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Tax Incentives for Charity: An Overview of Legislative Proposals , Record No.: RS21144, Date: September 20, 2002 1 (September 20, 2002)

handle is hein.tera/crstax0057 and id is 1 raw text is: Order Code RS21144 Updated September 20, 2002 CRS Report for Congress Received through the CRS Web Tax Incentives for Charity: An Overview of Legislative Proposals Jane G. Gravelle Senior Specialist in Economic Policy Government and Finance Division Summary This reports describes and, in some cases, briefly discusses, the tax provisions of the Community Solutions Act (H.R. 7, which passed the House on July 19, 2001). The provisions include charitable deductions for non-itemizers, rollovers of IRAs into charitable uses, a reduction in the excise tax on private foundation income, an increase in the deductions cap for corporate contributions, and several narrower provisions relating to business contributions of property and charitable remainder trusts. The Senate has reported a substitute that includes a number of similar provisions (The CARE Act of 2002), along with some revenue offsets (user fees and corporate tax shelters). The Community Solutions Act of 2001 (H.R. 7), which passed the House on July 19, 2001 has eight new tax provisions designed to benefit charities and charitable giving. The bill also contains provisions relating to charitable choice (directed at religious organizations' role in administering government programs).' According to the Joint Committee on Taxation, the charitable tax benefit provisions are projected to cost $13.3 billion over 10 years; when fully phased in they cost $2.4 billion on an annual basis. The President proposed three of these tax provisions in his original tax proposal, but these provisions were not included in the 2001 tax cut (P.L. 107-16). The President's FY2003 budget includes these provisions except the last one (self-constructed property), with expanded features in two cases (the non-itemizer's deduction and deductions for inventories), along with a change expediting consideration of applications for exempt status. S. 1924, introduced in the Senate by Senators Lieberman and Santorum after discussion with the President, would provide a temporary non-itemizers deduction with a higher cap. The Senate Finance Committee has reported out a version of the bill on June 18, 2002, the CARE Act of 2002 with a temporary non-itemizers deduction with both a floor and ceiling. It excludes some provisions of H.R. 7 but contains others, and is estimated to cost $10 billion per year, although the bill contains revenue offsets. The stated purpose of the tax revision is to encourage giving to charitable organizations: to provide Congressional Research Service *** The Library of Congress For a discussion of charitable choice provisions, see CRS Report RS20948, Charitable Choice Provisions ofH.R. 7.

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