Tax Policies Top Agenda For Lame Duck Congress

Leaders at national nonprofits are unifying in an attempt to make permanent three charitable provisions in the tax code during the lame duck Congress before a new session begins in January.

With Republicans taking control of the U.S. Senate during the next session, that means leadership changes for key committees. Sen. Orrin Hatch (R-Utah) is expected to become chairman of the Senate Finance Committee in the new legislative session, with Ron Wyden (D-Oregon) becoming ranking member.

In the House, chairmanship of the powerful Ways and Means Committee is expected to come down to either Paul Ryan (R-Wisc.) or Kevin Brady (R-Texas). Previous Chairman Dave Camp (D-Mich.) is retiring from the House.

The America Gives More Act (H.R. 4719) passed the Republican-controlled House in July by a vote of 277-130. Included in the bill are charitable provisions that expired last year: the Individual Retirement Account (IRA) Charitable Rollover, a tax deduction for donating food inventory and charitable land easements, and increasing the donation limits for both.

Republicans emerged from the Nov. 4 midterm elections with control of the Senate. The GOP will have at least a 53-47 majority, with one seat still undetermined as of this writing (Alaska) and another heading for a runoff election (Louisiana) this month. Republicans strengthened their 234-201 majority in the House by gaining at least nine seats, as of this writing.

“The end-of-year tax bill is on everyone’s list of ‘must-pass’ legislation because Congress can do what it wants,” said David Thompson, vice president, public policy, for the National Council of Nonprofits. “The absolute unified push is to make those three charitable provisions permanent, regardless of what they do with other incentives,” he said.

The legislation also would allow taking a deduction on charitable gifts until April 15 of the following tax year, and reduce the excise tax rate on private foundations’ investment income from 2 percent to 1 percent. The Senate Finance Committee had proposed the full extenders package through next year, he said.

There’s less unanimity on making April 15 the deadline, according to Thompson, and the excise tax provision has been talked about for a long time. “There’s plenty of good reason to do it,” he said.

Through negotiations and deliberations on competing versions of the America Gives More Act, Geoffrey Plague, vice president, public policy, at Independent Sector in Washington, D.C., is hopeful that at the very least the three priority provisions will be made permanent. Letting some provisions expire and retroactively bringing them back in 2015 might make sense for some items, Plague said, but not these because they involve long-term financial decisions by individuals and families. “The uncertainty in letting them expire, then retroactively reinstate them, has had a dampening effect on the incentive to give,” he said.

The ad hoc Washington, D.C.-based IS advocacy coalition has been circulating a letter, signed by more than 1,000 organizational leaders that will be sent to members of the House and Senate, communicating how important it is to make the provisions permanent.

“If recent history holds, we’ll be back here a year from now, with these provisions having been expired, two years from now looking to get reintroduced. We’re hoping to get off this merry-go-round and have these put in place permanently,” Plague said. “We are in a place where there’s more cause for optimism, because the full House approved legislation to make these three provisions permanent. That has not happened before,” he said.

Earlier this year, Camp proposed a comprehensive tax reform package. Something for charities to be mindful of, Plague said, is that there were an awful lot of ideas in the discussion draft that would have impacted charities. “The fact that it was vetted by staff and included in a very public document that was shared put them on the table as part of the conversation,” he said. Whether someone picks up Camp’s ideas, Plague said the charitable sector is part of the tax code so any efforts to rewrite the tax code will certainly look at charitable provisions. Sen. Mitch McConnell (R-Ky.), who is poised to become Senate majority leader next year, has said tax reform is one of his priorities, Plague added.

Thompson said comprehensive tax reform could be tackled in the Senate through budget reconciliation. Comprehensive tax reform “puts everything on the table,” he said, and so making the charitable provisions permanent is a priority because they’re less likely to be “tinkered with.”

Chances for postal reform were already low and possibly fall lower at this point, according to Stephen Kearney, executive director of the Alliance of Nonprofit Mailers in Washington, D.C. The lame duck session is a much shorter period of time and there are much higher priorities for Congress, he said, adding that there’s no sense of urgency that something needs to be done in the short term since the liquidity crisis at the United States Postal Services (USPS) has passed for now. NPT