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CARE Act Introduced in House and Senate

(Oct. 3, 2005) The Charity Aid, Recovery and Empowerment (CARE) Act, S.1780, was reintroduced by Sens. Rick Santorum (R-Pa.) and Joseph Lieberman (D-Conn.) on Sept. 28, 2005.

Reps. Roy Blunt (R-Mo.) and Harold Ford (D-Tenn.) introduced companion legislation, H.R. 3908, in the House. The two bills are very similar to the CARE Act that was introduced in 2003 and include charitable giving incentives such as the IRA rollover and non-itemizer deduction.

In the last Congress, the Senate passed the CARE Act by a vote of 95 to 5, while the House overwhelming approved its version by a vote of 408 to 13. However, the House and Senate were unable to resolve the differences between the two bills in a conference committee before the 108th Congress adjourned in December 2004.

Different Versions of the IRA Rollover

Both of the new versions contains the IRA rollover provision, a proposal that AFP has strongly supported in the past, but the House and Senate provisions differ slightly regarding the age thresholds that would trigger the charitable incentive.

In the Senate version, donors 59½ or older can use transfer funds from their IRAs tax-free to create planned gifts. At the age of 70½ or older, donors can transfer funds from their IRAs as direct gifts to charities. The House version allows both types of gifts, but only at age 70½. AFP strongly prefers the Senate version of the IRA rollover.

Additional giving incentives in the bills include:

  • Charitable deductions for contributions of food and book inventories;
  • An adjustment to the basis of S corporation stock for certain charitable contributions;
  • An enhanced deductions for charitable contributions of literary, musical, artistic and scholarly compositions; and
  • Mileage reimbursements for charitable volunteers excluded from gross income.

The CARE Act also contains a few accountability and oversight provisions, such as authorizing additional resources for the Internal Revenue Service, that would improve the regulation of tax-exempt organizations. The bill would also allow the government to issue grants and enter into cooperative agreements with nongovernmental organizations to provide technical assistance to community-based organizations.

Part of a Larger Bill?

With Senate Finance Committee Chair Charles Grassley (R-Iowa) working on charitable sector reform legislation aimed at overhauling and improving oversight of the nonprofit sector, it is possible that the CARE Act will be merged into a larger charity bill.

"We are delighted by the reintroduction of the CARE Act,' said AFP President and CEO Paulette Maehara, CFRE, CAE. 'This bill will do much to bolster the altruistic efforts of our nation's charities, particularly as they struggle to respond to the Hurricanes Katrina and Rita disasters. However, it is our hope that these charitable incentives do not come at the tremendous cost of burdensome charitable reforms that would impede charities from performing their essential philanthropic work."

AFP will post texts of the bills as soon as they become available.

For more information about the CARE Act, contact Jason Lee, director, government relations, at jlee@afpnet.org.

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