Foundations, charities and philanthropic individuals are thirsting for relief on tax issues surrounding charitable giving.
Since the 2013 lapse of a set of regulations addressing tax relief for certain charitable donations, the regulations have become the proverbial political football.
Tax politics have been given a higher priority than helping charities provide relief for the needy.
The regulations in question have been voted on annually, leaving contributors to play an annual guessing game on the implications of their donations. On Dec. 11, the House failed to advance the Supporting America’s Charities Act (H.R. 5806), a bill that would have made permanent the IRA charitable rollover and the enhanced deductions for donations of land conservation easements and food inventory.
The vote was 275 in favor and 149 opposed, just eight votes shy of the two-thirds super majority needed under the expedited procedural rule used to consider the legislation.
However, on Thursday House lawmakers passed new legislation (H.R. 644) to make permanent the three expired tax incentives for charitable giving and to also install a simplified tax mechanism for private foundations making investments.
It simplifies the private foundation excise tax to a flat 1 percent rate, makes permanent the IRA charitable rollover and also makes permanent and expands the charitable deduction for donations of conservation easements and the charitable deduction for donations of food inventory.
As expected, the vote broke
down mostly along party lines, with 279 members voting for the bill. It may surprise you that 136 Democrats voted “no.” Many of them voted against the bill on the grounds that the provisions are not offset with spending cuts elsewhere. This was their objection to last year’s bill as well. The Nonprofit Times clarifies that House Democrats strongly favor considering the tax policy provisions as part of comprehensive tax reform, rather than bringing tax bills to the floor individually.
Steve Taylor, senior vice president of public policy at United Way Worldwide, has said it’s not an accident that Congress is moving tax revisions that have brought bipartisan support.
“Some Republicans would like to set the precedent of extending expired tax revisions through the charitable provisions, and using that as a precedent to make it easier to move business related provisions,” Taylor said.
The America Gives More Act of 2015 must now go to the Senate for a vote, where timing on its consideration is unknown. Many in the Senate have voiced their agreement with the principles of the new legislation, but it’s in danger of being subsumed in the larger debate on tax reform.
However, if it passes that hurdle, President Obama is opposed to the bill, as with last year’s iteration.
While the president’s budget office says, “The Administration wants to work with the Congress to make progress on measures that strengthen America’s charitable sector,” they also say, “H.R. 644 represents the wrong approach.”
This is based on the same issue Democrats dislike, that the provisions in the bill lack funding offsets. While the president signed last year’s bill, he may veto this year’s if it reaches his desk.
In the meantime, United Way, the Council on Foundations, Independent Sector, the YMCA and hundreds of other supporters of the legislation are holding their collective breath to see if Congress and the President will finally decide to make permanent this needed support for charitable contributions.
In the meantime, hundreds of thousands of hungry, homeless and at risk seniors, adults and children have less help than they might.
Sarah Todd Clark is founder of Calhoun Enterprises, a resource for positive social change. She can be reached at 912- 224-2120 or calhounent@gmail.com.