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Taxation Committee Releases List of Reform Proposals for Charities, Philanthropy

The IRA Rollover, the non-itemizer deduction and the conversion of the charitable deduction into a tax credit are just some of the proposals included in the Joint Committee on Taxation’s report on the House Ways and Means Committee’s Tax Reform Working Groups.

As part of its comprehensive look at tax reform, the Ways and Means Committee created 11 different working groups, including a Charitable/Exempt Organizations Working Group to examine issues related to fundraising, philanthropy and the nonprofit sector.

The Joint Committee on Taxation report serves as a summary of all of the input and ideas received by the Charitable/Exempt Organizations Working Group, and the relevant information related to giving and charities starts on page 491. There is a background memo on current tax-exempt law on page 19.

The report notes that the working group received feedback that a number of groups opposed:

  • The 28 percent cap on all deductions
  • Any dollar cap on the charitable deduction
  • A minimum floor to qualify for the charitable deduction
  • Conversion of the charitable deduction into a charitable tax credit

Some of the ideas that received support included the IRA Rollover and the non-itemizer deduction, as well as conversion of the deduction into an itemized credit. Other issues, including tax-exempt status, unrelated business income tax, and different types of disclosure requirements, are also discussed.

AFP submitted its own comments to the working group about tax proposal affecting giving and fundraising.  AFP’s comments focused on preserving the charitable deduction in its current form and various caps and limits would affect giving negatively.

The report does not contain any sort of recommendations or detailed analysis about the proposals. The Ways and Means Committee will now begin to delve into specific proposals over the coming weeks.

“We appreciate the willingness of the working groups to accept feedback and ideas,” said Andrew Watt, FInstF, president and CEO of AFP. “I hope that the committee will listen to these comments and avoid making changes that would hurt the sector and the ability of charities to provide programs and services that help communities across the nation.”

Watt also noted that the charitable deduction is just one aspect of charitable tax policy being examined, and that other issues—such as disclosure and unrelated business income—will be discussed as well. “We’ve got to remain engaged on many fronts and not just focus on the deduction,” said Watt. “AFP will continue to play a lead role in helping fundraisers respond to these proposals and will alert members when action is needed.”

AFP, as well as the Charitable Giving Coalition, will be releasing a statement regarding the report, which was distributed on Monday, May 6.

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