Senate Working Groups Highlight Charitable Giving Incentives in Tax Reform “Exploration”
Charitable giving incentives, including the IRA Rollover Provision, were featured prominently in the reports of the Senate Finance Committee working groups that identified key areas for future consideration during the tax reform debate.
The reports did not include recommendations or priorities, but were meant to “explore options for reforming the identified areas,” including issues where the working groups felt there were opportunities for bipartisan discussion, support and/or compromise.
While the reports are not binding on the Senate Finance Committee, they do provide a good idea of how Senators are feeling about particular policy issues. Charities should be encouraged that so many charitable issues were discussed, and it did not appear that the intent of the reports was to limit the existing charitable deduction.
Long Range Goal: Comprehensive Tax Reform
With an eye towards working on comprehensive tax reform, the Senate Finance Committee put together several bipartisan working groups to explore different aspects of tax reform. The working groups were to analyze current tax law and explore reform options within five policy areas: 1) Individual Income Tax; 2) Business Income Tax; 3) Savings and Investment; 4) International Tax; and 5) Community Development and Infrastructure.
In April, AFP submitted comments to the Individual Income Tax and Business Income Tax Working Groups, calling for Congress to keep the current charitable deduction intact and expand giving opportunities. The Charitable Giving Coalition, which AFP co-chairs, also submitted comments that were signed and supported by more than 40 different charities and associations.
IRA Rollover and other Charity Proposals
The report from the Individual Income Tax Working Group, which contained most of the charitable giving proposals, focused extensively on the IRA Rollover. In particular, the working group found the continual temporary extensions of the provision to be troublesome, noting: “While the Working Group does not make specific recommendations, the Committee may wish to consider proposals for qualified charitable distribution rules that would increase certainty for taxpayers and increase the amount of funds that flow to charity.” The report also discussed options in expanding the IRA Rollover.
Other giving incentives were mentioned in the Individual Income Tax Working Group report, including deductions for contributions of qualified conservation easements and limits on how much individuals and corporations can deduction annually.
The Business Income Tax Working Group included discussions and policy proposals related to the mandatory filing of electronic Forms 990 (and related documents) for charities and other 501(c)(3) organizations and the excise tax on the net investment income of private foundations.
“While these reports merely present options, I am pleased at their tone and language,” said Andrew Watt, FinstF, president and CEO of AFP. “Tax reform is a huge undertaking, and we don’t know what the final legislation might look like. But discussion about expanding the IRA Rollover and making it permanent is a good sign, and the working groups seem to have spent a considerable amount of time looking at ways to increase giving and the charitable deduction, not limit them.”
With the five reports now published, the full Senate Finance Committee is expected to review each report and begin to prioritize policy areas for further debate.
Each of the working groups’ reports can be found here.