For June 2018, in partnership with United Philanthropy Forum, FPN is pleased to share information concerning several important policy discussions happening at the federal level.
Charitable Giving Tax Deduction Act Introduced by Reps. Smith and Cuellar
On May 11, Reps. Chris Smith (R-NJ) and Henry Cuellar (D-TX) introduced the Charitable Giving Tax Deduction Act (HR 5771), which would extend the charitable deduction to all taxpayers without limitations. As of now, there is no Senate companion bill. Rep. Smith authored an op-ed in the Washington Examiner in support of the legislation. You can read the full op-ed here.
Universal Charitable Giving Act
The Universal Charitable Giving Act has also been introduced and is being sponsored by Rep. Mark Walker (R-NC) in the House (HR 3988) and Sen. James Lankford (R-OK) in the Senate (S 2123). The legislation would extend a charitable deduction to non-itemizers that would be capped at one-third of the standard deduction ($4,000 for single filers and $8,000 for married couples filing jointly).
CALL TO ACTION—HOW DO YOU GET INVOLVED?
- Urge your representative to co-sponsor the Universal Charitable Giving Act of 2017 (HR 3988) sponsored by Rep. Walker (view list of current co-sponsors)
- Urge your representative to co-sponsor the Charitable Giving Tax Deduction Act (HR 5771) sponsored by Reps. Smith and Cuellar
- Urge your senators to co-sponsor the Universal Charitable Giving Act of 2017 (S 2123) sponsored by Sen. Lankford.
Attacks on Johnson Amendment Continue
Recently the House Appropriations Subcommittee on Financial Services and General Government approved an appropriations bill for fiscal year 2019 that includes a “rider” provision that would carve-out an exception to enforcement of the “Johnson Amendment” for churches.
The Johnson Amendment is a provision in the law that prohibits 501(c)(3) charitable organizations from participating or intervening in any political campaign in support of/opposition to a candidate running for public office. The language in the appropriations bill (which appears in Sec. 112 on page 21 of the bill) would prevent the IRS from enforcing the Johnson Amendment as it applies to any “church, integrated auxiliary of a church, or convention or association of churches” unless the following three conditions are met:
- The IRS Commissioner personally consents to a determination of unlawful conduct;
- The House Ways and Means Committee and Senate Finance Committee are informed of the determination within 30-days of the decision; and
- The IRS does not enforce the determination sooner than 90-days from the time of notification of the House and Senate tax-writing committees to enforce the Johnson Amendment.
Functionally, this would allow churches (classified as 501(c)(3) charitable organizations under the Internal Revenue Code) to engage in unlimited political and campaign activity—including using charitable dollars for which individuals received a charitable deduction to be used for non-charitable, political purposes. This explicitly encourages selective enforcement of the law and would threaten the integrity of the entire sector by corrupting and exploiting the intent of the charitable deduction as a means of supporting charitable activities.
DAF Regulatory Comment Reminder
The U.S. Treasury continues to request additional comments regarding DAF regulations from nonprofits as well as philanthropy. Although the original comment period has passed, they will accept comments through June. One issue in particular where the sector is not speaking with a single voice is on bifurcation of payment for events. It is clear this could be very damaging to nonprofits and their ability to attract donors to their events to engage and learn about their work.
IRS Introduces New Online Tool for Donors
Early this month, the IRS rolled out a new online tool, called the Tax Exempt Organization Search (TEOS), designed to make information about tax-exempt organizations more readily available to the public. The new tool gives users access to a range of public data on tax-exempt groups, including 990s and IRS determination letters green-lighting their tax-exempt status.
IRS Provides Guidance for Grantmakers and Donors
The IRS recently released guidance for grantmakers and donors regarding how these entities verify that the recipient organization of their grant or charitable contribution is verified as a charitable organization by the Internal Revenue Service (IRS).
The TEOS database (see story above) lists organizations that are verified as eligible to receive charitable grants and contributions. Revenue Procedure 2018-32 sets forth a number of parameters by which a grantmaker or donor can safely rely on the information in TEOS to confirm that they are making a lawful contribution to a charity.
TEOS provides a range of information pertaining to an organization’s eligibility to receive charitable contributions—including its determination as a 501(c)(3) charity and whether it classified as a public charity or a private foundation. It also indicates if an organization’s charitable status has been revoked, rendering it ineligible to receive tax-exempt/deductible contributions.
Revenue Procedure 2018-32 advises that grantmakers and donors may rely on the information provided in TEOS at the time the contribution is made unless the intended recipient organization is designated as a terrorist organization by the U.S. Office of Foreign Assets Control (OFAC).
The Florida Philanthropic Network gratefully acknowledges United Philanthropy Forum for federal policy information contained herein that can be shared with our members.