President’s FY15 budget released (4 March 2014)
Released today, President Obama’s $3.9 trillion budget proposal for fiscal year 2015 adheres to the spending levels Congress hammered out in December 2013, expands the Earned Income Tax Credit, and abandons the use of Chained CPI. Included is a $56 billion package beyond December’s budget deal, which addresses in equal parts domestic and defense spending initiatives. For the sixth year in a row, the president’s plan includes a 28-percent cap on certain itemized deductions, including the charitable deduction, for taxpayers in the top three tax brackets. Also repeated is the so-called Buffett Rule, which creates a 30-percent mandatory tax rate for individuals earning $1 million or more annually, except for charitable deductions, which are taxed at 28-percent. New to the budget blueprint this year is the permanent extension of the land conservation easement tax extender that expired January 1, 2014, while the other two charitable extenders were excluded. Learn more
Independent Sector submits comments to IRS (27 February 2014)
A diverse group of more than 100 organizations signed onto Independent Sector’s comments on the proposed regulations for 501(c)(4) political activity, which were submitted to the IRS at the end of the public comment period on February 27, 2014. Over 140,000 comments were sent to the IRS, the vast majority of which expressed concerns about the proposal. The same day, IS President and CEO Diana Aviv voiced the concerns of the charitable sector in a Congressional hearing focused on the proposed regulations. For more, read a press release with highlights and a link to the full testimony.
Camp unveils tax code rework (27 February 2014)
After convening over 30 hearings on the topic during his tenure, House Ways and Means Committee Chairman Dave Camp (R-MI) unveiled a discussion draft of a comprehensive tax reform plan yesterday that would bring major changes for both individual and corporate taxpayers. Dubbed the Tax Reform Act of 2014, the nearly 1,000-page proposal stipulates two tax brackets for individuals at 10 and 25 percent, with a 10 percent surtax for certain income over $400,000, and places the maximum corporate tax rate at 25 percent. According to Chairman Camp, the proposed system would allow 95 percent of taxpayers to avoid itemizing, and instead claim a larger standard deduction. Within the plan are several provisions that would impact charitable giving, such as a two-percent floor for claiming the charitable deduction and an extended deadline for making deductible donations -- through April 15. Beyond charitable giving, the plan proposes changes to the tax code that would alter the administration, reporting, and monitoring of exempt organizations. Camp stressed the bipartisan nature of the bill, citing inclusion of measures developed during the working group process in May 2013 and by his Committee colleagues, such as mandatory e-filing of the Form 990 information return for exempt organizations and the permanent reinstatement of certain land conservation easements. Learn more about tax reform
Omnibus clears the Senate with sharp cuts to IRS (17 January 2014)
Lawmakers agreed to a nearly 1,600-page spending bill yesterday, which allocates funds to every government agency through September 30, the end of fiscal year 2014. The legislation adheres to the $1.012 trillion funding level stipulated in the December budget agreement and includes several policy riders. Senate Appropriations Committee Chairwoman Barbara Mikulski (D-MD) explained that “we realized that we could be at a stalemate with policy riders and some we were able to compromise and in others we just said ‘Give up yours and we’ll give up ours.’” As part of the $11.3 billion allocated to the IRS, representing a 4.4 percent decrease from fiscal year 2013, $92 million is designated for improving the agency’s taxpayer services and increasing compliance. The legislation includes language explicitly prohibiting the IRS from using funds “to target groups for regulatory scrutiny based on their ideological beliefs or to target citizens for exercising their First Amendment rights.” IRS Commissioner John Koskinen previously called his agency’s shrinking budget one of the greatest challenges he will face during his term.