The House has passed legislation extending a number of tax deductions for charitable contributions and making them permanent.
The bill, known as the America Gives More Act of 2014, passed by a vote of 277 to 130, despite complaints from some lawmakers that the loss in tax revenue was not offset.
House Ways and Means Committee chairman Dave Camp, R-Mich., pointed out that many of the provisions enjoyed bipartisan support. One provision of the bill would make permanent and expand the charitable deduction for contributions of food inventory by businesses regardless of how they are organized.
“Food banks are a vital part of communities, helping Americans put food on the table and provide for their families when they have come across hard times or suffered through a natural disaster,” said Camp. “The Food Donation Connection has estimated that since this tax deduction was expanded in 2006, donations have increased 127 percent. Unfortunately, a provision in current law that encouraged pass-through businesses to contribute food inventory expired at the end of last year, and charities and foundations across the country are urging that it be restored and made permanent.”
According to one of the charities backing the legislation, Feeding America, 3.6 billion pounds of food are distributed by food bank members each year, and the legislation would significantly increase food bank access to the 70 billion pounds of nutritious food that are wasted each year.
“Today, we have the opportunity to continue this important credit, allowing all businesses and farmers to take advantage and donate more nutritious food to the millions of Americans who need it most,” said Camp.
The bill also would ensure that seniors who donate to charities from their individual retirement accounts can do so without a tax penalty, he noted.
According to the group Independent Sector, the provision has prompted more that $140 million in gifts to the work of nonprofits since enactment, assisting social service providers, religious organizations, cultural institutions and schools, and other nonprofits.
“Making this provision permanent can only serve to increase the generous donations that charities rely on,” said Camp.
In addition, the bill would make permanent the deduction for contributions of conservation easements, increasing the amount of land or property donated for charitable use. Camp noted that witnesses before the Ways and Means Committee have testified that in the first two years of the enactment of conservation easements, the number of donations doubled compared to the previous two years, resulting in a 32 percent increase of acreage conserved.
The tax reform draft that his committee produced earlier this year would encourage charitable giving in several important ways, and two provisions from the draft, lowering the excise tax on private foundations and extending the tax deadline for charitable contributions from December 31 to April 15, are included in the America Gives More Act.
“At the end of the year, many taxpayers have no idea what their tax liability will be, and it is only after struggling through the daunting process of preparing their tax return that they know with certainty,” said Camp. “If taxpayers were permitted to make and deduct contributions prior to filing their tax return, I believe many Americans will be even more generous in supporting religious and charitable causes.”
He pointed to testimony before the Ways and Means Committee that found allowing donors to deduct gifts until April 15 would result in significantly more charitable giving.
Another provision from the draft would lower and simplify the excise tax on private foundations making compliance easier, especially for smaller foundations. “As a result, foundations will have more of their resources available to support charities and exempt organizations across the country,” said Camp.
He noted that all of the provisions are bipartisan, and have the support of over 850 charities and foundations across the country, who wrote to Congress stating, “Without an incentive in place and assured, many of the gifts the [charitable] incentives were intended to promote will simply not take place.”
“The goodwill of the American people is unmatched, and we should do everything we can to encourage Americans to give more, enabling charities, nonprofits, foundations and schools across the country to expand their reach and serve those most in need,” said Camp. “A yes vote on this bill is a vote for hardworking Americans who selflessly lend a hand every day to their neighbors, communities and others in need.”
His Democratic counterpart on the committee, ranking member Sander Levin, D-Mich., complained that the cost of the provisions had not been paid for in the legislation and would add to the budget deficit. “I want to be clear what this debate is about, and what it is not about,” he said. “It’s not a debate about the merits of public charities and private foundations. We all support the good works of the charitable community and strive to provide charities with the resources they need to carry out their mission. Indeed, along with Congressman [Jim] Gerlach, I am the sponsor of the Food Donation Deduction. I’m a lead sponsor. And I think that highlights this is a debate not about charities, not about foundations, it’s about fiscal responsibility and fiscal priorities. To date, Republicans have selected to make permanent 10 of the approximately 60 expired tax provisions—without a single dime of offset. After today, if this bill passes, the House will have approved $534 billion worth of tax provisions—without a single offset—wiping out more than half of the deficit reduction enacted last year during the bipartisan fiscal cliff deal.”
Another Democrat, Rep. Lloyd Doggett, D-Texas, pointed out that the bill would make permanent an enhanced tax deduction for donations of “food inventory” for items with no nutritional value, including Twinkies, candy, stale potato chips and expired foods.
Levin pointed out that the Obama administration has issued a statement of administration policy saying it “supports measures that enhance nonprofits, philanthropic organizations, and faith-based and other community organizations in their many roles, including as a safety net for those most in need,” but the administration strongly opposes House passage of the bill, known as H.R. 4719, which would “permanently extend three current provisions that offer enhanced tax breaks for certain donations and add another two similar provisions without offsetting the cost.”
“We do not need a permanent tax break for Twinkies,” said Doggett. “Extending this tax break forever means it will never get the careful evaluation it requires. We should be encouraging contributions of nutritious food, not paying for junk.”
Nevertheless, several organizations representing the nonprofit sector, including Feeding America, Independent Sector, the Association of Fundraising Professionals, Land Trust Alliance and YMCA of the USA, issued a statement Wednesday urging lawmakers to pass the bill.
“As the leaders of organizations whose networks collectively represent tens of thousands of charities and foundations working across the country, we strongly urge all House Members to vote in favor of H.R. 4719, the America Gives More Act of 2014, legislation that will increase charitable giving in the U.S.,” they said. “Enactment of this legislation will have a significant and positive impact on millions of individuals and families in every congressional district who benefit from the programs and services provided by charitable organizations.”
They noted that the bill would make permanent the IRA charitable rollover and enhanced deductions for the donations of food inventory and conservation easements, all of which have currently lapsed. In addition, the bill would streamline the excise tax on private foundation investment income and extend until April 15 the deadline for taxpayers to make charitable contributions and claim a deduction on their previous year’s tax return.
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