During the current post-elections session of the 113th Congress, lawmakers are expected to address the package of nearly 55 expired tax provisions known as extenders, among which are three critical charitable giving incentives (see more below). For these provisions to be available to individuals and businesses in the tax filing season that begins in January 2015, the House and Senate will need to reconcile their differing approaches on the issue before the end of 2014, deciding whether to renew all extenders temporarily and/or make permanent only certain provisions. At the start of the lame duck session, Independent Sector, along with 1,031 organizations from across the charitable and philanthropic sector, sent a letter to all 535 Members of Congress, advocating for the permanent enactment of the charitable provisions in the America Gives More Act (H.R. 4719) in any year-end deal.
A number of critical giving incentives that are often included as part of the annual "tax extenders" package were extended in January 2012 for two years, retroactive to 2012 and through 2013. Without legislative action, however, these extenders expired January 1, 2014. Charitable giving incentives include:
House passes permanent legislation for charitable giving incentives
In July 2014, the House passed the America Gives More Act (H.R. 4719), a package of five charitable provisions that includes making permanent three expired tax extenders: the IRA charitable rollover, the enhanced deduction for donating land conservation easements, and the enhanced and expanded deduction for donating food inventory. Also included is a measure to extend through April 15 the deadline for claiming charitable donations on the previous year's tax filing and a measure to simplify to 1 percent the excise tax rate for private foundations' investment income. The House Ways and Means Committee reported out this legislation following a May 29 markup.
Senate Finance moves to renew charitable extenders
The Senate Finance Committee passed by voice vote April 3, 2014 the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act (S.2260), which extends through 2015 all three charitable tax extenders: the IRA charitable rollover and the enhanced deductions for donations of food inventory and land conservation easements. It is unclear when or whether the extenders package will reach the Senate floor.
IS POSITION AND ACTION
Because the IRA rollover and other incentives have come under close scrutiny, Independent Sector is working closely with our members and will support coalitions to make the case for bringing greater certainty to these powerful giving tools.
The set of 55 tax provisions that regularly expire and are reinstated are known collectively as "tax extenders." The package includes three charitable giving incentives: the IRA charitable rollover, the enhanced charitable deduction for food inventory, and the enhanced charitable deduction for land conservation.
After expiring at the end of 2011, the American Taxpayer Relief Act of 2012 (ATRA) extended through 2013 and retroactively through 2012 all three of these charitable tax extenders, as well as the basis adjustment to stock of S corporations making charitable contributions of property.
The language for the ATRA deal was taken in part from a slimmed down extenders package approved by the Senate Finance Committee on August 2, 2012. The Family and Business Tax Cut Certainty Act of 2012
would reinstate all three charitable extenders through 2013 and extend
for two years a provision that allows tax-exempt organizations to
exclude certain payments from their business income if the payment from a
controlled entity is less than fair market value. This package did not include the now-expired
enhanced deductions for books and computer equipment. Senate Finance
Committee Chairman Max Baucus (D-MT) and Finance Committee ranking
member Orrin Hatch (R-UT) said that the
newly streamlined package would allow roughly 25 percent of the current tax
provisions to expire.
Some lawmakers in the House signaled a preference to defer to Ways and Means Committee Chairman Dave Camp's (R-MI) comprehensive tax reform efforts for renewal of their preferred extenders. A lack of legislative action in 2013, however, allowed all extenders to expire on January 1, 2014.
Some members of the tax-writing committees hope that eagerness to renew the popular provisions can be leveraged to garner support for a comprehensive tax reform package in the future. The Congressional Research Service (CRS) published a report at the end of 2013 that estimated the total cost over ten years for the reinstatement of these three charitable extenders to be $1.9 billion.