation might be part of the strategy Democrats use to bridge the gap between a simple extension of the 2009 estate tax levels that President Obama favors and the more aggressive exemption level and tax rates being sought by many Republicans and some moderate Democrats.
Cash Contributions for Haiti Relief Now Deductible for 2009
President Obama has signed Public Law 111-126, which will allow taxpayers to make cash contributions to Haiti relief programs until March 1, 2010, and claim those contributions on their 2009 income tax return. The new law also specifies that contributions made via text message can be deducted and filers can show a telephone bill to prove the donation.
Lawmakers have also introduced a number of additional bills dealing with Haiti relief and charitable contributions. For example, Senator Charles Schumer (D-NY), a member of the Senate Finance Committee, introduced S. 2937, which would suspend charitable giving limitations for relief directed to Haiti in 2010. The legislation would temporarily waive the normal rules that limit charitable deductions to 50 percent of individual adjusted gross income and 10 percent of corporate income.
Senate Committee to Consider Financial Protection Legislation
After months of negotiating over broad financial protection legislation with senior Republicans on his committee, Senator Christopher Dodd (D-CT), Chairman of the Senate Banking Committee, has indicated that his staff will begin drafting legislation to present to the full committee later in February. It still remains unclear if Senator Dodd’s legislation will include language creating a new Consumer Financial Protection Agency and if such an agency would have authority over the work of fundraisers and charitable gift planners. The House approved legislation (H.R. 4173) last year creating a new Consumer Financial Protection Agency, but the Partnership and several other national organizations were successful in pushing for an outright exemption for activities relating to charitable giving.
Senator Grassley Suggests Minimum Payout Requirements
Upon release of the annual survey on college endowments from the National Association of College and University Business Officers, Senator Chuck Grassley (R-IA), Ranking Member of the Senate Finance Committee, suggested the possibility of a minimum pay-out requirement for endowments, donor-advised funds, and certain supporting organizations. “The thinking is that since these organizations are allowed to accumulate money tax-free for their charitable purpose, they should have to spend at least a small amount fulfilling that purpose,” Senator Grassley said.
CRS Releases “Issue Statement” on Charitable Giving
The Congressional Research Service has released a brief “issue statement” on charitable giving to Members of Congress and their staff, which explains that in recent years Congress has taken a keen interest in ensuring that existing charitable giving provisions “efficiently encourage donations to qualifying organizations and that deductible contributions are used for appropriate purposes.” The statement goes on to say that Congress may choose to expand these existing provisions, such as increasing the charitable standard mileage rate or developing new ways to encourage contributions for specific policy purposes, such as conservation. The statement also provides that “other potential legislative issues include whether taxpayers who do not itemize their deductions should be allowed to deduct charitable contributions, whether existing limits on deductibility should be re-examined, and whether expiring provisions should be extended.”
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