November 10, 2005 | Read Time: 1 minute
TAX WATCH
Sen. Charles E. Grassley, chairman of the Senate Finance Committee, plans to introduce new rules aimed at curbing tax abuses involving charities — as well as several proposals to stimulate charitable giving — as part of a tax bill the committee is drafting.
An aide to Mr. Grassley said that the committee will consider adding several charity-related provisions to a bill that would extend the life of a range of tax breaks affecting individuals and businesses. Among them: a move to allow people to donate to charity money from their individual retirement accounts without incurring taxes or penalties.
Details of the nonprofit provisions were not available, but Mr. Grassley has said previously that the provisions could include:
- Stiffening the regulation of conservation easements, a legal tool used to protect private land from development.
- Prohibiting people and companies from making improper financial gains from charity-owned life-insurance policies.
- Adding restrictions on the operations of nonprofit credit-counseling organizations.
- Tightening rules on corporate tax-shelter abuses that involve charities.
- Cracking down on supporting organizations and donor-advised funds that offer overly generous benefits to donors.
The provisions to curb charity-related abuses are likely to pass, the aide predicted, because they would produce federal revenue — and help to pay for the cost of extending the life of several tax breaks.
Mr. Grassley has been leading the Finance Committee’s effort to shape a broad bill that would impose new regulations on charities. At a recent meeting of charity leaders, he said that effort, including new rules that would force charities to disclose more information about their operations, will be postponed until next year.
