Washington Snapshot - March 21, 2014
Council to Senate: Preserve & Expand IRA Rollover
As our members know, the Council has long supported a permanent extension of the IRA charitable rollover, and an expanding the rollover by eliminating the $100,000 cap, allowing donors to make rollovers beginning at age 59 ½, and permitting rollovers to donor advised funds, supporting organizations, and private foundations. The Public Good IRA Rollover Act of 2013 (S. 1772), introduced by Senator Chuck Schumer (D-NY) with bipartisan support, would make these critical changes.
Yesterday, Council President and CEO Vikki Spruill sent a letter to all Senators to express the Council’s strong support for S. 1772 and, further, to support the extension and expansion of the rollover in any potential legislative vehicle. “A permanent extension would eliminate the tremendous uncertainty caused by frequent lapses and subsequent extensions, which have made it especially challenging for donors to plan IRA distributions and charitable giving in advance,” Spruill stated in the letter.
We’re continuing to hear that Senator Ron Wyden (D-OR), Chairman of the Senate Finance Committee, will advance an extenders bill to reinstate the 55 tax extenders that expired at the end of 2013. As we’ve frequently reported, the IRA charitable rollover, along with the enhanced deductions for land conservation and food inventory, are part of the extenders package. There is also speculation that the Senator might allow for changes to provisions, such as expanding the rollover. For that reason, the Council is strongly encouraging both extension and expansion of the provision. Bloomberg reports that Wyden will likely bring up a vote the week of March 31st or the following week Senator Wyden has made passing a tax extenders bill his first priority since taking over the Committee about a month ago.
The Finance Committee apparently has not yet decided whether to extend the breaks through the end of 2014 or 2015, but House Republicans have stated that they would not support a short-term extension. In addition, Chairman Wyden’s proposal will likely exclude or refine some of the 55 tax extenders, because Ranking Committee Member Orrin Hatch (R-UT) has made clear that he wants to examine each provision individually and determine which to keep. Renewing the full extenders package for a year would cost approximately $50 billion.
While many provisions—including the IRA charitable rollover—enjoy bipartisan support, Committee discussions over extenders are likely to generate conflict among Senators. Senator Wyden continues to characterize the process of dealing with the tax extenders as a “bridge to tax reform.” Hill staff cautions that the decision-making process could continue for the next two weeks because the Medicare “doc fix” must be dealt with prior to March 31 and will consume much of the Senate’s time.
More on the Tax Reform Act of 2014
Over the past few weeks, we’ve been updating you on provisions of House Ways and Means Chairman Dave Camp’s (R-MI-4) Tax Reform Act of 2014 that are most concerning to the Council or will affect our members most significantly.
The Council is deeply concerned about the proposal to impose a 5-year payout on donor advised funds (DAFs). We’re concerned not only about the proposed provision but also the underlying motivation for including such stringent restraints. We also continue to oppose the proposed limitations on the charitable deduction, along with any proposed policy changes that reduce the value of charitable giving incentives.
The proposal to repeal Type II and Type III supporting organizations is also deeply troubling. Council Senior Vice President of Public Policy & Legal Affairs Sue Santa told Tax Notes (subscriber only) this week that because supporting organizations received significant scrutiny when the Pension Protection Act was considered and passed, the sector believed that lawmakers’ concerns with these organizations had been addressed. "I do think there's some level of surprise to see it come up again. We're concerned on our end, representing foundations, that this could significantly limit the vehicles that they can use to achieve their philanthropic objectives," Santa told the publication. We encourage you to check out to last week’s Washington Snapshot for a more in-depth look at the Council’s concerns on these provisions.
Nonprofit Quarterly covered these and other provisions of the bill that have both broad and narrow implications for nonprofit organizations, such as:
- elimination of future tax-exempt private activity bonds;
- with respect to private colleges and universities, repeal of the rule thatprovides a charitable deduction of 80 percent of the amount paid for the right to purchase tickets for college athletic
- repeal the tax exemption for professional sports leagues; events and imposes an excise tax on certain investment income.
Chairman Camp’s proposal is a critical starting point for lawmakers in any tax reform conversations going forward even though it may not become law in this session of Congress. And, polls have repeatedly shown that the public supports reforming the tax code—which will undoubtedly motivate members of Congress as they prioritize their legislative agenda for after this year’s midterm elections. We’ll continue to alert our members that it’s critical to be part of discussion and negotiations so the voice of the philanthropic sector is heard.
Stay tuned for an announcement soon about Council webinars on the Camp bill, aimed at both educating our members about the bill and, more importantly, seeking your input on how the proposed changes will impact your organizations.
In the meantime, please feel free to contact the Council’s Policy Analyst Katherine LaBeau for more information about the Camp bill or to express your concerns.
State Issues
Property Tax Proposal in Connecticut
The Speaker of the Connecticut House of Representatives, Brendan Sharkey, has introduced a bill that would make nonprofit hospitals and colleges in the state fully liable for property taxes, writes the New Haven Register. The Speaker defended his bill on the grounds that some private colleges and hospitals are “multi-multi-million-dollar operations” taking up an increasing amount of valuable property in the state. He went on to say that these organizations are “big operations employing lots of people, providing economic benefits, but also running like a corporation.”
Mr. Sharkey also cited what he said was a blurring of lines between big nonprofits and for-profit entities. “Most private colleges now are multi-multi-million-dollar operations. It is not uncommon to see seven-figure salaries paid to their top executives. They are big operations employing lots of people, providing economic benefits, but also running like a corporation,” he said.
California Senate Votes "No" on Political Activity Bill
The Los Angeles Times reports that the California State Senate voted down a bill this week that would require donor disclosure from nonprofits that seek to influence state elections. This bill was one of several bills that have floated in the state legislature this year that attempt to more heavily regulate political activity by nonprofits in the state.
The bill would require an organization to make donor information public if it spends or contributes at least $50,000 in one year or more than $100,000 over a four-year period towards political activity. While the bill was defeated for now, it may be resurrected before the end of the legislative session in August, and, if approved, would take effect next year.
New Papers on the Future of State Charities Regulation
Columbia University’s Charities Regulation and Oversight Project of the National State Attorneys General Program (“Charities Project”) hosted a policy conference at Columbia Law School last year that focused on state regulation and enforcement of the charitable sector, “The Future of State Charities Regulation.”
Now, The Charities Project has announced that they have published two dozen papers solicited for the conference. This collection of state-focused articles is the first of its kind, addressing a variety of topics on state regulation of the charitable sector. The twenty-five articles are openly accessible and publicly searchable. We encourage our readers to peruse paper topics that may be of interest!
Philanthropy News and Op-Eds
Manhattan Institute Scholar Howard Husock penned an op-ed in Forbes vigorously defending the charitable deduction. Husock criticized the Administration for putting the charitable deduction on the same playing field as the mortgage interest deduction in his fiscal year 2015 budget. As we’ve mentioned before, the President’s budget for fiscal year 2015, released on March 4th, again proposed to cap itemized deductions at 28 percent. Both the charitable deduction and the mortgage interest deduction would be subject to this cap.
Husock highlights a critical distinction between the two tax provisions: “the White House mistakes a policy which allows someone to help himself to a bigger house with one which provides a modest incentive for helping others. It’s a mistake so basic that it reminds one of the famous Oliver Sacks book, ‘The Man Who Mistook his Wife for a Hat.’”
Keep in Touch!
Please feel free to reach out to any of us on the public policy team with any comments or concerns, or to share an issue, article, event, or op-ed you’d like to see covered in a future Washington Snapshot.
