|
|
|
Public Policy
CARE Act 2005 (S. 1780)
Status
The CARE Act (S
1780) was introduced by Senators Rick Santorum (R-PA) and Joseph
Lieberman (D-CT) on September 28, 2005. It is essentially the same
measure that was passed in the Senate by a vote of 95 to 5 in the
108th Congress. The CARE Act includes charitable giving incentives
such as the nonitemizer deduction and IRA rollover, as well as $1.3
billion of additional funding for the Social Services Block Grant.
Representatives Roy Blunt (R-MO) and Harold Ford (D-TN) introduced
companion legislation, the Charitable
Giving Act (HR 3908), in the House.
A number of provisions from S. 1780 were among the package of charitable
giving incentives and safeguard measures included in the pension
reform bill (H.R.
4) that President bush signed into law on August 17, 2006. See
Senator
Santorum's press release on charitable provisions from the CARE
Act that were included in the pension bill.
Side by Side Comparison
of S 1780 and HR 3908 (PDF)
As part of the Senate Republican leadership's package of priority bills, the CARE Act was also introduced in January, 2005 as Title III of S. 6, a larger bill that also includes welfare reform and family tax relief measures, but was intended to be considered separately.
In the 108th Congress the U.S. Senate passed the CARE Act S 476 on April 9, 2003, by a vote of 95 to 5. The House passed its companion bill, HR 7, on September 17, 2003 by a vote of 408 to 13. A House-Senate conference to resolve differences between the two bills was not convened before the 108th Congress adjourned in December 2004.
|
Summary of the CARE Act (S. 1780)
Tax incentives to encourage charitable donations include:
- A deduction for a portion of charitable contributions made by individuals who do not itemize deductions (single filers would be allowed to deduct total contributions over $250 up to a ceiling of $500; for joint filers, the amounts are $500 up to a ceiling of $1,000). This provision would sunset in two years.
- Tax-free distributions to charities from individual retirement accounts (donors aged 59 ½ and over may rollover amounts from a traditional or Roth IRA to create a life income gift to a charity; donors aged 70 ½ and over may make direct cash contributions to a charity);
- Charitable deductions for contributions of food and book inventories;
- An adjustment to the basis of S corporation stock for certain charitable contributions;
- An enhanced deductions for charitable contributions of literary, musical, artistic and
scholarly compositions; and
- Mileage reimbursements for charitable volunteers excluded from gross income.
Provisions to improve the oversight of tax-exempt organizations would:
- Authorize $80 million for the administration of the exempt organizations oversight operations of the IRS.
- Expand the number of written determinations by the IRS and related documents that are
made available to the public.
- Require tax-exempt organizations to include on its annual return (Form 990, 990-EZ or 990-PF) any name under which the organization operates or does business and any Internet web
site address of the organization.
- Modify the reporting of capital transactions by private foundations.
- Require the IRS to notify the public “in appropriate publications and other materials” the extent to which Form 990, 990-EZ and 990-PF are publicly available.
- Allow the IRS to disclose to appropriate state officers certain information about investigations related to refusal to recognize an organization as tax-exempt or revocation of tax-exemption. The IRS would only be permitted to disclose this information to state officials charged with overseeing tax-exempt organizations and the information could only be used to administer state laws regulating tax-exempt organizations.
- Expand penalties on preparers of Form 990 for omission or misrepresentation of any information that was known or should have been known by the preparer.
- Provide a new annual reporting requirement for nonprofits that do not currently file an annual information return (such as the 990) because their gross annual receipts do not exceed $25,000. The new report would cover the legal name of the organization; any name under which it does business; its mailing address and Internet web site address; its taxpayer identification number; the name and address of a principal officer; evidence of the continuing basis for the organization’s exemption from filing the 990; and upon termination, notice of that termination. Failure to file the annual notice for three consecutive years would result in revocation of tax-exempt status. There are no monetary penalties for failure to file the notice. The IRS would be required to notify every organization of this new requirement by mail, by Internet or by other means of outreach.
- Institute an automatic revocation of tax-exempt status for any organization that is required to file a Form 990 and fails to file that form in three consecutive years.
Social Services Block Grant funding would be restored to an annual appropriation of $2.8 billion and state authority to transfer up to 10 percent of TANF funds to SSBG programs would be restored.
Individual Development Account program would be expanded to cover 900,000 accounts.
Simplification of the lobbying expenditure limitation for charitable nonprofits, which Independent Sector has supported, would allow charitable nonprofits to spend their total lobbying allowance on any combination of grassroots and direct lobbying efforts.
Compassion Capital Fund
Provides authorizations for several agencies to issue grants and enter into cooperative agreements with nongovernmental organizations to provide technical assistance to community-based organizations. The authorization is through 2009 and is $85 million per year through HHS; $15 million through the Corporation for National and Community Service; $35 million through DOJ; and $15 million through HUD.
Maternity Group Homes
The bill would authorize the Secretary of HHS to award $33 million for FY2006 for competitive grants to states, local governments, Indian tribes, or public or private nonprofit organizations to establish or expand a maternity group home.
Legislative History
In the 108th Congress the U.S. Senate passed the CARE Act S. 476 on April 9, 2003, by a vote of 95 to 5. The House passed its companion bill, H.R. 7, on September 17, 2003 by a vote of 408 to 13. A House-Senate conference to resolve differences between the two bills was not convened before the 108th Congress adjourned in December 2004.
Background Information
Charitable Contributions Deduction for Nonitemizers
IRA Rollover
Last updated: August 23, 2006
|
