Washington Snapshot

Does Certainty Matter? Why We Are Activating in August

Thursday, August 14, 2014 - 11:01 am
Katherine La Beau

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Imagine your dream retirement, living comfortably off with the retirement savings you worked hard to build for years.

You also have an IRA account from which you’ll start taking yearly distributions soon. You don’t need these funds to support your retirement life. Instead, you prefer to donate your first distribution to a public charity. You’re thinking that when your kids were younger, you were active in their school and would love to support an after-school program. Your financial advisor connects with you with the local community foundation and you find out they are hoping to launch an after-school reading program. Your support could help make it a reality.

But when you talk with your financial advisor, there’s a problem. Because of Congress’ inaction, she’s not certain whether it will be covered under the “IRA charitable rollover” tax incentive. Therefore, you could incur taxes on your gift. Why? Because, if you donate now, you’ll be forced to recognize these donated dollars as personal income and pay tax on them. Instead of making the donation, you wait, and hope that Congress will act soon.

In the meantime, the community foundation is deprived of your generous gift—dollars that would flow back into improving your community. And, you are left in a limbo of uncertainty about what do to with your IRA distribution dollars. The clock is ticking.

Countless taxpayers throughout the country are facing this very situation in 2014.

Congress has not yet renewed the IRA charitable rollover or the other charitable “tax extenders,” leaving taxpayers questioning when, and in what amounts, to make their charitable contributions this year.

At the same time, charities all over the country that are would-be recipients of these gifts are also in the dark about when—if at all—these donations might trickle in.

Without a crystal ball to predict when Congress might act, no one can plan for the donation transaction. You can’t know whether you’ll incur tax liability on your IRA distribution, and the local community foundation can’t anticipate when it might be able to use your gift to help launch that reading program.

As you probably know, the House of Representatives recently passed H.R. 4719, the America Gives More Act. This bill makes three of the charitable “tax extenders” permanent law. So, the Council is “activating in August”—making a strong push to urge Senators to vote on it as soon as possible when they return to D.C. in September.

Why the urgency?

The more time that elapses without Congress making giving incentives like the IRA charitable rollover permanent, the greater the uncertainty that taxpayers and charities will experience.

Critical donations will be delayed indefinitely or not made at all. The after-school reading program will not be launched. Or the job-training center in your town won’t get the computers it desperately needs. Or two local high school students will be deprived of scholarships from a depleted fund. Or victims of a recent tornado won’t be able to rebuild their homes this year.

We recognize that donors and communities cannot wait much longer—which is why we’re asking the Senate to act quickly to vote “yes” on the America Gives More Act.

Use the Council’s advocacy toolkit to reach out to your Senators and ask them to support your community by voting for the America Gives More Act.

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