The Pension Protection Act of 2006 (Pub. Law 109-280) enacted a number of charitable giving incentives and reforms including the IRA charitable rollover, changes in substantiation for various types of noncash charitable donations, and new rules for donor advised funds and supporting organizations. The IRS has issued guidance to assist charities, foundations, and donors in complying with provisions in the Pension Protection Act.
Charitable Giving Incentives
Among the charitable giving incentives included in the pension reform act is an IRA rollover provision that allows individuals age 70½ and older to make charitable donations up to $100,000 from an IRA without having to count the donation as taxable income. This provision would be in effect for two years, allowing the charitable community to demonstrate its value as an incentive for increased giving that could be expanded in the future.
The law also provided expanded tax deductions for contributions of book and food inventory and qualified conservation contributions. The bill does not include a charitable deduction for taxpayers who do not itemize their deductions, despite the efforts of IS and a number of our member organizations.
The law also contains an important package of safeguards intended to strengthen the charitable sector by deterring potential abuse of tax-exempt organizations and creating additional protections to ensure that donated funds are used for charitable purposes. These reforms include new recordkeeping rules for cash donations and for some types of noncash donations, and new rules for donor-advised funds and supporting organizations. See the IRS website for updated guidance on these new rules.