Extension of tax provisions crucial to charities

Charitable organizations such as the Community Foundation of Jackson County, Seymour Main Street and the Jackson County United Way have much to be thankful for this holiday season.

So do the many donors who help them make a difference in the lives of others all across Jackson County.

Just before Thanksgiving and in time for year-end giving plans, congressional leaders in the House and Senate worked out a deal on the 55 expired tax provisions known as “tax extenders.” Of particular importance to donors and the charitable causes they support is the IRA charitable rollover.

The deal would permanently extend 10 of those provisions, including the IRA charitable rollover, making them permanent law. That’s good news for donors and charities alike because it eliminates the cyclical uncertainty for donors and nonprofits. It also encourages giving.

Enactment of the plan, however, isn’t a done deal. President Barack Obama and his administration have in the recent past been resistant to any permanent extension of expired tax provisions if resulting revenue loss is not offset, according to a news alert from the Council on Foundations.

Politico reported online Nov. 25 that the Obama administration threatened to veto the emerging deal in part because it omitted provisions sought by many Democrats renewing expansions of the earned income and child tax credits that are due to expire at the end of 2017.

We’ll hope those provisions can be extended and the overall package can be adopted by Congress and signed into law by President Obama.

A permanent IRA charitable rollover would allow donors to plan their charitable gifts in advance, which should create increased charitable investment for nonprofit organizations such as the community foundation and the communities it serves, from Crothersville to Reddington, from Medora to Freetown and from Brownstown to Seymour.

Such a step also could move Congress and the nation toward expanding the rollover to other giving vehicles, including donor advised funds such as those administered by the Foundation, along with private foundations and supporting organizations.

The Council on Foundations also reported the negotiated deal would make nine other extenders permanent, including the deduction for conservation easement contributions and the deduction for gifts of food inventory. Two provisions would be eliminated while 43 other expired provisions would be temporarily renewed through 2015.

Federal law uses the term “qualified charitable distribution” to describe an IRA charitable rollover. A qualified charitable distribution is money that individuals who are 70½ or older may direct from their traditional IRA to eligible charitable organizations, such as the Foundation. The provision has an annual cap of $100,000 for charitable distributions from individual IRAs. Individuals may exclude the amount distributed directly to an eligible charity from their gross income.

If the rollover is renewed, donors should check with their financial advisers on any changes in the law and how it might affect their own situation.

Dan Davis is president and CEO of the Community Foundation of Jackson County, 107 Community Drive. For information about donating to the foundation, call 812-523-4483 or send an email to president@cfjacksoncounty.org.