An important U.S. Supreme Court case was decided on July 1, 2021, Americans for Prosperity Foundation v. Bonta, involving California’s requirement that organizations making charitable solicitations file Schedule B to IRS Form 990, providing unredacted information on substantial contributors. The Court reversed an appeals court ruling in favor of California and finding that California’s requirement to report donations of major contributors to be unconstitutional.
At this time, charities should be aware of potential developments that may affect their donors and themselves. On April 28, 2021, the White House released their American Families Plan (“AFP”) proposal. The AFP calls for spending $1.8 trillion to provide subsidized childcare, free education (pre-K and community college), and paid family and medical leave, among other things. The President plans on paying for this new spending by increasing taxes on taxpayers earning more than $400,000, an increase in capital gains tax rates for people earning more than $1 million, and eliminating the “stepped up basis” rules for gains in the value of inherited property above $1 million, among other things. Despite earlier reports from the Biden Administration, the AFP does not limit the value of itemized deductions to 28 percent.
I will list, in no particular order, other potential Biden Administration tax / estate tax priorities which have been discussed as possibilities (these must of course be passed by Congress before becoming law):
Donors and their tax advisors may be wise to take action before these changes can be implemented. These changes may limit tax benefits available to taxpayers in future years causing them to increase tax deductible charitable giving in 2021.
Two other developments to consider:
Please do not hesitate to contact us if you have any questions on these subjects or other matters related to your charitable organization.
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Note: This provides general information regarding matters of interest to tax-exempt organizations. Such information is neither legal advice nor legal opinion concerning particular situations. If legal advice or opinion is required, legal counsel should be consulted.
We would be pleased to address any questions you may have regarding the foregoing or any other tax-exempt issues. For further information, please contact Mike Dutkovich (412-765-0535), [email protected]; Susan Ott (412-745-9900), [email protected]; or Jack Owen (412-765-1020), [email protected].
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