November 27, 1997 | Read Time: 1 minute
The Internal Revenue Service, responding to complaints from fund raisers, has reconsidered its position on the timing of payouts made by many charitable remainder trusts.
In April, the I.R.S. proposed regulations that would shorten the amount of time that charitable remainder trusts have to make payments to donors or the people designated as beneficiaries. Under current rules, trusts can make such payouts for a “reasonable” time after the end of a tax year. The proposed regulations would require that the payments be made by the end of the tax year for which that payment was due.
The I.R.S. proposed the change to crack down on the use of so-called accelerated charitable remainder trusts. Those trusts allow donors to dispose of large amounts of assets while escaping big capital-gains tax bills and giving little to charity.
To work, accelerated trusts need to make payouts after the end of a tax year. But planned-giving officials told the government that many trusts have legitimate reasons to need extra time to make their payments and would be unfairly penalized by a rule change.
In response, the I.R.S. has announced (Notice 97-68, Internal Revenue Bulletin 97-48) that its final rules will not require certain kinds of charitable remainder trusts to make their payments in 1997. But the I.R.S. has not decided on its policy for subsequent years.
