Charitable Giving Incentives Now Permanent

On December 18, 2015, President Obama signed the Protecting Americans from Tax Hikes (PATH) Act of 2015 into law. The act makes permanent three charitable giving incentives that had been enacted and expired several times during the last decade:

  1. the IRA charitable rollover, which allows donors aged 70 and 1/2 and above to make tax-free donations of up to $100,000 directly from their IRAs to qualified charities;
  2. enhanced deductions for donations of food inventory; and
  3. enhanced deductions for conservation land easements.

Independent Sector hailed this development as “a monumental victory on Capitol Hill.” “These incentives,” the organization’s three interim co-CEOs wrote, “strengthen the charitable community’s ability to improve American lives and our communities, and ends the sector’s nearly 10-year long struggle to make these incentives a permanent part of the tax code.”

The act also contains several other provisions affecting certain tax-exempt organizations. It:

  • establishes a mandatory application process for recognition as a 501(c)(4) organization—current 501(c)(4)s will also need to take action;
  • allows nonprofits to seek federal court review of revocations or denial of tax-exempt status;
  • requires the IRS to create a procedure enabling exempt organizations to appeal adverse decisions to the IRS Appeals Office;
  • exempts contributions to 501(c)(4), (c)(5), and (c)(6) organizations form the federal gift tax; and
  • makes permanent the fair-market value exception from unrelated business income tax for specific payments from controlled subsidiaries to parent exempt organizations.

An article by Venable LLP provides greater detail on the portions of the law that apply to tax-exempt organizations.

Charitable Giving Incentives Now Permanent

Suzanne Coffman

The preceding post is by Suzanne Coffman, GuideStar’s editorial director. See more of Suzanne’s sector findings and musings on philanthropy here on our blog.




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