The Senate Finance Committee will mark up charitable giving legislation based on the Santorum-Lieberman CARE Act (S 1924) tomorrow morning (June 13th). The legislation is being offered as a substitute to HR 7, a House giving bill that included controversial "charitable choice" provisions dealing with faith-based social services. The timing of this charitable giving legislation is extremely poor, as the Senate is right now debating legislation to permanently repeal the estate tax, a tax that provides a valuable incentive for charitable giving at levels much higher than the non-itemizer deduction in the giving bill is expected to generate. We urge you to call your Senators today and tell them to vote NO on permanent repeal of the estate tax (you can click here for ways to contact your Senators and for more information). While most of the provisions of the CARE Act are helpful to the nonprofit community, the non-itemizer deduction is problematic. Several estimates put the cost of the non-itemizer deduction at several times its expected benefit. For more information on the Senate's charitable giving bill, see below. Following are the major povisions included in the Charirman's mark for the Senate Finance Committee's June 13th markup of charitable giving legislation. 1. Nonitemizer charitable deduction. The provision allows taxpayers who do not itemize their deductions to claim an above-the-line deduction for their charitable giving to the extent that their total gifts exceed $250 for the year ($500 for joint returns). However, the maximum deduction that may be claimed is $250 ($500 for joint returns). Thus, for example, a single taxpayer who donated $350 during the year could claim a deduction for $100 (the amount in excess of the $250 floor). The deduction would be limited to cash contributions, and would be in effect during 2002 and 2003. The Treasury Department would be required to conduct a study on the effects of the proposal on charitable giving and on taxpayer compliance with the new rule. 2. IRA Charitable Rollover. The proposal would allow donors age 59 1/2 or over to rollover amounts from an IRA to create a life income gift (such as a charitable gift annuity). Donors age 70 1/2 or over would become eligible to also rollover amounts from an IRA as direct gifts. The proposal would be effective beginning 1/1/2003, and would be permanent. 3. 501(h) Simplification. The proposal includes a provision to simplify the rules that apply to charities that elect to be covered by section 501(h), which provides specific lobbying definitions, and a formula to determine allowable expenditures. The proposal would remove the "sub-limit" that restricts "grassroots" lobbying to 25% of a charities overall lobbying activities. The proposal would be effective 1/1/2002. 4. Social Services (Title XX) Block Grant. The proposal would increase the Title XX block grant from its current level ($1.7 billion in FY 2002) to $1.975 in FY 2003 and $2.8 billion in FY 2004. 5. Disclosure. The proposal includes several new disclosure requirements that generally follow several of the recommendations made by the Joint Committee on Taxation. The proposal would: 1) expand the definition of "written determinations" of the IRS that are subject to public disclosure; 2) require organizations to list on its 990 any names under which it does business, as well as any web sites it maintains; 3) require private foundations to prepare, and make publicly available, a summary description of its capital gains and losses for the year in lieu of a complete report (unless a member of the public requested the full report); 4) require the IRS to remind taxpayers that the Form 990 is publicly available in certain IRS publications; 5) allow the IRS to disclose to state charity officials certain information about tax-exempt organizations. 6. Contribution of Bonds. The proposal would allow a full, fair market value deduction for certain appreciated bonds donated to private foundations, beginning 1/1/2003. 7. Conservation easements. The proposal provides additional incentives for land owners to donate conservation easements to charities, beginning 1/1/2003. 8. Expedited Exemption Review. The proposal includes a provision to allow expedited review of certain charity's application for tax- exempt status. 9. Declaratory Judgment. The proposal extends a declaratory judgment procedure currently available to section 501(c)(3) organizations seeking certain rulings related to its tax status, to other types of tax-exempt organizations (such as those 501(c)(4) organizations, and so forth). 10. The Chairman's mark also includes provisions that would allow an enhanced deduction for gifts of food items, books, and certain computer and other scientific property donated to charity. These provisions are generally effective 1/1/2003 (the technology rules apply 1/1/2002). 11. Church-related Provisions. The proposal clarifies the definition of what constitutes a church tax inquiry to include contacts made by the IRS to education churches on exempt-organization law topics, and modifies the definition of a church "convention" or "association". 12. September 11th Relief Payments. The proposal codifies an IRS determination that certain payments made by charities in response to September 11th would be tax-free if certain conditions were met. This treatment would expire on 9/11/2003. 13. Individual Development Accounts. It appears the the proposal has deleted a provision to create individual development accounts (IDAs), which are tax-favored savings accounts designed to encourage low-income individuals to save for certain purposes. An amendment restoring the IDA provision is expected to be offered.