ACR NEWSLETTER

Speaking Out on Pease to Protect Charitable Giving

Next year (2013), a little-known tax provision called the Pease limitation is scheduled to be reinstated if Congress does not act.  The Pease rule would limit the value of itemized deductions (including the charitable deduction) for upper-income brackets, which is a concern for the charitable community.  This provision was recently included in the Senate Democratic tax plan to extend current tax rates for those making under $250,000 for one year, but allow rates to increase for those making over $250,000. 

The Pease rule was enacted in 1990, but gradually phased out starting in 2001 with the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), aka Bush Tax Cuts. These were set to expire on December 31, 2010, but many components have been extended as a result of the economic downturn and are now scheduled to come back into law in 2013.  Reinstatement of the Pease rule could hit the pockets of donors hard and, in turn, could impact contributions to America’s charities. Not surprisingly, statistics indicate that charitable contributions from higher income earners represent a significant percentage of overall giving. We, along with many of our colleagues in the field, are concerned about a provision that could have the effect of diminishing giving, especially while the economy is still struggling, and charitable organizations are continuing to provide services to the most vulnerable communities.
ACR joined our colleagues in the Charitable Giving Coalition in sending a letter to those Senators who voted for this bill and expressed our concern over the Pease provision. That letter can be viewed here.

For more insight on Pease check out this video of tax expert Evan Liddiard, CPA and former Senate tax staffer, explaining what Pease is and why we should be concerned.

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