Slow Progress in Congress has Taxwriters Looking to 2024
Lawmakers are set to depart Washington this week having made little headway on key agenda items in December. Discussions on government funding and border legislation have yielded scant progress, and other priorities, like a potential tax package, will likely remain on the back burner until 2024. Still, not all is quiet on Washington’s tax front. The House’s taxwriting committee is set to hold a hearing today on “the tax-exempt sector and its impact on American
Politics,” and lawmakers continue to socialize legislation impacting philanthropy (more on that below). Today’s hearing is the next in a series of hearings the Ways and Means Committee has held examining the tax-exempt sector this year, so we’ll be keeping a close eye on positions taken and any follow-up policy proposals.
Treasury's Proposed DAF Regulations on Definitions and Taxable Distributions
As you may be aware, the IRS and Treasury Department recently released proposed regulations that would create definitions for donor-advised funds (DAFs), donor-advisor, advisory privileges, and taxable distributions. The proposal, titled “Taxes on Taxable Distributions from Donor Advised Funds under Section 4966,” could help tee up the Treasury to write future DAF regulations – like those noticed in 2017 dealing with pledges and bifurcations, the public support test, and private foundation use of DAFs – for which the definitions are needed. Treasury’s proposed guidance is open for public comment until January 16, 2024.
Philanthropy Southwest and Integer held a webinar that took a deeper dive into Treasury’s proposal and potential next steps for the sector. PSW Members may access a recording of the webinar here.
Coming Down the Pike: Bill Clarifying the Distinction Between Federal Financial Assitance and Tax-Exempt Status
In early 2024, we expect a bill that clarifies that an organization’s tax-exempt status does not constitute “federal financial assistance” to be introduced by Senator Marco Rubio (R-FL) and Representative Greg Steube (R-FL). The bill would seek to reverse previous court decisions that suggest the federal government can revoke an organization’s tax-exempt status based on their compliance with federal policies (e.g., the Education Department’s requirements under Title IX) regardless of whether an organization receives direct fiscal support from the federal government. The bill could head off future attempts from federal policymakers to intervene in nonprofit activities.
December 2023 Public Policy Update provided in partnership with:
