Policy & Regulatory Update. Wednesday, August 26 th 2015

Transcription

1 Policy & Regulatory Update Wednesday, August 26 th 2015

2 Speaker Katherine LaBeau Policy Director & Counsel

3 Where Are We Now? Recap of policy developments in 2014 and 2015 so far

4 Recap Important Milestones in February 2014 Former House Ways and Means Chairman Dave Camp (R- MI-4) releases Tax Reform Act of 2014 discussion draft July 2014 America Gives More Act (H.R. 4719) passes House on a bipartisan vote of December 2014 Chairman Camp introduces the Supporting America s Charities Act (H.R. 5806); it fails to pass the House Congress passes tax extender provisions, retroactive for 2014 only, for just 2 weeks

5 Recap Important Milestones in February 2015 Senate announces Finance Committee tax reform working groups House passes America Gives More Act of 2015 (H.R. 644) April 2015 Sen. Schumer reintroduces Public Good IRA Rollover Act of 2015 (S. 1159) to make permanent and expand the IRA charitable rollover July 2015 Senate tax reform working groups release reports, includes reform options impacting charitable organizations

6 Recap Senate Tax Reform Working Group Options IRA Charitable Rollover make permanent and consider expanding Private Foundation Excise Tax Simplify to a flat rate E-filing of Form 990 Make mandatory Declaratory relief for 501(c)s Expand Food inventory donations deduction make permanent Conservation easement deduction make permanent Contributions of property look at valuation issues

7 2015: What s Still to Come? Tax extenders vote 1 or 2 year extension likely IRA charitable rollover Enhanced deductions for conservation easements and food inventory donations Private foundation excise tax simplification in America Gives More Act but not a tax extender 2016 federal budget Debt ceiling must be raised again Long-term Highway Trust Fund fix Export-Import Bank reauthorization

8 Looking Ahead: Tax Reform

9 Tax Reform Philanthropy is on the Tax Reform Radar How Do We Know? President s Budgets since 2010 (excise tax simplification, cap on charitable deduction) Tax extender renewal process and debate (America Gives More Act, Supporting America s Charities Act, Public Good IRA Rollover Act) Tax reform proposals we ve seen so far the past few years, including recent Senate working group activity Presidential candidate Hillary Clinton pay for decreasing higher education costs with itemized deduction cap

10 Tax Reform Tax Reform: Charitable Sector Themes and Motivations Belief that Americans donate primarily because they are generous not because of tax incentives Charitable deduction floor, cap Limits to deduction for gifts of property Skepticism and misunderstanding of the sector Repeal of Type II and III supporting organizations Changes to treatment of unrelated business income Excise tax on excess executive compensation

11 Tax Reform Tax Reform: Charitable Sector Themes and Motivations Questioning of endowed philanthropy funds for long-term invested charitable giving 5-year donor advised fund payout Focus on specifics; not the aggregate Timing of tax incentives and distribution to community Transparency and simplicity Private foundation excise tax simplification Philanthropic resources as alternative to diminished government dollars

12 Role of National Standards in Policy National Standards for U.S. Community Foundations is a peer driven, voluntary, selfregulatory accreditation program that ensures operational effectiveness to foster excellence in community philanthropy.

13 Role of National Standards in Policy The National Standards Program Intersects with Policy Tax Reform Act of 2014 raises questions about DAFs and endowed philanthropy Council educates policymakers about community foundation self-regulation Some states provide tax credits to donors of accredited community foundations

14 Tax Reform: What Can We Do?

15 What Should We Be Doing? Educating leaders throughout the philanthropy world on policy issues that impact their work Continuous lawmaker and staff education forge relationships with district staff and be sure they know where you stand on issues that matter Thinking about how you talk about your foundation do you talk only in terms of assets and grants, or do talk about your ability to convene, develop partnerships, and innovate? Remember: lawmakers and staff don t often understand foundations or have misperceptions

16 Regulatory Update

17 Regulatory Update Treasury Priority Guidance Plan White House announcement on PRI/MRI rules Dept. of Labor Fair Labor Standards Act Overtime Rule IRS Political Activity Rule

18 Regulatory Update Treasury Priority Guidance In May, the Council wrote to the Treasury and the IRS, urging them to prioritize several regulations and guidance documents, including: Guidance on the statutory provisions related to donor advised funds, which became law in the Pension Protection Act of 2006 (PPA); Guidance on the standards IRS officials employ to recognize nonprofit media organizations as exempt under Section 501(c) (3); An update to Revenue Procedure 92-94, which governs equivalency determinations for charities overseas; A modification of the Foreign Account Tax Compliance Act (FATCA) that will simplify the cross-border grantmaking efforts of many of our members; clarification on whether foundations may apply the three-part test for program-related investments to their mission-related investments

19 Regulatory Update Treasury Dept. PRI & MRI Rules Treasury announced plans to finalize 9 new examples of permissible Program-Related Investments (PRIs) Examples include loans and other investments to support a variety of charitable purposes including medical research, environmental protection, and disaster recovery. PRI regulations are only directly applicable to Private Foundations Treasury will be considering additional guidance around Mission- Related Investments (MRIs) Language is still being finalized, and the Council is collecting input to share with officials Council suggested extending the 3-part test used for PRIs to determining charitable purpose of impact investments made with endowment dollars

20 Regulatory Update DOL Overtime Rule Would increase the salary threshold for employees to qualify for overtime compensation, impacting an estimated 4.5 million employees. Threshold would jump from $23,660 to $54,440 meaning employees making between those two amounts are now eligible for overtime pay in many circumstances. No explicit exemption for nonprofit employees Council working with a coalition of organizations (IS, National Council of Nonprofits, etc.) to assess impact on nonprofit operations. Comments due to DOL on September 4 th.

21 Questions? Contact Me. (703)