Presentation the donors forum blog by jolinmilioncherie


									    Washington Update

Andrew Schulz
Vice President, Legal and Government Relations
Council on Foundations
      2010 Issues: IRA Rollover
 CoF Position:
  • Expand to DAFs, SOs, and PFs
  • Make permanent
 Result:
  •   No expansion
  •   Extended for two years (2010 - 2011)
  •   Same limits (70½ and older, $100,000/taxpayer)
  •   Distribution by 1/31/11 may be treated as12/31/10
  •   No recapture of RMD if already taken
  2010 Issues: PF Excise Tax
 CoF Position:
  • Replace two-tier rate (2%/1%) with a flat 1.39%
    rate (JCT Revenue-neutral number)
 Result:
  • Not Achieved
       2010 Issues: Estate Tax
 CoF Position:
  • Reinstate an Estate Tax
  • No specific position on rates and exemption levels
 Result:
  •   Reinstated for 3 years (2010 – 2012)
  •   35 % top rate
  •   Exemption: $5 million / $10 million for couples
  •   Retroactive – but can elect for 2010 law treatment
 2010 Issues: Deduction Rates
 CoF Position:
  • Maintain current law on charitable deduction rates
  • WH has proposed capping deduction for people in
    the upper tax brackets
 Result:
  • No change in law
         2010 Election Results
House of Representatives               Senate

            193     Democrats     47            Democrats
                                           53   Republicans
242                 Republicans
112th Congressional Leadership

U.S. House of Representatives                      U.S. Senate

Speaker of the House John Boehner (R-Ohio 8)       Majority Leader Harry Reid (D-Nev.)
Majority Leader Eric Cantor (R-Va. 7)              Majority Whip Dick Durbin (D-Ill.)
Majority Whip Kevin McCarthy (R-Calif. 22)         Minority Leader Mitch McConnell (R-Ky. )
Minority Leader Nancy Pelosi (D-Calif. 8)          Minority Whip Jon Kyl (R-Ariz.)
Minority Whip Steny Hoyer (D-Md. 5)
Assistant Minority Leader Jim Clyburn (D-S.C. 6)
                The Players
 House Ways and Means
  • Dave Camp (Mich. 4), Chairman
  • Sandy Levin (Mich. 12), Ranking Member
 Senate Finance Committee
  • Max Baucus (Mont.), Chairman
  • Orrin G. Hatch (Utah), Ranking Member
 House Ways and Means Subcommittee on Oversight
  • Rep. Charles Boustany, chairman
Outlook for the 112th Congress
The Republican majority in the House have indicated that they will
pursue three main initiatives:

•   Repealing the new health care bill
•   Reducing the budget deficit
•   Making government smaller

House Ways and Means Chairman, Dave Camp (R-Mich.) recently
said that he sees a “unique opportunity” to overhaul the nation’s tax
system in the next two years. The Committee hosted a hearing, the
first in a series, focusing on the federal income tax last week.
2011 Compromise
           Debt and Deficits
 National Commission on Fiscal
  Responsibility and Reform
  • Recommends eliminating all “tax expenditures”,
    including all itemized deductions
  • “Simplify key provisions to promote work, homes,
    health, charity, and savings while increasing or
    maintaining progressivity”
  • Eliminate all tax expenditures for business – lower
              Gang of Six
 Plan announced next week?
 “Don’t tie our work to debt ceiling debate”
 Members
   • Senator Saxby Chambliss (R-GA)
   • Senator Tom Coburn (R-OK)
   • Senator Kent Conrad (D-ND)
   • Senator Mike Crapo (R-ID)
   • Senator Richard Durbin (D-IL)
   • Senator Mark Warner (D-VA)
 Hearings, hearings, hearings
 SFC – March 30, 2011
  • How Do Complexity, Uncertainty and Other
    Factors Impact Responses to Tax Incentives?
  • Senator Thune noted that by incentivizing private
    giving, the charitable deduction reduces the
    burden on government (and taxpayers)
 JCT – April 6, 2011
  • Gephardt and Baker urge bipartisanship
  • Suggest charitable deduction “off limits”
 More coming, SFC aide said yesterday
      Legislative Agenda for the
           112th Congress
 Issues:

  •   Expand and Extend the IRA Rollover
  •   Simplify Private Foundation Excise Tax
  •   Promote Rural Philanthropy
  •   Promote the Charitable Sector
       IRA Charitable Rollover
 CoF Position:
  • Expand to DAFs, SOs, and PFs
  • Make permanent

