Senate “Buffett rule” legislation maintains charitable incentives for giving
Senator Sheldon Whitehouse (D-RI) has introduced legislation that would apply the so-called “Buffett rule” that President Obama announced in his State of the Union. The Paying a Fair Share Act would apply a minimum 30% income tax rate for taxpayers with adjusted gross incomes above $1 million. The bill maintains current incentives for charitable giving, and would permit wealthy taxpayers to continue to receive a credit equal to the value of the charitable contributions deduction under the regular income tax. The bill is cosponsored by Senators Daniel Akaka (D-HI), Mark Begich (D-AK), Richard Blumenthal (D-CT), Tom Harkin (D-IA), Patrick Leahy (D-VT), Jack Reed (D-RI), Bernie Sanders (I-VT), and Chuck Schumer (D-NY).
President Obama’s State of the Union address calls for economic equality
President Obama’s third State of the Union address promoted economic fairness based on “responsibility from everybody” to reduce the federal debt and spur economic growth and employment. A “blueprint” released by the White House following the speech outlines the Administration's priorities, along with a proposed overhaul of the tax code that would ensure that households making more than $1 million pay an effective tax rate of at least 30 percent — a so-called Buffett Rule. The blueprint suggests that the proposal could be implemented without “disadvantaging individuals who make large charitable contributions.”
JCT releases report on tax expenditures
The Joint Committee on Taxation released its analysis (JCS-1-12) of federal tax expenditures for fiscal years 2011-2015. The report found that in 2010 the majority of foregone federal revenue from the charitable deduction resulted from donations made by households earning more than $200,000 per year. The data also shows that 85 percent of taxpayers who claimed the deduction had annual household income below $200,000, including 2.9 million households with income below $50,000.
IRS updates guidance on private, operating foundations status rulings
The Internal Revenue Service (IRS) released updated procedures for issuance of rulings and determination letters regarding the status of private and operating foundations. The updated guidance noted that a determination is not necessary to establish the new private foundation status of an organization that no longer qualifies as a public charity. Such a change is indicated by the organization's filing of a Form 990-PF annual information return. The procedure also does not apply to a private foundation seeking to terminate its status under Section 507 or an examination of an organization that results in changes to its foundation status. The updated was published January 9 in Internal Revenue Bulletin 2012-2.
The Department of the Treasury released a report December 6 on the organization and operation of supporting organizations and donor-advised funds. The report was mandated by the Pension Protection Act of 2006.
The National Philanthropic trust also recently released its 2011 Donor-Advised Fund Report. According to the report, donor-advised funds held nearly $30 billion in assets last year, an increase of more than 12 percent from 2009. The pay-out rate from donor-advised funds was 17.1 percent.
Postal reform legislation pending in the House and Senate
Rep. Darrell Issa (R-CA), Chairman of the House Oversight and Government Reform Committee, introduced the Postal Reform Act of 2011 (H.R. 2309) and a companion bill (S. 1625) was introduced in the Senate by Sen. John McCain. Among the cost-saving measures in the bills is a provision that would significantly reduce the discount that nonprofits receive on postage rates. Senators Lieberman (ID-CT), Collins (R-ME), Carper (D-DE), and Scott Brown (R-MA) introduced bipartisan postal reform legislation (S. 1789) that maintains nonprofit mailing rate preferences. Learn more.
