June 1, 2006 | Read Time: 2 minutes
The odds that Congress will pass any major legislation this year to change rules affecting donors and nonprofit groups are growing slimmer.
Two key lawmakers are squabbling over the legislation, and unless they come up with a compromise, Congressional aides and charity lobbyists say, it is doubtful that the charity provisions will be considered again before 2007.
For several years, charities and some members of Congress have been pressing for legislation that would stimulate charitable giving and cut abuses of tax laws by donors and nonprofit organizations.
Charities were optimistic when the Senate passed many such measures last year as part of a major tax bill. But nearly all of those measures were stripped out of the legislation in a compromise with the House, and the only charity provision left in the bill, which President Bush has signed into law, is one that tightens the rules on corporate tax-shelter abuses that involve charities. It imposes steep penalties on charities and other entities that participate in abusive tax shelters.
Sen. Charles E. Grassley, the Iowa Republican who is chairman of the Senate Finance Committee, is pushing his colleagues to include the charity provisions in another measure: pension legislation that would tighten rules that protect America’s private pension system.
But Rep. William M. Thomas, the California Republican who is chairman of the House Ways and Means Committee, has suggested that some of the charity measures be put on hold until Congress has more time to conduct research on them.
Among the provisions the Senate passed — and that are now up in the air — are incentives to allow people who do not itemize on their income-tax returns to write off some of their charitable gifts, and to permit people age 70 and older to withdraw money from their individual retirement accounts and donate it directly to charity without being subject to income tax. Proposals to reduce charitable abuses include tougher rules on donor-advised funds and supporting organizations.
If the charity provisions aren’t included in the pension bill, chances are slim that they could become law this year, says Erica Greeley, director of strategic policy planning at the National Council of Nonprofit Associations, one of the groups that has been lobbying for the changes.
“The understanding of many of us working on this was that the pension bill might be the best road,” she said. “The House and Senate have so many other priorities. I’m not sure what it would take to get this through.”
Some charities have expressed concerns about the provisions, saying that stricter rules on supporting organizations and donor-advised funds would harm charities without doing enough to protect the public from abuse.
