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Government Relations
Legislative Update September 12, 2011
Welcome to the Partnership's Legislative Update highlighting national legislative issues of interest to charitable gift and estate planners.
Super Committee Begins Deficit Reduction Work, Changes to
Charitable Deduction Remain on Table
Although the charitable deduction
was spared in the last-minute
debt-ceiling deal reached by Congress in early August, attention now turns
to the 12-member, bipartisan, bicameral Joint Committee on Deficit Reduction
(the so-called “Super Committee”), which is tasked with finding at least $1.2
trillion in deficit savings by Thanksgiving. Given the massive amount of money
that must be found and the short timeframe in which it must work, it is likely
the Super Committee will address tax reform issues, including significant
changes to the charitable deduction. The Super Committee held its first meeting
last week and policy negotiations will begin in earnest this week.
In an address to a joint session of Congress,
President Obama presented his
American Jobs Act, a $450 billion jobs
package that proposes a number of provisions
such as elimination of the payroll tax for
workers, a tax break for companies that hire
unemployed individuals, and certain amounts of
federal funding and aid to states. Of particular
note, the President indicated his plan would be
“fully paid for” and that he will call on the
Super Committee to “to come up with additional
deficit reduction necessary to pay for the Act
and still meet its deficit target.” Although the
President has yet to provide any specifics, it
is highly likely he will once again call for a
limit on itemized deductions, including the
charitable deduction, to pay for the cost of his
jobs package. The White House is expected to
release a detailed plan in the coming days.
As part of a series of hearings this year
examining comprehensive tax reform, the Senate
Finance Committee is now scheduled to hold a
hearing the second week of October focusing
exclusively on charitable giving incentives.
There is no final witness list yet, but the
hearing is expected to examine President Obama’s
budget proposal to limit the value of the
charitable deduction as well as a host of other
issues such as tax “extenders” like the IRA
Charitable Rollover. The hearing will also
likely highlight the attitudes of key lawmakers
toward charitable giving tax issues. In a
previous tax reform hearing, for example, Senate
Finance Committee Chairman Max Baucus (D-MT)
questioned the “equality” of the charitable
deduction.
It is no secret that Washington is seriously
considering significant changes to the
charitable deduction, including elimination all
together or a limitation in its value. As a
result, PPP plans to bring this critical debate
to the
National Conference on Philanthropic Planning.
During the opening keynote on October 4th, Tim
Hanford, former tax counsel to the House Ways
and Means Committee, and Doug White, academic
director of the Heyman Center for Philanthropy
and Fundraising at New York University, will
discuss a number of related issues, including
whether the charitable deduction is an efficient
taxpayer subsidy of charitable giving.
The Senate has now approved House-passed
legislation (H.R.
1249) that would, among other things, ban
the future patenting of tax strategies,
including charitable strategies. Under the bill,
the Patent and Trademark Office would not be
allowed to approve any more tax strategy
patents, whether they are pending or in future
applications. President Obama supports the
legislation and is expected to sign the measure
into law very soon. PPP joined with the American
Institute of CPAs and a coalition of national
organizations in efforts to support this
important provision.
The IRS has now issued
final regulations implementing the revised
Form 990, which most organizations began using
for the 2008 tax year returns filed in 2009.
These final regulations, which largely retain
the language of the proposed regulations issues
almost three years ago, allow for new threshold
amounts for reporting compensation, require that
compensation be reported on a calendar year
basis, and modify the scope of organizations
subject to information reporting requirements.
The final regulations also eliminate the advance
ruling process for new organizations, change the
public support computation period for publicly
supported organizations to five years, and
clarify that support must be reported using the
organization’s overall method of accounting.
The IRS is seeking
public comment on Notice 2005-44, Charitable
Contributions of Certain Motor Vehicles, Boats,
and Airplanes, which provides guidance regarding
how to determine the amount of a charitable
contribution for certain vehicles and the
related substantiation and information reporting
requirements. Comments are due by November 7th.
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