A little tax week humor...
With Congress out of session this week and next, there is not much action on the legislative front. But here is what's on our policy radar this week:
For the past few weeks we’ve given you a play-by-play of the debates on the Hill surrounding the renewal of the 55 “tax extenders” that expired in December. To recap, the Senate Finance Committee, under the leadership of Chairman Ron Wyden (D-OR), passed a bill out of committee that would renew most of the original 55 extenders for two years. The IRA charitable rollover was expanded in its current form, along with the enhanced deductions for food inventory and conservation easement donations.
Thank you to all of our members and partners who contacted their Senators to ensure that the IRA charitable rollover was part of the Senate Finance Committee bill. But work to extend (and hopefully expand this provision) has just begun. Senate Majority Leader Harry Reid (D-NV) must now decide if and when to bring the bill to the Senate floor for a vote. Sources say that Senator Reid plans to call for a floor vote on the bill during the next work period which begins on April 28th.
The House Ways and Means Committee has also started to consider certain tax extenders, beginning with a hearing that we covered last week. That hearing covered only the seven tax extenders that impact for-profit businesses—the only extender provisions that the Chairman Camp (R-MI-4) renewed in his comprehensive tax reform proposal. We don’t know at this point if the Chairman will choose to move forward with only those seven extenders, but we are working closely with our Hill team and House Ways and Means staff to ensure that the charitable tax extenders—particularly the IRA charitable rollover—are included in the Ways and Means extenders bill. The Council will submit comments to the hearing record next week, and will share those with readers in the next edition of Washington Snapshot.
Commentators are noting that the biggest challenge in passing tax extenders legislation will be reconciling House and Senate priorities over which extenders to renew and which to discard. Another point of contention is whether (and if so, how) Congress should pay for renewing the extenders—which cost $85 billion over 10 years in the bill passed by the Senate Finance Committee.
Senator Ron Wyden (D-OR) has a new leadership role to add to his resume as he assumes former Senator Max Baucus’s chairmanship of the Joint Committee on Taxation (JCT). JCT announced the transition in a press release this week. Representative Dave Camp (R-MI-4), Chairman of the House Ways and Means Committee, serves as the JCT Vice Chairman.
JCT is a critical, non-partisan committee that assists both the House and Senate with developing and analyzing tax bills, and providing revenue estimates of all tax legislation.
Tax reform is on the minds of a lot of organizations. In the publication Associations Now, the monthly publication of the American Society of Association Executives (ASAE), Mark Athitakis makes the argument that associations of all types need to make their case publicly on whether they like or don’t like the provisions in Chairman Camp’s bill. “Even with the recent release of a formal legislative proposal, real progress on a bill seems unlikely in an election year. Regardless, the smart association is already preparing,” says Athitakis.
In the face of congressional doubts and misperceptions, Athitakis also urges associations to make sure their internal houses are in order to continue the ongoing integrity of the tax-exempt sector. Athitakis delves into some of these motivations: “In a tough post-recession economy, the untaxed revenue that associations generate can look tempting to legislators seeking ways to close budget gaps. Moreover, reports of financial mismanagement in the nonprofit community have provided some legislators with the justification to push such changes forward,” he says.
IRS will re-write 501(c)(4) rules, Commissioner says
IRS Commissioner John Koskinen sat down with Susan Page of USA Today this week to discuss what’s happening at the IRS on the eve of Tax Day. Page asked Koskinen about the proposed 510(c)(4) rule which received over 150,000 public comments, including comments from the Council.
Koskinen told the reporter, “in all likelihood we will re-propose a redefined rule and ask for more public comment.” He continued on to say that "there are very thoughtful comments and concerns, and one of the questions that has evoked a lot of comment is, once you define what political activity is, to what organizations should it apply in the 501(c) context and how much of it should be allowed? All of that is going to be very important."
Final rule on Combined Federal Campaign rules
Earlier this week the federal Office of Personnel Management published final rules that make numerous changes to the administration of the Combined Federal Campaign (CFC). The CFC is a massive, national effort that helps federal employees channel charitable donations to organizations and causes that they care about. Under the old rules, the CFC was administered locally by outreach coordinators within each federal agency. The new final rules shift much of this responsibility to a few central campaign administrators.
Many nonprofits are concerned that less emphasis on local agency outreach, along with the end of cash contributions, will result in fewer donations. Steve Taylor, Senior Vice President of United Way Worldwide, shared his concerns with the Washington Post: “The way charitable giving works best in the workplace is when a fellow employee asks another employee to give to something that they care about and that they know about. With the centralization, with the lack of authority from the local employee committee, you lose that.”
Community foundation leaders weigh in on tax policy
MiBiz, a publication covering businesses in Western Michigan, looked at how local Michigan nonprofits are challenging federal tax policy proposals. Rob Collier, President and CEO of the Council of Michigan Foundations, cited two major tax policy proposals of concern to him: the IRS’s proposed regulations on 501(c)(4) political activity and Chairman Camp’s comprehensive tax reform proposal. Collier told MiBiz that his key message for lawmakers from foundations was to “leave the charitable deduction alone.” He also emphasized the importance of putting together philanthropy’s case for lawmakers, noting that the sector needs to “be diligent and get data and stories together.”
Diana Sieger, President of the Grand Rapids Community Foundation, echoed Collier’s concerns about proposed changes to the charitable deduction. “If the federal government is going to continue to lean on the social sector as a safety net, then why tie our hands in trying to limit what donors may give to us?,” Sieger asked rhetorically. Collier and Sieger also discussed the motivations behind lawmakers’ increased scrutiny of the sector that is apparent in some provisions in Chairman Camp’s proposal, citing the widespread growth of donor advised funds over the past 20 years. “What we’re seeing now is the difficulty some Congressional staff have with what it means to hold an endowment,” Sieger said.
Interested in having your voice heard on how tax decisions in Washington impact your organization’s work? Check out the Council’s op-ed template and suggestions for local outreach opportunities. Tax policy matters for philanthropy—and now is the time to speak up!
New Yorker covers attitudes towards charity on Tax Day
A provocative New Yorker piece published on April 15th (“Tax Day”), points to a compelling distinction between people’s views about giving to charity versus their perspective on paying taxes. Author Benjamin Soskis points out that people give to charity voluntarily out of a sense of morality but despise the obligation to pay taxes that fund some of the same types of social services that the nonprofit sector provides. Soskis believes that this is rooted in the ideal that “private generosity is a more effective means of curing social ills than government bureaucracy is.”
In his long but riveting piece, Soskis covers the history of Americans’ attitudes towards the tax code and voluntary giving. Ultimately, Soskis explores possibilities for transforming Americans’ deep-rooted dislike of paying taxes. He aims to turn us into “cheerful taxpayers” who fulfill this obligation with the same voluntary spirit that motivates us to make charitable donations, a curious aspiration indeed.