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Government Relations
Legislative Update April 6, 2011
Welcome to the Partnership's Legislative Update highlighting national legislative issues of interest to charitable gift and estate planners.
Senators Chuck Schumer (D-NY) and
Olympia Snowe (R-ME) have introduced the Public Good IRA Rollover Act of 2011 (S.
557). This legislation, long advocated by PPP, would extend the IRA
charitable rollover beyond 2011, lift the $100,000 cap on distributions, and
allow planned gifts beginning at age 59½. Additionally, it would allow IRA
charitable rollovers to be made to donor-advised funds, supporting
organizations, and private foundations. PPP members are encouraged to contact
their Senators and ask them to support the charitable sector by co-sponsoring S.
557.
As part of a series of hearings this year on tax
reform, the Senate Finance Committee heard
testimony late last month on whether tax
incentives work or whether they simply reward
behavior that would otherwise occur absent such
tax incentives. While the
prepared testimony did not focus on the
charitable deduction specifically, Senator John
Thune (R-SD), a member of the Finance Committee,
offered his support for the charitable deduction
and asked witnesses about the potential impact
of President Obama’s proposal to cap the
charitable deduction. The witnesses, for their
part, were tentatively supportive of the
deduction, noting that any reduction in the
value of the charitable deduction would likely
result in a decrease in giving.
Nonprofit organizations in and around
Washington, DC continue to join PPP in voicing
strong opposition to various proposals to limit
the value of the charitable deduction,
explaining that such changes in the tax law
would reduce charitable giving and ultimately
harm charities. For example, a coalition of over
20 national nonprofits sent a
letter to President Obama asking him to
reconsider his proposal to cap itemized
deductions at 28 percent for certain taxpayers.
In addition, the Association for Healthcare
Philanthropy released the
results of a February
member survey on the effects of proposed cuts to
the charitable deduction. The vast majority of
respondents indicated that the proposed tax code
changes will negatively affect their fundraising
programs. They also reported that tax
deductibility is an important consideration for
their donors. Finally, the Heritage Foundation
released a
paper on the President’s proposal and
concludes that it would discourage charitable
giving and particularly affect universities and
medical centers.
Senator Charles Grassley (R-IA), a senior member
of the Senate Finance Committee, suggested that
Congress calculate the total cost to the federal
government of the nonprofit tax exemption in
order to determine, at least in part, whether
the services nonprofits provide are worth the
revenue the government loses from granting them
exempt status. Congressional staff indicate that
such an estimate could be used by lawmakers to
force Congress to examine whether certain
nonprofit organizations, like hospitals and
universities for example, should continue to
enjoy the same tax exemption as other types of
charities. Once Senator Grassley makes a formal
request to the Joint Committee on Taxation, the
tax-estimating committee must comply, but it is
unknown how long it would take for them to
develop figures.
Both the Senate and House have now approved
legislation (H.R.
4) to repeal the new Form 1099 reporting
requirements set to take effect next year.
Enacted as part of last year's healthcare reform
law, the new reporting rules would require all
businesses and tax-exempt organizations to issue
a Form 1099 to all vendors from whom they buy
goods totaling $600 or more annually. H.R. 4
will now be sent to President Obama for his
signature.
The Senate voted 95-5 to approve patent reform
legislation (S.
23) containing a ban on the practice of
patenting tax strategies. Attention now turns to
the House where Judiciary Committee Chairman
Lamar Smith (R-TX) recently introduced his
version of patent reform legislation (H.R.
1249), which contains ban language similar
to that in S. 23.
Senator Charles Schumer (D-NY), a member of the
Senate Finance Committee and the third-ranking
member of the Democratic leadership, has
introduced legislation that would crate a flat
tax rate on foundation investment earnings.
Specifically, the legislation (S.
593) would streamline and reduce the private
foundation excise tax to a revenue-neutral rate
of 1.39 percent.
Representative John Lewis (D-GA), Ranking Member
of the House Ways & Means Subcommittee on
Oversight, has introduced the Artist-Museum
Partnership Act of 2011 (H.R.
1190), which would allow a charitable
deduction equal to fair market value for
donations of literary, musical, artistic, or
scholarly creations of the donor.
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