Legislation

As the nation’s unemployment rate remains at an unsettling 9.6 percent, an increasing number of 501(c)(3) organizations are taking advantage of an exclusive opportunity to opt out of the state unemployment tax system. However are all of these nonprofits benefiting?

According to a federal law enacted in 1970 (IRC Title 26, Chapter 23 §3309(a)(2)), nonprofits can instead elect to reimburse their state only when a former employee collects unemployment benefits. Many 501(c)(3)s can save significantly by directly reimbursing the state in lieu of paying into the unemployment tax system.

The Senate has unveiled a new tax bill that would extend through 2011 a tax break for people who use money from their individual retirement accounts to donate to charity.

The legislation would also extend tax provisions to encourage donations of property, food inventory, books to public schools, and computer equipment for educational purposes.

The chairmen of President Obama's deficit commission—in their final plan for improving the nation's fiscal health—today offered a proposal to eliminate the charitable deduction and replace it with a 12-percent tax credit.

However, only people who had donated a certain percentage of their income would  be eligible.

The new plan, which is expected to be voted on by the full commission on Friday, proposed changing the charitable tax break as part of a broader effort to simplify the tax code, reduce the deficit, and lower individual and corporate income-tax rates.

mGive announced that it is powering the mobile donation industry’s first $25 text donation campaign launched by the American Center for Law and Justice (ACLJ). Through this campaign, individuals can text LIFE to 50555 to donate $25 to the ACLJ, an organization dedicated to protecting freedom, life, and religious liberties in the United States and internationally.

Three liberal groups have offered a new proposal on how to cut the federal deficit, proposing yet another way to change the charitable deduction.

The proposal—by the Century Foundation, Demos, and the Economic Policy Institute—suggests converting the federal income-tax deduction for charitable donations to a 25-percent tax credit. The credit would be available to all federal taxpayers, including those who don’t itemize or owe any income taxes.

A high-level committee that offered a plan for reducing the federal government's debt today issued a proposal that would radically change the way the tax code treats charitable gifts.

The proposal would essentially eliminate the charitable tax deduction.

In its place, all donations made by federal taxpayers would qualify for a 15-percent tax credit. But instead of that credit going to the taxpayer, it would be given to the charity receiving the donation in the form of a matching grant from the Internal Revenue Service.

Uncertainty over future tax rates and the end of a popular tax break for seniors could cause givers to postpone or reduce charitable contributions this year, putting pressure on charities already struggling with a decline in donations.

The fourth quarter is traditionally the time of year when many large charities receive the majority of their annual contributions. Donors who make their contributions by Dec. 31 can claim the deduction when they file their tax return for the year. But political gridlock has turned that strategy upside down, charitable experts say.

As voters prepare to head to the polls Tuesday, philanthropy experts are looking ahead to a new Congress that will probably shift the way it approaches legislation that is important to the nonprofit world.

With Sen. Charles E. Grassley, the body’s leading nonprofit watchdog, expected to take on a new role, they predict a less aggressive approach to charity regulation in the Senate. But with Republicans projected to win a majority in the House, charities could nonetheless face heightened scrutiny in some areas.

We'd like to introduce SOFII to those of our readers who don't know about it and share some of the fundraising efforts that have made it into the site's Best of the Best Showcase.

Before regulations changed in 2006, nonprofits making less than $25,000 annually didn't have to file annual tax returns. Congress, however, passed legislation mandating almost all tax-exempt organizations except churches file annual forms starting in 2008.

The law also requires a nonprofit failing to file the appropriate forms for three consecutive years to be stripped of its federal tax-exempt status, and 2010 is the first time companies could have three years of noncompliance, according to a statement from IRS Commissioner Doug Shulman.