[House Report 113-495]
[From the U.S. Government Publishing Office]


113th Congress  }                                            {   Report
  2d Session    }        HOUSE OF REPRESENTATIVES            {  113-495

=======================================================================
 
                    CHARITABLE GIVING EXTENSION ACT 

                                _______
                                

 June 26, 2014.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Camp, from the Committee on Ways and Means, submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 3134]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 3134) to amend the Internal Revenue Code of 1986 to 
allow charitable contributions made by an individual after the 
close of the taxable year, but before the tax return due date, 
to be treated as made in such taxable year, having considered 
the same, report favorably thereon with an amendment and 
recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. SUMMARY AND BACKGROUND...........................................2
          A. Purpose and Summary.................................     2
          B. Background and Need for Legislation.................     2
          C. Legislative History.................................     3
 II. EXPLANATION OF THE BILL..........................................3
          A. Extension of Time for Making Charitable 
              Contributions (sec. 170 of the Code)...............     3
III. VOTES OF THE COMMITTEE...........................................4
 IV. BUDGET EFFECTS OF THE BILL.......................................5
          A. Committee Estimate of Budgetary Effects.............     5
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures Budget Authority......................     5
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................     5
          D. Macroeconomic Impact Analysis.......................     6
  V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.......6
          A. Committee Oversight Findings and Recommendations....     6
          B. Statement of General Performance Goals and 
              Objectives.........................................     7
          C. Information Relating to Unfunded Mandates...........     7
          D. Applicability of House Rule XXI 5(b)................     7
          E. Tax Complexity Analysis.............................     7
          F. Congressional Earmarks, Limited Tax Benefits, and 
              Limited Tariff Benefits............................     7
          G. Duplication of Federal Programs.....................     8
          H. Disclosure of Directed Rule Makings.................     8
 VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED............8
VII. DISSENTING VIEWS................................................10

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Charitable Giving Extension Act''.

SEC. 2. EXTENSION OF TIME FOR MAKING CHARITABLE CONTRIBUTIONS.

  (a) In General.--Subsection (a) of section 170 of the Internal 
Revenue Code of 1986 is amended by redesignating paragraphs (2) and (3) 
as paragraphs (3) and (4), respectively, and by inserting after 
paragraph (1) the following new paragraph:
          ``(2) Treatment of charitable contributions made by 
        individuals before due date of return.--If any charitable 
        contribution is made by an individual after the close of a 
        taxable year but not later than the due date (determined 
        without regard to extensions) for the return of tax for such 
        taxable year, then the taxpayer may elect to treat such 
        charitable contribution as made in such taxable year. Such 
        election shall be made at such time and in such manner as the 
        Secretary may provide.''.
  (b) Effective Date.--The amendments made by this section shall apply 
to elections made with respect to taxable years beginning after 
December 31, 2013.

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    Similar to a provision contained in the discussion draft of 
the ``Tax Reform Act of 2014'' released on February 26, 2014, 
the bill, H.R. 3134, reported by the Committee on Ways and 
Means, provides that individual taxpayers may deduct charitable 
contributions made after the close of the taxable year but 
before the due date of the return (April 15 for most 
individuals) for the taxable year covered by the return.

                 B. Background and Need for Legislation

    While the Committee continues actively to pursue 
comprehensive tax reform as a critical means of promoting 
economic growth and job creation, the Committee also believes 
that it is important to provide individuals and small 
businesses permanent, immediate tax relief to encourage faster 
economic growth and job creation, while fostering charitable 
giving. Enabling individuals to take charitable deductions in a 
particular taxable year through the due date for that return 
(April 15 of the following year for individual taxpayers) is 
expected to increase charitable giving because many individuals 
will decide to give more generously at the time they are 
actually preparing and finalizing their returns. According to 
testimony received by the Committee, allowing donors to deduct 
gifts until the filing of a tax return, or April 15, would 
result in significantly more charitable giving than the cost of 
the bill--each dollar of additional giving would only cost 
approximately 20 cents to 40 cents in tax revenues. H.R. 3134, 
which is similar to a provision contained in the February 26, 
2014, discussion draft of the ``Tax Reform Act of 2014,'' would 
expand and simplify the tax rules governing deductible 
contributions and encourage individual charitable giving that 
supports the myriad tax-exempt organizations assisting 
individuals in need, local communities, and the nation overall.

                         C. Legislative History


Background

    H.R. 3134 was introduced on September 19, 2013, and was 
referred to the Committee on Ways and Means.

Committee action

    The Committee on Ways and Means marked up H.R. 3134, the 
Charitable Giving Extension Act, on May 29, 2014, and ordered 
the bill, as amended, favorably reported (with a quorum being 
present).

Committee hearings

    The need for permanent rules to allow charitable 
contributions made by an individual after the close of the 
taxable year, but before the tax return due date, to be treated 
as made in such taxable year was discussed at a full Committee 
hearing on Tax Reform and Charitable Contributions (February 
14, 2013).

                      II. EXPLANATION OF THE BILL


 A. Extension of Time for Making Charitable Contributions (sec. 170 of 
                               the Code)


                              PRESENT LAW

    The Internal Revenue Code allows taxpayers an income tax 
deduction for contributions to certain organizations, including 
charities, Federal, State, local and Indian tribal governments, 
and certain other organizations.
    To be deductible, a charitable contribution generally must 
meet several requirements. First, the recipient of the transfer 
must be eligible to receive charitable contributions (i.e., an 
organization or entity described in section 170(c)). Second, 
the transfer must be made with gratuitous intent and without 
the expectation of a benefit of substantial economic value in 
return. Third, the transfer must be complete and generally must 
be a transfer of a donor's entire interest in the contributed 
property (i.e., not a contingent or partial interest 
contribution). To qualify for a current year charitable 
deduction, payment of the contribution must be made within the 
taxable year.1 Fourth, the transfer must be of money or 
property--contributions of services are not deductible.2 
Finally, the transfer must be substantiated and in the proper 
form.
---------------------------------------------------------------------------
    1Sec. 170(a)(1).
    2For example, the value of time spent volunteering for a charitable 
organization is not deductible. Incidental expenses such as mileage, 
supplies, or other expenses incurred while volunteering for a 
charitable organization, however, may be deductible.
---------------------------------------------------------------------------
    A charitable deduction generally is claimed on the tax 
return that is filed for the year in which the contribution is 
made. The return generally is due by April 15 of the following 
year, with certain extensions being allowed.

                           REASONS FOR CHANGE

    Enabling individuals to take charitable deductions in a 
particular tax year through the due date for that return 
(typically April 15 of the following year) is expected to 
increase charitable giving, because many taxpayers will decide 
to give more generously at the time they are preparing and 
finalizing their returns. Therefore, the Committee believes it 
is appropriate to allow taxpayers to make charitable 
contributions for a year after the close of the year but before 
the due date for the return for the year (determined without 
regard to extensions).

                        EXPLANATION OF PROVISION

    The provision permits individuals to elect to deduct for a 
taxable year charitable contributions made after the close of 
that taxable year but not later than the due date (determined 
without regard to extensions) for the individual's income tax 
return for that taxable year. Charitable contributions for 
which an election has been made may not be claimed as a 
deduction in any other taxable year. The election must be made 
at such time and in such manner as the Secretary provides. For 
example, if a calendar year individual makes a charitable 
contribution on February 15, 2015, the individual may elect to 
treat the contribution as having been made during 2014. The 
election must be made at the time of the filing of the 2014 
income tax return in the manner prescribed by the Secretary.

                             EFFECTIVE DATE

    The provision applies to elections made with respect to 
taxable years beginning after December 31, 2013.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the vote of the Committee on Ways and Means in its 
consideration of H.R. 3134, the Charitable Giving Extension 
Act, on May 29, 2014.
    The bill, H.R. 3134, was ordered favorably reported as 
amended by a roll call vote of 23 yeas to 12 nays (with a 
quorum being present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Camp.......................        X   ........  .........  Mr. Levin........  ........        X   .........
Mr. Johnson....................        X   ........  .........  Mr. Rangel.......  ........  ........  .........
Mr. Brady......................        X   ........  .........  Mr. McDermott....  ........        X   .........
Mr. Ryan.......................        X   ........  .........  Mr. Lewis........  ........  ........  .........
Mr. Nunes......................        X   ........  .........  Mr. Neal.........  ........  ........  .........
Mr. Tiberi.....................        X   ........  .........  Mr. Becerra......  ........        X   .........
Mr. Reichert...................        X   ........  .........  Mr. Doggett......  ........        X   .........
Mr. Boustany...................        X   ........  .........  Mr. Thompson.....  ........        X   .........
Mr. Roskam.....................        X   ........  .........  Mr. Larson.......  ........        X   .........
Mr. Gerlach....................        X   ........  .........  Mr. Blumenauer...  ........        X   .........
Mr. Price......................        X   ........  .........  Mr. Kind.........  ........        X   .........
Mr. Buchanan...................        X   ........  .........  Mr. Pascrell.....  ........        X   .........
Mr. Smith......................        X   ........  .........  Mr. Crowley......  ........  ........  .........
Mr. Schock.....................        X   ........  .........  Ms. Schwartz.....  ........        X   .........
Ms. Jenkins....................        X   ........  .........  Mr. Davis........  ........        X   .........
Mr. Paulsen....................        X   ........  .........  Ms. Sanchez......  ........        X   .........
Mr. Marchant...................        X   ........  .........  .................
Ms. Black......................        X   ........  .........  .................
Mr. Reed.......................        X   ........  .........  .................
Mr. Young......................        X   ........  .........  .................
Mr. Kelly......................        X   ........  .........  .................
Mr. Griffin....................        X   ........  .........  .................
Mr. Renacci....................        X   ........  .........  .................
----------------------------------------------------------------------------------------------------------------

