Members of Congress wrote to the US Treasury Department and the Internal Revenue Service (IRS) on Friday, urging them to help middle-class families save money on their taxes by restoring the ability for taxpayers to make charitable donations to their communities and receive a tax credit on their local tax bills.
Congressman Josh Gottheimer (NJ-5) is the lead signatory to the letter, which also includes Congresswoman Mikie Sherrill (NJ-11) and Congressman Tom Suozzi (NY-3).
In the aftermath of the devastating 2017 cap on the State and Local Tax (SALT) deduction, the charity tax deduction helped restore the SALT deduction’s value by allowing taxpayers to deduct charitable contributions to their state or other local governments.
Then, in June 2019, the Treasury Department and the IRS finalised a rule in a massive regulatory overreach — without any legislative basis and against both legal precedent and decades of prior IRS approval — that put a limit on these charitable deductions, completely bypassing Congressional intent when it comes to the tax treatment of these donations.
“By capping the State and Local Tax deduction and reducing the number of taxpayers who itemise their tax returns, the 2017 Tax Hike Bill (P.L.115-97) inadvertently diminished the incentive to make charitable gifts.”
Many states sought to provide assistance to their citizens in the aftermath of the unfair SALT cap by enabling them to make charitable gifts to offset the extra tax burden imposed by Washington.
The IRS imposed a rule…which had the paradoxical consequence of further restricting the incentive to make charitable gifts,” the Members stated in a letter to Treasury Secretary Yellen and IRS Commissioner Rettig in response to these state initiatives.
The letter’s primary signatory is Congressman Josh Gottheimer (NJ-5) and includes Congresswoman Mikie Sherrill (NJ-11) and Congressman Tom Suozzi (NY-3).
Thirty-three states offer tax credits to encourage charitable giving for specified reasons, while an IRS rule restricts states’ ability to use charitable donations to pay for local services excessively.
“Ways to reduce tax benefits for donors to these long-standing initiatives would have been included in P.L.115-97 if Congress had intended to do so.” As a result, we implore you to act quickly to reverse this catastrophic regulation.”
Thirty-three states provide tax credits to encourage charitable giving for specific purposes, and the IRS rule limits states’ ability to encourage charity donations to fund local services unduly.
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More than a hundred state charitable tax credits exist, supporting programmes like foster care in Arizona, playground construction in Louisiana, and affordable housing development in Illinois.
Following the catastrophic 2017 cap on the State and Local Tax (SALT) deduction, the charity tax deduction allowed taxpayers to deduct charitable contributions to their state or other local governments, helping to restore the SALT deduction’s value.
As a result, we ask you to take swift action to undo this disastrous regulation.