Legislative Updates

Be In the Know! Legislative News

Last Updated January 9, 2012

Want more information? Go to the Government Relations section of the Partnership for Philanthropic Planning website

Super Committee Fails to Produce Deficit Reduction Agreement
The Joint Select Committee on Deficit Reduction (the Super Committee) failed to produce any deficit reduction agreement by the committees November deadline, which means the charitable deduction has been spared for the time being. Because the Super Committee did not reach agreement, however, an automatic $1.2 trillion in spending cuts are set to take effect January 1, 2013 through a sequestration process. During the coming months, attention in Washington is expected to turn to how to amend this process in order to mitigate the effects of these spending cuts, possibly by coming up with $1.2 trillion in deficit reduction (which the Super Committee already failed to do) or by changing the requirements for the automatic cuts. PPP will continue to monitor any developments as they relate to changes to the charitable deduction.

PPP Urges Congressional Leaders to Preserve the Charitable Deduction
PPP recently wrote to all members of the Senate Finance Committee and the Joint Select Committee on Deficit Reduction urging lawmakers to preserve the current charitable deduction during forthcoming debates on tax reform and deficit reduction. Nearly 25 nonprofit organizations joined the letter, which emphasizes that proposed changes to the charitable deduction would adversely impact the ability of charities nationwide to raise the necessary resources to provide critical philanthropic services that ensure shelters for the homeless, food for the needy, healthcare services for those who lack access, programs that improve civic and cultural vitality and other necessary endeavors. PPP anticipates that Congress will continue to pursue proposals to eliminate or reduce the charitable deduction throughout at least the beginning part of 2012.

IRA Charitable Rollover Expires
Congress recessed for the year without taking any action on the IRA Charitable Rollover, so the provision expired on December 31st. In addition to the Rollover, there are about 60 other tax provisions that expired at the end of 2011, and when Congress reconvenes later this month, lawmakers will be under pressure to retroactively extend many of these tax provisions. The cost of such an extension, however, continues to remain a significant hurdle. Not counting an Alternate Minimum Tax patch, which is typically grouped with any tax extenders package, the cost of a one-year extension of all expiring provisions is estimated at $30 billion to $35 billion over 10 years. PPP will continue to push for inclusion of the Rollover in whatever tax extenders package may be under consideration in early 2012.

House Oversight Chair Promises Continued Examination of Nonprofit Sector in 2012
Representative Charles Boustany (R-LA), Chairman of the Ways & Means Subcommittee on Oversight, recently said that in 2012 his Subcommittee will examine the nonprofit sectors modes of operation and the IRS oversight of the sector. Chairman Boustanys latest comments to the press follow a December letter to the IRS and an April report concerning the AARPs tax-exempt status. Although Chairman Boustany has focused on the AARP in the past, he now indicates that Subcommittee members are concerned that exempt organizations in general may not be complying with tax-exempt requirements, and that his Subcommittee wants to ensure the IRS has the tools it needs to adequately monitor the sector. Chairman Boustany said that his areas of concern include royalties and unrelated business income tax, the independence of an organizations board, and the firewalls between non-profit and for-profit arms operating under the same umbrella organization.

Treasury Completes Study on Supporting Organizations and Donor Advised Funds
The Department of Treasury released its long-awaited study on supporting organizations and donor advised funds that was mandated as part of the Pension Protection Act of 2006. The study found that during tax year 2006, supporting organizations received $94.1 billion in total revenue, had total expenses of $72.5 billion, and net worth of $226.7 billion. Donor-advised fund sponsoring organizations, the study found, received $59.5 billion in revenue during tax year 2006, including $9 billion in contributions to DAFs. The sponsoring organizations had total expenses of $37.7 billion and had a net worth of $211.3 billion at the end of the year. The aggregate payout rate across all aggregate DAFs in 2006 was 9.3 percent. The study concluded that because giving was high compared with private foundations, it did not believe any federal requirements on annual giving should be imposed.

Disclosure of Names of Split-Interest Trusts No Longer Required on Form 990
Organizations filing Schedule R, Related Organizations and Unrelated Partnerships, will no longer have to disclose the names of split-interest trusts in Part IV, according to a PwC alert. The change, which will be effective beginning with the 2011 tax year, means that organizations will not have to report the trusts name, address, or employer identification number on the Form 990 and is intended to address concerns regarding the confidentiality and expectations of privacy of split-interest trust donors.

Want more information?  Go to the Government Relations section of the Partnership for Philanthropic Planning website.