December 14, 2009

Have You Contacted Your Members of Congress About the Private Foundation Excise Tax?

It is vitally important that private foundation representatives tell members of Congress and their staffs why establishing a revenue-neutral, flat excise tax is beneficial.  Earlier this year, on March 24, Sen. Charles Schumer (D-N.Y.) introduced an excise tax bill, (S.676) in the Senate. On Tuesday, Nov. 17, John Lewis (D-Ga.), chair of the House Ways and Means Subcommittee on Oversight, and Reps. Danny Davis (D-Ill.) and Patrick Tiberi (R-Ohio) introduced a House excise tax bill, H.R. 4090. Both bills would amend the Internal Revenue Code of 1986 to modify and simplify the excise tax that private foundations pay on net investment income. If enacted into law, H.R. 4090/S.676 would replace the current two-tiered excise tax imposed on private foundations with a revenue-neutral, single tax rate of 1.32 percent.

In simplifying the tax requirement, H.R. 4090 and S. 676 will encourage increased giving by private foundations, which is more important than ever, given the elevated demand on philanthropy to help meet the needs of Americans. To date, H.R. 4090 has six co-sponsors including the original sponsors mentioned above. S. 676 has eight co-sponsors including Senator Schumer. See the full list of co-sponsors of H.R. 4090 and S. 676 below.  H.R. 4090 and S. 676 have been referred to the House Ways and Means and Senate Finance committees, respectively. In order for the House Ways and Means and Senate Finance committees to take further action on H.R. 4090 and S. 676, a minimum quorum of one-third of each committee's members must be available to hold a markup session. You can help to increase the number of co-sponsors for the bills by contacting your representatives and senators and asking them to co-sponsor H.R. 4090 and S. 676. For your convenience,  formatted House and Senate template letters, which you may edit and send to your lawmaker’s Washington, D.C. office, are posted on the Council’s Policy Action Center Web page..

Current co-sponsors of H.R. 4090 (as of Dec. 10)

Rep. Danny Davis (D-Ill.)
Rep. Jesse L. Jackson, Jr. (D-Ill.)
Rep. John Lewis (D-Ga.)
Rep. Patrick J. Tiberi (R-Ohio)
Rep. Fred Upton (R-Mich.)
Rep. Don Young (R-Alaska)

Current co-sponsors of S. 676 (as of Dec. 10)

Sen. Mark. Begich (D-Alaska)
Sen. Richard Burr (R-N.C.)
Sen. Saxby Chambliss (R-Ga.)
Sen. Johnny Isakson (R-Ga.)
Sen. Carl Levin (D-Mich.)
Sen. Lisa Murkowski (R-Alaska)
Sen. Charles Schumer (D-N.Y.)
Sen. Debbie Stabenow (D-Mich.)

If you have any questions about the private foundation excise tax or need assistance in communicating your message to your members of Congress, contact Council public policy staff members Andrew Schulz at Andrew.Schulz@cof.org, 703-879-0715, or Chatrane Birbal at Chatrane.Birbal@cof.org, 703-879-0689.

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House Passes Extenders Package, IRA Rollover Included; Senate Timeline Uncertain 

On Wednesday, Dec. 9, the House passed the Tax Extenders Act of 2009 (H.R. 4213) by a vote of 241 to 181. H.R. 4213 contains one-year renewals (through 2010) of the 49 expiring tax provisions included in President Obama's fiscal 2010 budget. The proposal is expected to cost approximately $31 billion over 10 years and is offset primarily through taxes on private equity, real estate, and venture capital firm partners. The bill will reportedly provide $1.2 billion in tax incentives to encourage charitable giving, including the IRA charitable rollover and enhanced deductions for donations of food, conservation easements, computers, and books. The IRA provision proposes to extend tax-free distributions from individual retirement plans for charitable purposes. Specifically, the bill would extend through December 2010 the provision that permits tax-free charitable contributions of up to $100,000 per taxpayer, per taxable year from an IRA. The provision is estimated to cost $591 million over 10 years.

The bill will now go to the Senate chamber for consideration. However, the timeline for Senate consideration of the extenders package is uncertain. While the White House has expressed support of H.R. 4213, the Senate has expressed concerns over the offsets included by the House. Senate Finance Committee Chairman Max Baucus (D-Mont.) has said he intends to try to move to extend expiring tax cuts this year, but the Senate’s preoccupation with health care reform may limit time available for the extenders package.

The Council on Foundations will continue to track the extenders package in the Senate and will report on developments in the next Policy Update.  If you have any questions, please contact Andrew Schulz at Andrew.Schulz@cof.org, 703-879-0715, or Chatrane Birbal at Chatrane.birbal@cof.org, 703-879-0689, in the Council’s Public Policy Department.

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This Week in Congress

Congress will be in session this week, Dec. 14–18.

House

The House chamber will take up the fiscal 2010 defense spending bill (H.R. 3326) this week. The bill is likely to include a broad range of tax extensions, job creation provisions, and an increase in the debt limit.  Congress must clear this final spending bill by this Friday, Dec. 18, when the stopgap appropriations law expires, or enact another funding extension.

Additionally, House leaders have indicated that the chamber could recess as early as this Wednesday, Dec. 16, for the rest of the year, if Senate progress on the health care reform bill stalls.

The House Ways and Means Committee has not yet scheduled any hearings for this week.

Senate

The Senate will push ahead this week with its health care reform bill, the Patient Protection and Affordable Care Act (H.R. 3590). As soon as the Congressional Budget Office completes its cost analysis of the bill, the chamber is expected to resume debate on amendments.

The Senate Finance Committee has not yet scheduled any hearings for this week.

Policy Update is a service of the Public Policy Department at the Council on Foundations.

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