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>> Federal: Speaker Ryan to Retire
>> Federal: Proposed IRS Changes
>> Local: State-level SALT Workarounds
>> Federal: Universal Charitable Giving Act
>> Consider This: Keeping up with Washington
>> Top Reads: A Fading Culture of Giving
Last month, lawmakers passed a $1.3 trillion spending package to fund the government through the end of the fiscal year, September 30. The long-term spending bill included a fix to a tax reform provision known as the “grain glitch” involving an outsized tax cut for farmers. It also increased funding for the IRS to implement the new tax law. However, the legislation did not include charitable provisions or fixes to other errors that have been identified from last year’s tax law.
Republicans, including President Donald Trump and Ways and Means Chairman Kevin Brady (R-TX), are now suggesting a second round of tax cuts. The legislation is expected to make permanent the individual tax rates that are set to expire in 2025, but according to Chairman Brady, is not likely to fix any technical errors and would be separate from any effort to fix glitches in last year’s tax bill. There are several more opportunities before the election, and then there’s a likely lame duck session in late November/early December that could see a tax bill emerge. Of course, that also means that revenue raisers could come into play.
House Speaker Paul Ryan (R-WI) announced Wednesday he will not seek reelection this year after almost 20 years in Congress. According to the Speaker, he does not plan to leave Congress early and instead will serve out his term and retire in January. Recent reports have indicated that House Majority Leader Kevin McCarthy (R-CA) and Majority Whip Steve Scalise (R-LA) are most likely to seek the top Republican spot. See Consider This for more on the announcement.
Representatives Lynn Jenkins (R-KS) and John Lewis’ (D-GA) bipartisan legislation to redesign the Internal Revenue Service passed out of the House Ways and Means Committee this week. The package, which is now awaiting a vote from the full House, proposes multiple changes, but one in particular aims to boost transparency in the tax-exempt sector by requiring all nonprofits to file their returns electronically. This provision was also included in the CHARITY Act and is largely supported by the sector.
As you may recall, Speaker Paul Ryan (R-WI) and Ways and Means Chairman Kevin Brady (R-TX) proposed a much broader restructure of the IRS in their A Better Way plan that would have been infinitely more disruptive by creating three branches within the IRS – corporate, individual, and a small claims court (with no mention of where non-profits fit in). Perhaps this means that more sweeping plan is shelved. We recommend you revisit our recap from the nonprofits and IRS panel at the 2017 ACR Summit for Leaders.
At the end of March, New York became the first state to enact a measure to circumvent the new federal cap on state and local tax deductions. The workaround creates various state-run charitable funds to allow taxpayers to pay state taxes by way of charitable contributions, therefore allowing them to claim the federal charitable deduction and circumvent the $10,000 cap on the deduction for state and local taxes.
Similarly, the New Jersey state legislature passed a bill yesterday that would allow local governments to accept property taxes in the form of charitable contributions, also creating a workaround to the cap on state and local tax deductions. The legislation is now awaiting a signature from New Jersey’s Governor Phil Murphy.
As you may recall, several Treasury officials have thrown cold water on this idea and the department is likely to challenge this type of workaround as these contributions bear none of the trademarks of genuine charity. Keep in mind, Treasury officials have said in order to be eligible for a charitable tax deduction, charitable contributions need to be given for truly charitable purposes.
Other high tax states, such as California, have also proposed similar legislative efforts, but a recent report by the Tax Foundation suggests these workarounds could actually backfire and increase a taxpayer’s total tax liability.
ACR is working closely with a long list of colleagues in the sector to garner support for the Universal Charitable Giving Act sponsored by Rep. Mark Walker (R-NC) in the House and Sen. James Lankford (R-OK) in the Senate. As you may recall, the legislation would extend a charitable deduction to nonitemizers that would be capped at one-third of the standard deduction. Under current law, that’s $4,000 for single filers and $8,000 for married couples filing jointly.
In appreciation of their leadership and commitment to the charitable sector, ACR and our colleagues plan to send a letter to Rep. Walker, Senator Lankford and to each cosponsor of the bill.
Keeping up with what is going on in Washington these days is a whole lot tougher than keeping up with the Kardashians. Truly.
Some of the news is bad, some is salacious, some is just downright depressing.
We did not take the news of Speaker Ryan’s decision to not run for reelection very well. We are going to miss him. He’s been a friend to our sector for many years and one of the few who really grasps what nonprofits bring to the table in terms of bolstering and maintaining civil society. He understands what our sector does that the government and the for-profit sector cannot do or cannot do well.
We very much hope the Speaker won’t give up on public policy altogether. If ever there was an urgent need for someone with the ability to talk about the way we organize our daily lives and our governing institutions, it is arguably now. And if ever there was a need for someone to bring the warring factions on these issues into the same room, it is most definitely now.
So fingers crossed that the Speaker stays engaged in the public square. If history is any guide, we expect he will.
- National – A Fading Culture of Giving
- National – New DAF Pushes to Keep the Cash Moving
- National – Fidelity Charitable Crosses the $1 Billion Mark in March
- National – A Donor-Advised Fund for the Wealthy Startup Crowd Looking To Do Good
- National – The Growth of “Side-Car” DAF Accounts
- National – Is Impact Investing the Next Big Thing for Donor-Advised Funds?
- National – A Charitable Gift that Doubles as an Employee Retirement Plan
- National – One Example of a Nonprofit Moving to Scale through a Collaborative Network
- Local – New York Finds a Work-Around to New Tax Law and Other States May Follow
- Local – The Wait is Over: New York Enacts Federal Deduction Limitation Workarounds
- Opinion – Letter to the Editor: Support the Universal Charitable Giving Act
- Opinion – Nonprofits, Movements, and the New Democracy
- Opinion – Will new tax laws hurt charitable giving? Local financial planners don’t think so
Please feel free to email us at email@example.com if you have any questions, stories or topics you would like us to include in our newsletter.
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