Proposed Legislation to Increase Charitable Deduction

H.R. 969

PGDC SUMMARY:

Rep. Mark E. Souder has re-introduced the "Giving Incentive and Volunteer Encouragement Act" in order to provide an increased incentive for charitable giving. The proposed bill would (i) increase the amount of deduction for charitable contributions by individuals to 120 percent; (ii) allow individuals who do not itemize their deductions for the taxable year to take the charitable deduction under section 63 to the extent such amount exceeds $1000 ($2000 in the case of a joint return); (iii) exclude charitable giving from the overall limitation on itemized deductions, and (iv) extend the deadline for making charitable donations until April 15. The effective date will apply to taxable years beginning after December 31, 1998.

FULL TEXT:

Mr. SOUDER. Mr. Speaker, today I am re-introducing the "Giving Incentive and Volunteer Encouragement Act", the GIVE Act, to provide an increased incentive for charitable giving. The vast majority of Americans agree that charitable organizations and the nonprofit sector are more efficient and effective in the use of donations than the federal government is with additional tax revenue. The goal is to decrease the cost of giving and allow more Americans to give more generously to those charities they feel are making the greatest impact in the lives of their neighbors and communities. In addition to increasing the power of charitable donations, the bill increases flexibility, once again provides lower income taxpayers the opportunity to deduct charitable deductions, and the bill would eliminate the cap on charitable giving which hinders additional giving by those most able to give. Specifically, the legislation would:

Allow individuals to deduct 120% of the value of their charitable donations. -- This will encourage additional giving to private organizations and increase the total amount of charitable giving. Experts agree that the key factors in determining the amount of charitable giving are income and price. This provision will increase charitable giving by decreasing the effective cost to the giver.

Allow non-itemizers who give more than $1,000 to charity (or $2,000 filing jointly) to deduct their donations. -- There's simply no reason why the government should encourage philanthropy only among the better-off. Before the 1986 tax bill, all taxpayers were able to deduct their charitable donations, not just those who make enough to itemize deductions. Restoring this provision to the tax code will empower everyone, not merely people of means, to give back to their community through charitable donations.

Exclude charitable giving from the overall limitation on itemized deductions. -- By reducing allowable deductions to 3% of the taxpayer's income over $100,000, the 1990 tax bill placed unnecessary hurdles in front of those taxpayers most able to give. A person in need doesn't care what his benefactor's tax bracket is, and neither should the government.

Extend the deadline for making charitable donations until April 15. -- Most taxpayers take note of allowable deductions only when they fill out their tax returns. They often realize, in retrospect, that they could have given more to charity in the previous year. Current law already allows deductions for contributions to IRA's up until filing time. By extending similar treatment to charitable contributions, we can (1) assist taxpayers' planning, (2) increase the incentive for taxpayers facing penalties for underwithholding, and (3) help advertise the value of the charitable giving tax incentive. We can also encourage those whose giving is curtailed at the end of the year by the holiday cash crunch.

I am grateful for my twenty colleagues which have joined me as original cosponsors and invite other members to join me by cosponsoring this important incentive for increased charitable giving and to allow more Americans the privilege of contributing greater to charity. We must continue to encourage the tremendous charitable efforts which enrich our communities and improve our society while providing significant tax relief for American taxpayers.

The text of the bill follows:

To amend the Internal Revenue Code of 1986 to increase the amount of the charitable contribution deduction, to allow such deduction to individuals who do not itemize other deductions, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the "Giving Incentive and Volunteer Empowerment (GIVE) Act".

SEC. 2. MODIFICATIONS TO DEDUCTION FOR CHARITABLE CONTRIBUTIONS.

    (a) Increase in Amount of Deduction for Individuals. -- Paragraph (1) of section 170(a) of the Internal Revenue Code of 1986 is amended by adding at the end the following: "In the case of an individual, the amount of each charitable contribution shall be treated for purposes of this section as being equal to 120 percent of the amount of such contribution which (but for this sentence) would otherwise be taken into account under this section."

    (b) Contributions Made After Close of Taxable Year. -- Subsection (a) of section 170 of such Code is amended by adding at the end the following new paragraph:

    "(4) Time when contributions deemed made. -- The taxpayer may elect to treat any charitable contribution which is made not later than the time prescribed by law for filing the return for the taxable year (not including extensions thereof) as being made on the last day of such taxable year. Such an election, once made, shall be irrevocable."

    (c) Deduction Allowed to Individuals Who Do Not Itemize Other Deductions. --

    (1) In general. -- Section 170 of such Code is amended by redesignating subsection (m) as subsection (n) and by inserting after subsection (l) the following new subsection:

    "(m) Deduction for Individuals Not Itemizing Deductions. -- In the case of an individual who does not itemize his deductions for the taxable year, the amount allowable under subsection (a) for the taxable year shall be taken into account as a direct charitable deduction under section 63 to the extent such amount exceeds $1,000 ($2,000 in the case of a joint return)."

    (2) Direct charitable deduction. --

    (A) In general. -- Subsection (b) of section 63 of such Code is amended by striking "and" at the end of paragraph (1), by striking the period at the end of paragraph (2) and inserting ", and", and by adding at the end thereof the following new paragraph:

    "(3) the direct charitable deduction."

    (B) Definition. -- Section 63 of such Code is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection:

    "(g) Direct Charitable Deduction. -- For purposes of this section, the term 'direct charitable deduction' means that portion of the amount allowable under section 170(a) which is taken as a direct charitable deduction for the taxable year under section 170(m)."

    (C) Conforming amendment. -- Subsection (d) of section 63 of such Code is amended by striking "and" at the end of paragraph (1), by striking the period at the end of paragraph (2) and inserting ", and", and by adding at the end thereof the following new paragraph:

    "(3) the direct charitable deduction."

    (d) Charitable Contribution Deduction Not Subject to Overall Limitation on Itemized Deductions. -- Subsection (c) of section 68 of such Code (relating to overall limitation on itemized deductions) is amended by striking "and" at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting ", and", and by adding at the end thereof the following new paragraph:

    "(4) the deduction under section 170 (relating to charitable, etc., contributions and gifts)."

    (e) Effective Date. -- The amendments made by this section shall apply to taxable years beginning after December 31, 1998.

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