 Legislative Status:
  • Extended for two years (2010 – 2011)
  • Public Good IR Rollover Act of 2011 (S. 557) (March 10, 2011)
  • Currently has 9 co-sponsors
  • Extends the IRA charitable rollover beyond 2011
  • Expand to allow gifts made to DAFs, Sos, and PFs to qualify for the
  • Lifts the $100,000 cap on distributions and allow planned gifts
    beginning at age 59 ½.
Private Foundation Excise Tax
 CoF Position:
  • Replace two-tier rate (2%/1%) with a flat 1.39% rate (JCT
    Revenue-neutral number)

 Legislative Status:
  • S. 593 Introduced (March 16, 2011)
  • Currently has 12 co-sponsors
  • Removes the current two-tiered excise tax imposed on private
    foundations and replace it with one flat rate
  • Sets the excise tax rate at 1.39 percent/
  • Applicable to tax years beginning after the date the bill is enacted
  • Obama Administration’s FY2012 budget proposal calls for a single,
    1.35 percent excise-tax rate on investment income of private
   Promote Rural Philanthropy
 CoF Position:
  • Seeks investment of existing federal resources through the creation of
    a program within the US Department of Agriculture to provide challenge
    grants and capacity building grants to build rural endowments to benefit
    economically distressed rural counties.

 Legislative Status:
  • Rural Philanthropy Growth Act (RPGA)
  • Provide challenge grants to qualifying community foundations to build
    community-based unrestricted endowment funds to benefit one or more
    economically distressed counties.
  • Provide capacity-building grants to qualifying community foundations.
  • Strategies:
           – Encourage USDA to implement via internal initiative;
           – Introduce stand-alone legislation; and/or,
           – Insert intent language via amendment into the farm bill or other appropriate vehicle.
 Promote the Charitable Sector
 CoF Position:
  • Maintain current law on charitable deduction rates
  • WH has proposed capping deduction for people in
    the upper tax brackets
 President Obama’s fiscal 2012 budget outline
  • Caps deduction rate at 28% - regardless of tax rate
    (would raise revenues by $321.9 billion over 10 years)
  • Applies to all itemized deductions – not just charitable
 Increased recent pressure on “tax
Be Informed in Public Policy
E-Updates from Washington , D.C.
Foundations are sometimes
concerned that any
communication with policy-
makers will be viewed as
lobbying; however, that is not
the case.
“A Foundation’s Guide to
Advocacy” outlines the
differences between
networking and lobbying and
provides information to help
foundations navigate the policy

Purchase Your Copy at:
         CF Audits Update
• Still planning 100 audits
• Approximately 30 underway or complete
• Most that have closed are yielding no findings
• Confirms what we already know – CF’s are
  well run and Standards are a big part of that
• Hopefully this will be the last such effort for
  some time
 COF proposed revisions to Rev. Proc. 92-94
  would allow an approved organization to
  issue determinations that foreign NGOs are
  the equivalent of US public charities.
 Private foundations and donor advised funds
  would be able to rely on the determinations.
 Improve quality of decision making
 Reduce overhead
 Enable more foundations to give
          Other Matters
 Final regulations on foreign bank account
  reporting make clear that reporting is not
  required for investments in offshore hedge
  and similar funds
 Congress has repealed new requirements for
  1099 reporting of payments to corporations
 Still awaiting Treasury study of private
  foundations, donor advised funds and
  supporting organizations – due August 2007
       ABA on Simplification
   Private Foundation Excise Tax
   Repeal section 514
   Repository Project
   PRI modernization
          IRS Examinations
   Political Activity
   International Grants
   Alternative Investments
   Huge Foundations?
             IRS “to do” list
 Treasury study of DAFs
 Report on IRS compliance checks?
 Regulations
  • Public support test
  • Supporting organizations
  • Donor advised funds
COF Legal and Public Policy
Janne Gallagher or 703-879-0711

Legal      Maya Harris or 703-879-0714
           Dan Rader or 703-879-0719
           Kelly Simone or 703-879-0716
           Kristy Tsadick or 703-879-0718

           Andrew Schulz or 703-879-0715
Policy     Chatrane Birbal or 703-879-0689
           Hal McCabe or 703-879-0712

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