05 May 2017

Legislation Aimed At Increasing Charitable Giving Introduced In House

WASHINGTON, D.C.— Reps. Erik Paulsen (R-MN) and Danny Davis (D-IL) reintroduced on May 4 H.R. 2386, the Private Foundation Excise Tax Simplification Act, which will result in more funds being available for charities. Reps. Pat Tiberi (R-OH), George Holding (R-NC), and Richard Nolan (D-MN) are original cosponsors of the legislation.

“The House of Representatives has passed legislation streamlining the private foundation excise tax to a flat rate of one percent twice in the past three years with bipartisan support. This has been a legislative priority for ACR because it frees up more funds at private foundations for charities in their community,” said Sandra Swirski, executive director of ACR.

Current law requires private foundations to pay an annual excise tax equal to two percent of their net investment income. However, the tax is reduced to one percent in any year in which a foundation’s grants to charity exceed the average of their grants over the past five years. The way this current tax is structured results in foundations hesitating to make a substantial grant in any one year – such as for disaster relief, for example – because that one grant could force the foundation to pay the higher tax in subsequent years.

The PF Excise Tax Simplification Act was passed by the House in 2014 and 2015 as part of the America Gives More Act. The provision was also included in S. 2750, the Charities Helping Americans Regularly Throughout the Year Act, or CHARITY Act, in 2016.