In what has become an annual tradition in recent years, a package of 55 short-term tax incentives, collectively referred to as “tax extenders,” expired at the end of the year, and Congress failed to renew them. Notably, this package includes the IRA Charitable Rollover provision, which allows individuals aged 70 ½ and older to donate up to $100,000 from their Individual Retirement Accounts (IRAs) to public charities without having to count the distributions as taxable income.
Although the tax extender provisions have now all lapsed, PPP remains hopeful the IRA Charitable Rollover will be retroactively extended at some point this year and is working to ensure that happens as early in the year as possible. A couple factors, however, are complicating such a retroactive extension. First, the price tag for the extenders continues to grow (a one-year extension of all extenders would cost more than $938 billion over ten years, according to the Congressional Budget Office), and given the current state of the budget, lawmakers are becoming increasingly hesitant to vote on tax legislation without somehow offsetting the cost, especially in an election year. Second, tax-writers in Congress have been focused on a broad overhaul of the code (see above) that would, in turn, do away with the notion of extenders and other such “ad hoc” approaches to tax policy, and therefore such a re-write of the code would likely mean that some expiring extender provisions would be reworked permanently while others would simply be allowed to sunset. Under such an overhaul, of course, there is no guarantee into which category the IRA Charitable Rollover would ultimately fall.