Exempt Organizations Advisory -Fate of Charitable Reforms and Giving Incentives Still Uncertain

On May 3, House and Senate tax conferees struggled to reach agreement on a tax reconciliation bill. An "agreement in principle" was brokered on a $70 billion package of tax cuts (H.R. 4297). This bill reportedly does not include the charitable reform provisions and charitable giving incentives that were included in the Senate-passed version of the reconciliation bill, but a second package of tax extenders, or "trailer bill," is still in negotiation. Senate Finance Committee Chairman Charles Grassley (R-IA) is pushing to include the charitable provisions in the trailer bill, and he wants the trailer bill to move at the same time as the reconciliation bill.

Also on May 3, Senate Finance Committee staff unofficially released a general list of the charitable provisions "in play," culled from the Senate-passed tax reconciliation bill. Staff suggests that changes have been made to the proposed reforms on donor-advised funds and supporting organizations.

According to Independent Sector, which has lobbied the Senate Finance Committee on behalf of the charitable sector, several problems in this legislation were identified and have been addressed by the staff of the Senate Finance Committee and the Joint Committee on Taxation. These issues include the following provisions: floor on the itemizer deduction; IRA rollover; certification of unrelated business income; fractional interest donations; donor-advised funds; and supporting organizations. Click here for more information.

It remains to be seen whether the changes will satisfy House members who oppose the charitable reforms. A vote in both chambers on the tax reconciliation bill is not expected before next week.

For more information on this topic, please contact Catherine W. Wilkinson, Suzanne Ross McDowell, or the Steptoe attorney(s) with whom you usually work.

The Exempt Organization Advisory is a general summary of the law and is not intended as specific legal advice for any organization.

Internal Revenue Service - Circular 230 Disclosure: As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

Questions and comments about the Exempt Organizations Advisory are always welcome and should be sent to bstone@steptoe.com.