Reproduced with permission from Daily Tax Report, 108 DTR G-1 (June 5, 2014).
Copyright 2014 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com
Donor-advised fund representatives are hoping to dial back a proposed five-year spend down requirement that would be imposed on funds as part of House Ways and Means Committee Chairman Dave Camp’s (R-MI) draft Tax Reform Act of 2014.
Under the Camp discussion draft, donor-advised funds (DAF) would be subject to a 20 percent excise tax on DAF contributions that aren’t disbursed to charities within five years. The tax would apply in every year the donor-advised fund fails to make the distribution
Killing a payout requirement entirely may be difficult to accomplish, Sandra Swirski, executive director for the Alliance for Charitable Reform, told Bloomberg BNA June 3.
House Ways and Means Chairman Dave Camp (R-MI) held a markup (which is a formal amendment process) on May 29 on another group of tax extenders – annually expiring tax incentives – and related bills that the Chairman hopes to make permanent. The Committee considered three charity-related bills: a permanent extension of the IRA charitable rollover (introduced by Rep. Aaron Schock (R-IL) and Rep. Earl Blumenauer (D-OR); a permanent extension of the deduction for qualified conservation easements; and a permanent extension of the enhanced deduction for food donations.
The Committee also considered two other bills, both of which have long been ACR priorities.
The rising popularity of donor-advised funds (DAFs) has caught the attention of the nonprofit community and congressional leaders. Despite their popularity, however, DAFs are still widely misunderstood, particularly by those outside of the charitable sector and by policymakers. For these and other reasons, the Alliance for Charitable Reform conducted its most recent webinar on May 28 entitled The Increased Popularity – and Scrutiny – of Donor-Advised Funds.
In late February 2014, Representative Dave Camp (R-MI) put forth what’s been described as the most serious tax reform proposal (the Camp proposal) since the historic Tax Reform Act of 1986 (the 1986 Act). The Camp proposal represents the result of many months of study and hearings with representatives of many of the United States’ economic sectors and includes provisions drawn from both Democratic and Republican suggestions for tax reform and simplification.
While few observers believe that this proposal will become law in its current form, many think that it may, in fact, serve as a blueprint for future tax reform discussions.
Let’s explore ways in which this proposed legislation would impact charitable tax incentives, as we begin to contemplate its impact on income and estate tax planning.
Internal Revenue Service Commissioner John Koskinen said in an interview this week with USA Today’s Susan Page that the IRS will likely rewrite the rule it proposed defining political activity of nonprofit organizations.
Last week, Senate Finance Committee Chairman Ron Wyden (D-OR) publicly voiced concern over a proposal of a “giving floor” on the charitable deduction at the annual meeting of the National Council of Nonprofits. He also reiterated his stance that the charitable deduction is a “lifeline, not a loophole.” From the National Council of Nonprofits: