US House of Representatives Approves Charitable Giving Incentives Legislation

On July 17, 2014, responding in part to the expiration of numerous tax incentives last December 31, the House of Representatives approved by a 277–130 vote a bill (H.R. 4719, The America Gives More Act) containing permanent extension of several tax incentives related to charitable deductions.

The bill permanently extended incentives that include: (1) a provision facilitating corporate contributions of food to charities, such as food banks; (2) a provision permitting tax-free charitable contributions to be made from the IRA accounts of senior citizens; and (3) a provision encouraging conservation easements.

In addition, H.R. 4719 also extends the deadline for individual charitable contributions until April 15 of the following year, making such deductions similar to Individual Retirement Account contributions, which can also be made from January 1 until April 15 of the following year. And, H.R. 4719 lowers and simplifies the excise tax on private foundations by replacing the two rates of excise tax on tax-exempt private foundations with a single rate of tax of one percent. Procedurally, H.R. 4719, which originally dealt only with corporate contributions of food to charities, was amended to incorporate the four other tax provisions, each of which had been approved as separate bills by the House Ways and Means Committee in late June.

The contribution deadline extending provision may be of particular interest to a wide range of nonprofit organizations. This provision extending the deadline for contributions is drawn from the legislation authored by Pennsylvania Congressman Mike Kelly (R), a second-term member who sits on the House Ways and Means Committee. The primary rationale for extending the deadline for individual contributions is that many Americans would have more certainty on their tax liability for the prior year when preparing and filing their income tax returns, and thus may be convinced to make even more generous contributions to charities. On the other hand, it is worth noting that many nonprofits center their fundraising around the end of the calendar year and enactment of this new provision would necessitate a reassessment of fundraising campaigns to take into account a taxpayer’s ability to elect to deduct retroactively a contribution on his/her prior year’s returns.

In recent months, the House majority’s approach to restoring expired tax incentives has been to select a few provisions and to approve legislation permanently extending them, while the Senate preferred in its EXPIRE Act in April to restore such provisions only for 2014 and 2015. The full Senate was unable to reach a consensus on the more comprehensive EXPIRE Act earlier this Spring and thus today’s House extenders legislation is unlikely to move quickly to Senate consideration. A sticking point is that the House is approving extenders without any budgetary offsets, leading the White House to issue a veto threat that today’s legislation and other extenders need to be paid for with corresponding budget offsets. Ultimately, we expect that the House and Senate will negotiate a compromise on many of the 55 expired tax provisions after the November elections that will likely provide retroactive relief for all of 2014.

More detailed information is available in the press release from Ways and Means Committee Chairman Dave Camp (R-Michigan).

501(c)(3) nonprofit organizations that are interested in learning more about the potential impact on their organizations of this legislation are encouraged to talk to their advisors or to contact Arent Fox.

Arent Fox’s Government Relations practice will continue to be active on this issue and monitor future developments. For additional information, please contact Dan H. Renberg.