Tax Extenders/America Gives More Act
CONGRESS MUST REINSTATE CHARITABLE TAX EXTENDERS

On February 12, by a greater than two-thirds majority, the House passed legislation (H.R. 644) that would make permanent the IRA charitable rollover and the enhanced deductions for donations of food and land conservation easements, all of which expired on January 1, as well as simplify the excise tax rate on the investment income of private foundations. Unfortunately, the Senate is currently only considering a temporary extension of these measures through 2016.

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Read the Mar. 2015 joint letter to the Senate Finance Committee | Read the Nov. 2014 sign-on letter to Congress
See Tax Reform Comments from Tax Day 2015 | View our Summer 2015 Action Guide
Find notes and recording of our Apr. 2015 Sector-wide strategy call

The Issue
A number of critical giving incentives that are often included as part of the annual "tax extenders" package expired for the fourth time in recent years at the start of 2014, but were reinstated for the 2014 tax year on December 19, 2014. The package of extenders expired again on January 1, 2015.

The legislative pieces within the America Gives More Act package will help to promote and resource the crucial work of charitable nonprofits at a time when demand for nonprofit services continues to rise and outpace donations. These incentives have proven their effectiveness, yet Congress has allowed them to lapse, creating donor uncertainty.

Charitable giving incentives include:

  • IRA charitable rollover: this incentive allows individual taxpayers aged 70½ and older to donate up to $100,000 from their individual retirement accounts (IRAs) directly to charitable nonprofits, and has provided needed support for the work of social service programs, religious organizations, arts and cultural institutions, schools, healthcare providers, and other charitable organizations — all of which benefit Americans across the country.
  • Enhanced charitable deduction for food inventory: this provision would raise the cap on giving and allow small businesses donating wholesome excess food to a qualified nonprofit to take the same enhanced tax deduction C corporations have been permitted since 1976.
  • Enhanced charitable deduction for land conservation: conservation easements have helped America’s land trusts work with farmers, ranchers, and other modest-income landowners to increase voluntary land conservation by a third, to over a million acres a year when the tax incentive is in effect.
  • Giving by private foundations during times of crisis: simplifying the excise tax that private foundations pay would make more funds available for the work of charitable nonprofits in communities.

LATEST NEWS
Senate Finance approves expired giving incentives
The Senate Finance Committee approved legislation (S. 1946) on July 21 that would reinstate for the 2015 and 2016 tax years a package of expired tax provisions, which includes the IRA charitable rollover, the enhanced deduction for land conservation easement donations, and the enhanced deduction for food inventory donations.

Charitable tax provisions pass House

On February 12, the House passed the America Gives More Act (H.R. 644), with a veto-proof majority vote of 279 to 139. The legislation packages together bills to extend permanently the IRA charitable rollover (H.R. 637), the enhanced and expanded deduction for donating excess food inventory (H.R. 644), and the enhanced deduction for land conservation easements (H.R. 641). Also included is a bill (H.R. 640) that would simplify to 1 percent the excise tax rate on private foundations’ investment income.

Congress restores giving incentives for 2014 tax year

The Senate signed off on legislation (H.R. 5771) on December 16, 2014 to reinstate retroactively dozens of expired tax provisions, including the IRA charitable rollover and the enhanced deductions for donating land conservation easements and food inventory. While taxpayers will be able to employ these provisions in the upcoming filing season for the 2014 tax year, the package will expire again in roughly two-weeks' time, on January 1, 2015. The House passed the measure on December 3 and the president signed it into law on December 19.

House fails to advance permanent bill for charitable giving incentives

On December 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 supermajority needed under the expedited procedural rule used to consider the legislation.

IS POSITION AND ACTION
Because the IRA rollover and other incentives have come under close scrutiny, Independent Sector is working closely with our members and will support coalitions to make the case for bringing greater certainty to these powerful giving tools.

