201-896-4100 info@sh-law.com

New Legislation Protects Large Gift Donations To Nonprofits

Author: Frank L. Brunetti|May 26, 2015

The House of Representatives recently took action to protect individuals who make large gift donations

New Legislation Protects Large Gift Donations To Nonprofits

The House of Representatives recently took action to protect individuals who make large gift donations

By approving legislation that would ensure these donations do not incur the gift tax, H.R. 1104, the Fair Treatment for All Donations Act, now affects gifts made out to 501(c)4, 501(c)5 and 501(c)6 non-profit organizations.

The New Legislation

Rep. Peter Roskam, R-Ill., chairman of the Ways and Means Oversight Subcommittee, introduced the legislation earlier this year. In a statement, Roskam emphasized that the IRS has never levied gift taxes on donations made to nonprofits. However, the agency sent letters to donors in 2011, inquiring about these donations, according to Bloomberg News.

Currently, any gifts worth more than $14,000 are subject to taxation, so by codifying IRS policy, lawmakers can proactively insulate specific groups that take part in elections and do not reveal the identity of their donors, the media outlet reported.

Benefits of the New Legislation

Roskam touted the benefits of his legislation, emphasizing the need to provide fair treatment for all Americans who make donations to tax-exempt organizations.

“Although the IRS claims it is no longer seeking to curb giving to social welfare organizations, we need assurances that this practice will never happen in the future,” he said. “The Fair Treatment for All Donations Act, which will codify the longstanding practice of exempting these contributions from the gift tax, marks an important step in shielding Americans from further burdensome taxes and intrusive scrutiny by the IRS.”

While this bill obtained approval in the House, lawmakers introduced a similar version in the Senate, according to Bloomberg News. At the same time, the IRS is in the process of developing rules that would affect exactly what nonprofits can do without endangering their tax exemptions or ability to protect the identity of donors.

New Legislation Protects Large Gift Donations To Nonprofits

Author: Frank L. Brunetti

By approving legislation that would ensure these donations do not incur the gift tax, H.R. 1104, the Fair Treatment for All Donations Act, now affects gifts made out to 501(c)4, 501(c)5 and 501(c)6 non-profit organizations.

The New Legislation

Rep. Peter Roskam, R-Ill., chairman of the Ways and Means Oversight Subcommittee, introduced the legislation earlier this year. In a statement, Roskam emphasized that the IRS has never levied gift taxes on donations made to nonprofits. However, the agency sent letters to donors in 2011, inquiring about these donations, according to Bloomberg News.

Currently, any gifts worth more than $14,000 are subject to taxation, so by codifying IRS policy, lawmakers can proactively insulate specific groups that take part in elections and do not reveal the identity of their donors, the media outlet reported.

Benefits of the New Legislation

Roskam touted the benefits of his legislation, emphasizing the need to provide fair treatment for all Americans who make donations to tax-exempt organizations.

“Although the IRS claims it is no longer seeking to curb giving to social welfare organizations, we need assurances that this practice will never happen in the future,” he said. “The Fair Treatment for All Donations Act, which will codify the longstanding practice of exempting these contributions from the gift tax, marks an important step in shielding Americans from further burdensome taxes and intrusive scrutiny by the IRS.”

While this bill obtained approval in the House, lawmakers introduced a similar version in the Senate, according to Bloomberg News. At the same time, the IRS is in the process of developing rules that would affect exactly what nonprofits can do without endangering their tax exemptions or ability to protect the identity of donors.

Firm News & Press Releases