Charitable Giving Incentives Expire
A number of critical giving incentives often included as part of the annual "tax extenders" package expired at the beginning of 2012. These incentives include:
- IRA charitable rollover
- Enhanced charitable deduction for food inventory
- Enhanced charitable deduction for book inventory
- Enhanced charitable deduction for qualified computer contributions
- Enhanced charitable deduction for land conservation
Take Action
Contact your Congressional representatives and urge them to reinstate the IRA charitable rollover and other giving incentives as soon as possible. Use this one-pager.
LATEST NEWS
Ways and Means Subcommittee holds hearing on tax extenders
On April 26 the House Ways and Means Select Revenue Measures Subcommittee held a hearing on the expiring and expired tax extenders. Testimony was limited to House members who had introduced or co-sponsored legislation related to the tax provisions during the 112th Congress. Several House members testified in favor of the charitable tax extenders, including Rep. Wally Herger (R-CA), sponsor of legislation (H.R. 2502) to expand and make permanent the IRA charitable rollover, who said that “maintaining incentives for charitable giving is especially important in tough economic times.” Subcommittee Chairman Pat Tiberi (R-OH) said the hearing begins the process of reviewing the merits of the provisions, but noted that passing a tax extenders package is unlikely before the November elections.
Read the IS statement and learn more about how to submit a statement or comments for the record. Statements will be accepted through May 10, 2012.
Senate
Sens. Chuck Schumer (D-NY) and Olympia Snowe (R-ME) have introduced the Public Good IRA Rollover Act of 2011 (S. 557). The legislation would make permanent and expand the IRA charitable rollover, lifting the $100,000 charitable gift limit and allowing for certain giving, like to a charitable remainder trust, to begin as early as age 59 ½.
The Senate Finance Committee held a hearing January 31, 2012 entitled "Extenders and Tax Reform: Seeking Long-term Solutions."
Senate Finance Committee Chairman Max Baucus (D-MT) has vowed "to find a bipartisan path forward" for these tax extenders, adding that "it is critical to extend these tax provisions early in the year to maximize their effect and provide certainty for the 2012 tax year."
Reps. Wally Herger (R-CA) and Earl Blumenauer (D-OR) have introduced the Public Good IRA Rollover Act (H.R. 2502) as a companion to the Senate legislation.
Joint Committee on Taxation
On April 25, 2012, the Joint Committee on Taxation (JCT) has issued an updated legislative background report on the expired and expiring incentives ahead of the House Subcommittee on Select Revenue Measures hearing on tax extenders.
A previous legislative background report was issued January 30, 2012 before the Senate Finance Committee hearing on extenders.
IS Position
Because the IRA rollover and other incentives have come under close scrutiny in the 112th Congress, Independent Sector will be working closely with its members and will support coalitions to make the case for bringing greater certainty to these powerful giving tools beyond 2012.
An OP-ED by IS President and CEO Diana Aviv was published in the March 27, 2012 edition of Roll Call, urging the reinstatement of the expired individual and corporate charitable giving incentives.
Independent Sector sent a letter to members of the Finance Committee, including Chairman Max Baucus (D-MT), ranking member Orrin Hatch (R-UT) urging the reinstatement of the charitable provisions as soon as possible. IS has also signed onto a broader tax coalition letter sent to every member of Congress urging quick legislative action to restore the expired tax provisions.
IRA Charitable Rollover
The IRA Rollover was first enacted in 2006 as part of the Pension Protection Act. The provision allows individuals aged 70½ and older to donate up to $100,000 from their Individual Retirement Accounts (IRAs) to public charities without having to count the distributions as taxable income.
Since the provision was first enacted, Americans have made millions of dollars of new contributions to nonprofits -- including social service programs, religious organizations, arts and cultural institutions, schools, and health care providers -- that benefit people every day. LEARN MORE.
The IRA Charitable Rollover was first enacted on August 17, 2006, as part of the Pension Protection Act of 2006 and has been reinstated for 2011.
- Taxpayers age 70½ and older are required to make annual distributions from their IRAs which are then included in the taxpayers’ adjusted gross income (AGI) and subject to taxes.The IRA Charitable Rollover permits those taxpayers to make donations directly to charitable organizations from their IRAs without counting them as part of their AGI and, consequently, without paying taxes on them.
- A donor’s total combined charitable IRA rollover contributions cannot exceed $100,000 in any one year.
- Eligible Charities. Charitable contributions from an IRA must go directly to a public charity that is not a supporting organization. Contributions to donor-advised funds and private foundations, except in narrow circumstances, do not qualify for tax-free IRA rollover contributions.
- Eligible Retirement Accounts. Distributions can only be made from traditional Individual Retirement Accounts or Roth IRAs. Charitable donations from 403(b) plans, 401(k) plans, pension plans, and other retirement plans are ineligible for the tax-free treatment.
- Directly to the Charity. Distributions must be made directly from the IRA trustee payable to the public charity.
- No Gifts in Return. Donors cannot receive any goods or services in return for charitable IRA rollover contributions in order to qualify for tax-free treatment.
- Written Receipt. In order to benefit from the tax-free treatment, donors must obtain written substantiation of each IRA rollover contribution from each recipient charity.