  • On April 8, 2015, Diana Aviv, President and CEO of Independent Sector, along with leaders from Feeding America, National Council on Nonprofits, League of American Orchestras, Council on Foundations, United way Worldwide, and the Land Trust Alliance hosted a sector-wide strategy call to discuss ways to increase pressure on the US Senate to take action on the America Gives More Act. A recording and transcript of our April 2015 sector-wide strategy call are available.
  • In March 2015, Independent Sector, along with United Way Worldwide, YMCA of the USA, The Jewish Federations of North America, National Council of Nonprofits, Council on Foundations, Feeding America, and Land Trust Alliance sent a joint letter signed by their senior leadership asking the Senate Finance Committee to move forward quickly on the America Gives More Act
  • Shortly after returning for a lame duck session in 2014, Independent Sector and 1,031 organizations sent a letter to every Member of Congress in support of making the charitable provisions permanent in any year-end deal. IS President and CEO Diana Aviv also joined with sector leaders to send a letter published in POLITICO to the President and leaders in Congress, on December 2.
  • In advance of a House floor vote in July 2014, Independent Sector delivered another sign-on letter joined by over 850 organizations, as well as published a newspaper ad in Roll Call with the list of signers.
  • Leading up to a markup in the House Ways and Means Committee in May 2014, Independent Sector and 252 organizations sent a letter to the panel, urging them to extend permanently the three charitable extenders.
  • Independent Sector organized a sector-wide letter that was sent to all U.S. Senate offices in February 2014, in support of legislation to renew and enhance the expired IRA charitable rollover provision. Nearly 500 organizations from across the country signed on.

Background
The set of 55 tax provisions that regularly expire and are reinstated are known collectively as "tax extenders." The package includes three charitable giving incentives: the IRA charitable rollover, the enhanced charitable deduction for food inventory, and the enhanced charitable deduction for land conservation.

After these measures expired at the end of 2011, the American Taxpayer Relief Act of 2012 (ATRA) extended through 2013 and retroactively through 2012 all three of the charitable tax extenders, as well as the basis adjustment to stock of S corporations making charitable contributions of property. The package did not include previously available extenders that offered enhanced deductions for books and computer equipment.

In 2013, some lawmakers in the House signaled a preference to defer to former Ways and Means Committee Chairman Dave Camp's (R-MI) comprehensive tax reform efforts for renewal of their preferred extenders. A lack of legislative action in 2013, however, allowed all extenders to expire on January 1, 2014.

In 2014, lawmakers in both chambers advanced legislation to make permanent only certain tax extenders and extend others only temporarily. The Senate Finance Committee passed by voice vote in April the EXPIRE Act (S.2260), which would have renewed through 2015 the entire extenders package. The bill, however, failed to reach the Senate floor due to partisan disagreement over the amendment process. In July, the House passed the America Gives More Act (H.R. 4719), which would have restored permanently three charitable extenders as well as extended through April 15 the deadline for claiming charitable donations on the previous year's tax filing and simplified to 1 percent the excise tax rate for private foundations' investment income. The Senate did not take up the bill. In December, the House was unsuccessful in passing under suspension of the rules narrower legislation, the Supporting America's Charities Act (H.R. 5806), which would have made permanent only the three charitable extenders.

Unable to reach a longer-term agreement on extenders, the lame duck 113th Congress adopted legislation (H.R.5771) in December 2014 to extend the package of expired provisions, including three charitable giving incentives, retroactively for just the 2014 tax year. The provisions were set to expire again in two-weeks' time, on January 1, 2015.

Resources

Notes and recording from April 2015 Sector-wide strategy call

CRS report: Tax Provisions Expiring in 2013 (December 2013)

JCT report: "Legislative Background of Selected Federal Tax Provisions Scheduled to Expire in 2011 or 2012" (April 2012)

IRA Charitable Rollover one pager

IS Comments to Senate Finance Committee Tax Reform Working Groups (April 2015)

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