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From: Land Trust ADVOCATES
Subject: Update - Charitable Tax Incentives
Charitable tax incentives are a hot issue this
month, and we have three updates for you today:
- Senator Grassley gave a speech where he discussed
the status of charitable reform legislation in his committee.
- IRS Commissioner Steven Miller spoke at LTA's
National Conference: Rally 2005 on IRS actions affecting charitable
donations for conservation.
- The President's Advisory Panel on Federal Tax
Reform's made several recommendations that would affect charities.
Senator Grassley's speech to Independent Sector
Senator Grassley (R-IA) is chairman of the Senate Finance
Committee, and in that position has been pushing for changes to
the law affecting nonprofits -- aimed at preventing abuses. In his
speech, he outlined the following changes in his plans for enacting
nonprofit reforms:
"While I hoped to have a complete reform
package ready this fall, Katrina has affected this and many other
plans. I hope to bring forward the first phase of reforms this fall
and continue with a second phase of reforms as a priority next year
as well. In general, the reforms will focus on better transparency
and improving board governance, particularly on self-dealing and
high salaries. In addition, we'll deal with three types of abuses.
First will be abuses we've found in certain types of charities-such
as supporting organizations, donor-advised funds and credit counseling.
Second will be abuses involving certain noncash donations-such as
facade easements and as many of you know from my friend, the springbok-taxidermy.
And finally will be abusive transactions, such as what we've seen
with life insurance and corporate tax shelters."
"I hope that we'll couple the reforms with
incentives to encourage charitable giving. But let me be clear-we're
seeing serious abuses in parts of the charitable sector. I'll take
action when and where I can to deal with those abuses-just as I
did with corporate tax abuse."
In other words, Chairman Grassley hopes to do
a first round of reforms in the upcoming budget reconciliation bill,
and then more next year. Note that he mentioned historic facade
easements as part of his early round of reforms, but not conservation
easements. That means our work with Congress on potential reforms
affecting conservation donations will not be settled this year.
It will continue into 2006.
View the full text of the speech at: http://www.independentsector.org/AnnualConference/2005/index.html
IRS Commission Steven Miller's speech at Rally
Steven Miller, IRS Commissioner for Tax Exempt
and Government Organizations, gave a plenary address at LTA's National
Conference: Rally 2005. The text of the speech, which discusses
that IRS' enforcement work on conservation easements, is available
through RallyNet, where you will find materials from many of the
conference sessions. RallyNet is available to all LTA member organizations,
and is open to everyone through the end of the year. View the speech
at: http://www.ltanet.org/objects/view.acs?object_id=17578
Tax Reform Panel
This week the President's Advisory Panel on Federal
Tax Reform presented their final report. The Panel was asked to
suggest major changes to the structure of the tax code, and their
report included several recommendations that would affect charities
and charitable giving. Action on these reforms is not likely this
year, but we did want to make sure you were aware of the recommendations.
They included:
1. a new "above the line" deduction
for charitable donations. Itemizers and non-itemizers alike could
deduct the value of contributions to charity exceeding 1% of their
income.
2. Permitting tax-free gifts to charities from taxpayers' IRAs (for
individuals over 65).
3. Enacting new reporting requirements for large (over $600) charitable
contributions.
4. Encouraging Congressional review of the current standards to
qualify for and maintain tax-exempt status.
5. Allowing taxpayers to sell property and donate the proceeds to
charity without paying tax on their capital gain.
6. Tightening appraisal standards and increasing penalties for bad
appraisals.
Note that proposal 6 is a reform LTA has
endorsed relative to conservation donations. You can view the report
and learn more about the Panel at: http://www.taxreformpanel.gov/
To
learn more about this issue, visit the Land Trust Alliance's policy
website.
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