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House Passes Tax Reconciliation Bill Without Charitable Giving Incentives or Reforms

(Dec. 19, 2005) On Thursday, Dec. 15, 2005, the U.S. House of Representatives approved H.R. 4297, the Tax Relief Extension Reconciliation Act of 2005, by a vote of 234 - 197.

H.R. 4297 extends several current-law provisions that are expiring in the near future. For instance, the lower tax rates on capital gains and dividends are extended in the bill. The House version does not contain any of the charitable giving incentives or the charitable reform provisions found in the Senate approved companion legislation, S. 2020, the Tax Relief Act. However, H.R. 4297 appears to have a charitable giving incentive related to computer donations that AFP believes will allow the House and Senate to negotiate charitable giving provisions during conference.

As previously reported in eWire, the Senate's bill includes key CARE Act giving incentives, including:

  • Tax-free distributions from individual retirement accounts for charitable purposes (IRA rollover provision)
  • Deduction for a portion of charitable contributions to be allowed to individuals who do not itemize deductions (nonitemizer provision)
  • Modification of charitable deductions for contributions of food inventories (food donation provision)

Although AFP was pleased to see the inclusion of the IRA rollover provision in the Senate bill, it is concerned about several charitable reforms that also were included in the bill, including provisions that:

  • impose new user fees on donors claiming certain deductions
  • modify substantiation and recordkeeping requirements for certain charitable contributions (creating more paperwork and bureaucracy for charities)
  • change deduction rules for clothing and household items

It is unclear whether the House and Senate will complete their conference on their bills before the end of the year. AFP will continue to monitor the situation and work with members of congress to both advocate for charitable giving incentives, such as the IRA rollover provision, and voice its opposition to overly burdensome charitable reforms.

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