During the current post-elections session of the 113th Congress,
lawmakers are expected to address the package of nearly 55 expired tax
provisions known as extenders, among which are three critical charitable
giving incentives (see more below). For these provisions to be
available to individuals and businesses in the tax filing season that
begins in January 2015, the House and Senate will need to reconcile
their differing approaches on the issue before the end of 2014, deciding
whether to renew all extenders temporarily and/or make permanent only
certain provisions. At the start of the lame duck session, Independent
Sector, along with 1,031 organizations from across the charitable and
philanthropic sector, sent a letter
to all 535 Members of Congress, advocating for the permanent enactment
of the charitable provisions in the America Gives More Act (H.R. 4719)
in any year-end deal.
The IRA Charitable Rollover provision allows individuals who have reached age 70½ to donate up to $100,000 to charitable organizations directly from their Individual Retirement Account (IRA), without treating the distribution as taxable income. The provision is part of a package of 55 temporary tax extenders that were allowed to expire on January 1, 2014.
House approves legislation to make permanent IRA charitable rollover
On July 17, the House the America Gives More Act (H.R. 4719), a package of five charitable provisions that includes making permanent three expired tax extenders: the IRA charitable rollover, the enhanced deduction for donating land conservation easements, and the enhanced and expanded deduction for donating food inventory. Also included is a measure to extend through April 15 the deadline for claiming charitable donations on the previous year's tax filing and a measure to simplify to 1 percent the excise tax rate for private foundations' investment income. All five provisions were reported out of a May 29 markup in the Ways and Means Committee.
IRA charitable rollover introduced in 113th Congress
Senior Senate Finance Committee member Charles Schumer (D-NY) introduced the Public Good IRA Rollover Act (S.1772) on November 21, 2013 to renew and make permanent the IRA charitable rollover, which was set to expire January 1, 2014. The measure was introduced with five bipartisan cosponsors: Senators Susan Collins (R-ME), Tim Johnson (D-SD), Carl Levin (D-MI), Mark Pryor (D-AR), and Kirsten Gillibrand (D-NY). In the House, Rep. Alan Grayson (D-FL) introduced legislation (H.R. 3944) January 28, 2014 that would renew the provision for one year, along with 11 other temporary tax provisions that have expired or would expire in 2014. Ways and Means Committee members Aaron Schock (R-IL) and Earl Blumenauer (D-OR) also introduced legislation (H.R. 4619) on May 8, 2014 that would make permanent the IRA charitable rollover provision.
Independent Sector supports the reinstatement and permanent extension of all charitable tax extenders, including the IRA charitable rollover. The uncertainty caused by the need for an annual extension, as well as the fact that the provisions have been allowed to lapse, diminish the incentive effect of the IRA charitable rollover and other giving incentives, thereby reducing charitable giving and increasing the tax burden on older Americans.
In February 2014, Independent Sector organized a sector-wide letter that was sent to all U.S. Senate offices in support of legislation to renew and enhance the expired IRA charitable rollover. Nearly 500 organizations from across the country signed on. In advance of a House Ways and Means Committee markup in May 2014, IS and 252 organizations sent a letter to the panel, urging them to extend permanently the three charitable giving incentives.
The IRA Rollover was first enacted in 2006 as part of the Pension Protection Act. The provision expired and was reinstated multiple times, most recently as part of the American Taxpayer Relief Act of 2013 through December 31, 2013. The provision allows individuals aged 70½ and older to donate up to $100,000 from their IRAs to public charities without having to count the distributions as taxable income.
Individuals may begin taking distributions from their IRAs as early as age 59½, but are required to begin taking them at age 70½. Normally, these distributions are subject to income taxes.
Since the provision was first enacted, Americans have made millions of dollars of new contributions to nonprofits -- including social service programs, religious organizations, arts and cultural institutions, schools, and health care providers -- that benefit people every day.