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Independent Sector
Policy Update
July 22, 2005
Chairman Greenspan Offers Opinion on Estate Tax
While testifying before the Senate Banking, Housing and Urban Affairs Committee on July 21, Federal Reserve Chairman Alan Greenspan explained that he would not favor full repeal of the estate tax nor a compromise reform unless the revenue lost by the tax is offset elsewhere in the budget. Chairman Greenspan offered his opinion in response to questions from Senator Charles Schumer (D-NY). Although Senate Majority Leader Bill First (R-TN) has said he may bring estate tax legislation to the floor for a vote before the August recess, it does not seem likely that he has the 60 votes necessary to proceed on a full repeal.
More on estate tax reform
NonCash Contribution Coalition Sends Letter
Independent Sector joined with the NonCash Contribution Coalition in sending a letter (PDF) to Senators Charles Grassley (R-IA) and Max Baucus (D-MT) urging them to move with caution in drafting legislation related to the donation of noncash gifts. The letter specifically expresses concern about proposals that would replace the current fair market value deduction with a deduction for the lesser of the donor’s cost basis or fair market value. The coalition letter, which was signed by 71 national organizations and 217 regional, state and local organizations, asks the Senators to consider instead the reforms proposed by the Panel on the Nonprofit Sector to increase the accuracy of valuation without discouraging donations (see pages 53-60 of the Panel report). The Panel’s recommendations include strengthening the definitions of qualified appraisal and expanding penalties for grossly inflated valuations.
Postal Reform Bill Scheduled for House Floor Next Week
The House is scheduled to consider the Postal Accountability and Enhancement Act, H.R. 22, on the floor next Tuesday, July 26. The bill would, among other things, permit the U.S. Postal Service to use escrowed funds to pre-fund postal retiree health benefits, which could delay future postal rate increases. The Senate Homeland Security and Governmental Affairs Committee approved the companion bill, S. 662, on June 22.
New IRS Web Pages on Conservation Easements and Intermediate Sanctions
The IRS has posted a new web page providing information on conservation easements along with a link for submitting comments and questions about such arrangements. Conservation easements were also the topic of a June 8 Senate Finance Committee hearing. The Committee is considering including provisions to address abuses of such transactions in nonprofit reform legislation that is expected by mid-September. The House Ways and Means Oversight Subcommittee also held a hearing on June 23 to review tax deductions for historic facade easements.
The IRS has also added a web page with helpful explanations of key terms in the excess benefits rule, also known as intermediate sanctions (section 4958 of the Internal Revenue Code). The page can be found on the Life Cycle of a Public Charity web page.
AmeriCorps Issues Final Rule on Program Reforms
On July 1, the Corporation for National Service issued a final rule (PDF) containing changes in the AmeriCorps program, some of which will be effective starting September 2005 and others that will be phased in next year. The new rules focus on sustainability of the programs, including decreasing reliance on federal funding; grant selection criteria; performance measures; and requirements for tutoring programs. The Corporation received input on rule changes through two comment periods and public meetings it conducted around the country. The AmeriCorps website contains more information about the rule, including a summary and frequently asked questions.
Technical Correction on Vehicle Donation Acknowledgment
Both House and Senate versions of a technical corrections tax bill (H.R. 3376/ S. 1447) include a clarification with respect to vehicle donation acknowledgments. In addition to including the name of the donor, the vehicle donation number and the intended use of the donated vehicle, the corrections bill clarifies that charitable organizations must also state whether the charity provided any goods or services in return for the donated vehicle, and if so a description and good faith estimate of the value of such goods or services, or if the goods and services consist solely of intangible religions benefits, a statement to that effect. This clarification brings the vehicle donation acknowledgement into conformity with existing law for acknowledgement of gifts of over $250.
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