Gottheimer asks new Treasury Secretary Yellen to help North Jersey residents save money on their taxes by reinstating charity tax withholding
WASHINGTON, DC – US Congressman Josh Gottheimer asked US Treasury Secretary Janet Yellen to help North Jersey families tax their taxes by re-enabling taxpayers to make charitable donations to their cities for a tax credit for their local ones Receive tax bills.
Given the detrimental cap on state and local tax deduction (SALT) under the 2017 Tax Increase Act, Gottheimer was a proponent of restoring the value of the SALT deduction by providing a tax deduction for taxpayers who make charitable contributions to their state or other local governments.
Then, in June 2019, the Treasury and IRS under previous administration finalized a rule in massive regulatory excess – with no legal basis and against both legal precedents and decades of prior IRS approval – that completely restricted these charitable deductions outside the scope of the intentions of Congress regarding the tax treatment of these donations.
“We urgently need to work together to fix our tax policies and lower taxes on hardworking Americans as we continue to fight this pandemic. Given the needs in this country, we should try to encourage charitable giving as much as possible to help those who need additional help. ” Congressman Gottheimer said in a letter to US Treasury Secretary Yellen this week. “
In the last Congress, Gottheimer introduced a bipartisan joint resolution in the House of Representatives to completely repeal the Treasury Department’s massive regulatory overshoot that prohibits states like New Jersey and New York from allowing cities and towns to use charitable funds to give their communities real tax breaks Offer.
You can find a copy of the letter HERE, the text of which is given below.
January 25, 2021
Honorable Janet Yellen Honorable Charles Rettig
Secretary Commissioner
US Treasury Department Internal Revenue Service
1500 Pennsylvania Avenue NW 1111 Constitution Avenue NW
Washington, DC 20220 Washington, DC 20220
Dear Secretary Yellen and Commissioner Rettig:
Our nation’s not-for-profit charities that serve those in our community with the greatest needs are struggling now more than ever. Congress recognized this and included several tax adjustments under the Coronavirus Aid, Aid and Economic Security Act (CARES) (PL 116-136) to help them. Key changes include a new $ 300 charitable deduction available to taxpayers who use the standard withholding when filing their 2020 taxes instead of listing their deductions. Even so, there are widespread news reports [1] that charities are still struggling to cope with the ongoing COVID-19 pandemic as the ensuing economic recession has suppressed charitable giving while increasing community needs for these organizations.
To address these challenges, 33 states offer tax credits that encourage charitable giving for specific purposes. More than a hundred of these state tax credits for charity support services like maintenance in Arizona, building playgrounds in Louisiana, or developing affordable housing in Illinois. [2] Regrettably, the Internal Revenue Service rule entitled “Contributions in Exchange for State or Local Tax Credits” (RIN: 1545-BO89), which was published in the Federal Register on June 13, 2019, as final regulation, [3] unnecessarily burdens states’ ability to offer tax credits to residents who donate to these charities. If Congress had intended to remove tax benefits for donors to these long-term programs, PL115-97, the tax law enacted in December 2017, would have included language that does just that. It is for this reason that I urge you to act quickly. Roll back this disastrous rule.
It is imperative that we work together to fix our tax policies and lower taxes on hard-working Americans as we continue to fight this pandemic. Given the needs in this country, we should try to encourage charitable giving as much as possible to help those who need additional help. I look forward to your responses on this important topic.
With best regards,
Josh Gottheimer
MEMBER OF THE CONGRESS
[1] https://www.wsj.com/articles/while-covid-19-donations-soar-other-charities-see-a-big-hit-to-funds-11596913200
[2] Bankman, Joseph and Gamage, David and Goldin, Jacob and Hemel, Daniel Jacob and Shanske, Darien and Stark, Kirk J. and Ventry, Dennis J. and Viswanathan, Manoj. “Federal income tax treatment of charitable donations that qualify the donor for a state tax credit.” UCLA School of Law, Law-Econ Research Paper No. 18-02; UC Hastings Research Paper No. 264.
[3] 84 Fed. Reg. 27513
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