Public Policy
The following provisions in pending tax reconciliation legislation (H.R.
4297) have been corrected by the staff of the Senate Finance Committee
and the Joint Committee on Taxation.
Nonitemizer Deduction
There will be no change in the current charitable deduction permitted
to itemizers, that is, there will not be a floor imposed on charitable
deductions for itemizers. The nonitemizer deduction being recommended
is the same as the provision in the CARE Act: taxpayers who claim the
standard deduction would be permitted to take a deduction for total charitable
gifts in excess of $250, up to a ceiling of $500 – so a maximum
deduction of $250 if they give $500 or more. The amounts would be doubled
for married taxpayers who file jointly.
IRA Rollover
The provision would now be in place for one year, and the ages have been
corrected to mirror the provisions in the CARE Act.
Treatment of Unrelated Business Income
The bill would no longer require that nonprofits have their UBIT liability
certified by an outside party. It still corrects the treatment of payments
by affiliated organizations, but now only requires that nonprofits make
their Form 990-T public, excluding information that would jeopardize the
operations of unrelated business activities.
Fractional Interest Donations
The provision has been broadened to provide agencies receiving such gifts
maximum flexibility in taking actual possession of the gift over time
(it is no longer restricted to possession in a given year, or every year).
Donor-Advised Funds
The provision has been corrected to permit donor advised funds to count
any payment to the sponsoring organization as part of its qualifying distributions.
DAFs would also be permitted to count payments to organizations not defined
as public charities (including international organizations) if the amount
is exclusively for a charitable purpose as defined in the tax law. The
definition of a donor-advised fund has been clarified to exclude funds
which exclusively benefit a single identified organization or governmental
entity and funds which provide scholarships or study and travel benefits
to individuals if the committee which determines grants is not controlled
directly or indirectly by the donor or other disqualified persons of the
fund. Type I and Type II supporting organizations as well as “Functionally
Integrated Type III” supporting organizations would be permitted
to hold donor-advised funds (for which donors receive a tax deduction
when making gifts to the DAF). A “functionally integrated Type III”
organization is one that performs functions or carries out purposes of
the supported organization or that conducts activities that would normally
be performed by the supported organization if the Type III did not exist.
Supporting organizations
All of the provisions have been altered (except for the identification
and reporting on the Form 990) to apply only to Type III supporting organizations
that are not “functionally integrated.” Private foundations
would continue to be able to count as qualifying distributions grants
awarded to Type I and II supporting organizations, and “functionally
integrated” Type III supporting organizations.
Take Action!
We urge you to send a letter to your Representative and Senators
and also urge you to call them as soon as possible urging them to pass
the package of charitable incentives and reforms. If you do not have the
phone number for your representatives, you can call the US Capitol Switchboard
at 202-224-3121.
Contact
your Representative
Contact
your Senators
Last Updated: May 3, 2006
-Top of Page-
|
