Capitol Correspondence - 06.30.20

Senate Considers Expanding Charitable Deduction

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Following the 2017 Tax Cuts and Jobs Act, which reformed many tax regulations including the charitable deduction, ANCOR’s nonprofit members recorded declines in their charitable funding. The legislation described in the article below by ASAE could address the challenges this situation poses for nonprofits that support people with intellectual / developmental disabilities. ASAE is the association for association leaders, of which ANCOR is a member.

“A bipartisan group of senators introduced legislation this week to expand a tax break for charitable giving to encourage taxpayers to donate to nonprofit organizations impacted by the COVID-19 pandemic.

The Universal Giving Pandemic Response Act, introduced by Senators James Lankford (R-OK), Chris Coons (D-DE), Mike Lee (R-UT), Jeanne Shaheen (D-NH), Tim Scott (R-SC) and Amy Klobuchar (D-MN), would build on a provision in the CARES Act that allows a $300 deduction for charitable donations from taxpayers who don’t itemize their deductions. The senators’ bill would allow non-itemizers to get a charitable deduction of up to one-third of the standard deduction for the 2019 and 2020 tax years – around $4,000 for individuals and around $8,000 for married couples filing jointly.


Under the bill, taxpayers who make donations this year prior to the new tax-filing deadline of July 15 would be able to claim those deductions on their 2019 tax return. Those who have already filed taxes for 2019 would be able to amend their returns to receive the deduction.”

The broader, operational context: It is important to note that even if this legislation advances, it might face implementation difficulties because the Internal Revenue Service is short-staffed during the pandemic and struggling to meet its duties as it is. As reported by Politico Pro, “taxpayers may be in for a long wait for refunds, as an estimated 4.7 million returns were backlogged at the IRS by mid-May because of the agency’s employee evacuation for the coronavirus pandemic, according to a National Taxpayer Advocate report released Monday. […]

The holdup in processing paper returns comes amidst an unusual filing season in which the IRS delayed the tax return deadline by three months to July 15 due to the pandemic. The agency also delayed numerous other taxpayer deadlines in the process, numbering more than 300 in total, according to the report.

Among other disruptions, it also said the IRS has had trouble processing applications for business taxpayers that have filed claims for the pandemic-related tax credit they can get for keeping employees on payroll. IRS phone lines and other taxpayer assistance processes like refund corrections have also been unusually hampered this year, in which much of the agency’s focus has shifted to distributing some 160 million economic stimulus payments.”