Negotiations to find a legislative home for pro-giving tax code changes are on hold until Congress returns from the Memorial Day holiday.
If eventually passed, the provisions would enable taxpayers who don’t itemize on their returns some tax deduction for charitable contributions and allow tax-free distributions from retirement accounts for charitable purposes — two moves expected to bolster charitable giving. They would also raise excise taxes to fund greater Internal Revenue Service enforcement of nonprofits, and impose new restrictions on tax-exempt organizations that use tax shelters.
Earlier this month, the group of changes were stripped from the tax reform bill during a House-Senate conference committee. According to Luis Maldonado, director of Government Relations and Public Policy for the Council on Foundations, the changes — called the extender provisions — were deleted under pressure from the White House.
“The White House made clear to the conferees that there were too many additions to the basic bill already, and they wanted a clean bill to come out of committee,” Maldonado said.
Some advocates of the changes believe attaching the provisions to the Pension Reform Act, also now before Congress, is now their best hope for passage during this session of Congress.
Maldonado emphasized that no agreement on changing the pension bill had been reached between the White House or the conference committees addressing the different House and Senate versions of the legislation. “We could see all of the provisions added, or some, or none at all,” he said.
Some in the midst of the debate would prefer a more cautious approach to any new legislation.
“Charitable reform efforts should focus first on enforcing the existing laws before creating new ones,” said Sandra Swirski Principal with VennStrategies LLC, speaking on behalf of the Alliance for Charitable Reform. She says her group believes any new laws must not disadvantage small foundations that lack the ability to comply with any new federal regulations.
The ACR claims only about 10 percent of the money now collected from federal excise tax is used for IRS charity enforcement, so the government should make better use of its existing tax collections to police nonprofits before increasing taxes for that purpose.
A decision is likely when Congress returns from the holiday break next week.
Have information about area nonprofits? Contact Frank Sietzen at [email protected].
