Legislators on Capitol Hill are at loggerheads about many things — to the enormous frustration of most Americans — but they appear to agree on the importance of preserving the tax deduction for charitable contributions.
Last week, Sen. Ron Wyden, D-Ore., and his Republican colleague, John Thune of South Dakota, introduced legislation with several charity provisions, affecting foundations, donor-advised funds and nonprofits.
The proposals also include a nonbinding sense of the Senate that says “encouraging charitable giving should be a goal of tax reform.”
Moreover, it says, “Congress should ensure that the value and scope of the deduction for charitable contributions is not diminished during a comprehensive rewrite of the tax code.”
At the end of last year, President Barack Obama signed into law tax provisions that made several charitable tax incentives permanent.
The Charities Helping Americans Regularly Throughout The Year Act (S. 2750) would go beyond those provisions.
The Wyden-Thune legislation proposes the following:
Donor Advised Funds IRA Rollover Eligibility and Transparency: This would make DAFs eligible for IRA rollovers, whereby those aged 70-1/2 years and older can exclude from their gross income up to $100,000 a year in distributions made directly from the IRA to certain public charities.
Also, DAF sponsors would be required to disclose whether they have an official policy on inactive or dormant funds, and if they do, describe it or include a copy with the return.