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the effects on the budget of the bill, H.R. 3134, as 
reported.
    The bill, as reported, is estimated to have the following 
effect on Federal budget receipts for fiscal years 2014-2024:

                                                  FISCAL YEARS
                                              [Millions of Dollars]
----------------------------------------------------------------------------------------------------------------
  2014      2015     2016    2017    2018    2019    2020    2021    2022    2023    2024    2014-19    2014-24
----------------------------------------------------------------------------------------------------------------
- - -       -2,195     -52     -80     -72     -71     -72     -70     -62     -76     -72     -2,470     -2,822
----------------------------------------------------------------------------------------------------------------

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new or increased budget authority. The 
Committee further states that the revenue-reducing tax 
provisions involve increased tax expenditures. (See amounts in 
table in Part IV.A., above.)

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the CBO, the following statement by CBO is 
provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, June 5, 2014.
Hon. Dave Camp,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman:The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3134, the 
Charitable Giving Extension Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Logan 
Timmerhoff.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 3134--Charitable Giving Extension Act

    H.R. 3134 would amend the Internal Revenue Code to permit 
individuals to deduct for a taxable year charitable 
contributions made after the close of that taxable year but 
generally not later than the subsequent April 15, the due date 
(determined without regard to extensions) for the individual's 
income tax return for that taxable year. Under current law, a 
charitable deduction is generally claimed on the tax return for 
the year in which the contribution is made. Under H.R. 3134, if 
taxpayers elected to take such deductions for the taxable year 
before the contribution was made, they could not then deduct 
the same amounts again in the later year.
    The staff of the Joint Committee on Taxation (JCT) 
estimates that enacting H.R. 3134 would reduce revenues, thus 
increasing federal budget deficits, by about $2.8 billion over 
the 2014-2024 period.
    The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting 
direct spending and revenues. Enacting H.R. 3134 would result 
in revenue losses in each year beginning in 2015. The estimated 
increases in the deficit are shown in the following table.
    JCT has determined that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandates Reform Act.
    The CBO staff contact for this estimate is Logan 
Timmerhoff. The estimate was approved by David Weiner, 
Assistant Director for Tax Analysis.

            CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 3134, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON MAY 29, 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   by fiscal year, in millions of dollars--
                                                    ----------------------------------------------------------------------------------------------------
                                                      2014    2015    2016   2017   2018   2019   2020   2021   2022   2023   2024  2014-2019  2014-2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               NET INCREASE IN THE DEFICITStatutory Pay-As-You-Go Effects....................      0    2,195     52     80     72     71     72     70     62     76     72     2,470      2,822
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Staff of the Joint Committee on Taxation.

                    D. Macroeconomic Impact Analysis

    In compliance with clause 3(h)(2) of rule XIII of the Rules 
of the House of Representatives, the following statement is 
made by the Joint Committee on Taxation with respect to the 
provisions of the bill amending the Internal Revenue Code of 
1986: the effects of the bill on economic activity are so small 
as to be incalculable within the context of a model of the 
aggregate economy.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee advises that it was as a result of the 
Committee's review of the provisions of H.R. 3134 that the 
Committee concluded that it is appropriate to report the bill, 
as amended, favorably to the House of Representatives with the 
recommendation that the bill do pass.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                D. Applicability of House Rule XXI 5(b)

    Rule XXI 5(b) of the Rules of the House of Representatives 
provides, in part, that ``A bill or joint resolution, 
amendment, or conference report carrying a Federal income tax 
rate increase may not be considered as passed or agreed to 
unless so determined by a vote of not less than three-fifths of 
the Members voting, a quorum being present.'' The Committee has 
carefully reviewed the bill, and states that the bill does not 
involve any Federal income tax rate increases within the 
meaning of the rule.

                       E. Tax Complexity Analysis

    Section 4022(b) of the Internal Revenue Service 
Restructuring and Reform Act of 1998 (the ``IRS Reform Act'') 
requires the staff of the Joint Committee on Taxation (in 
consultation with the Internal Revenue Service and the Treasury 
Department) to provide a tax complexity analysis. The 
complexity analysis is required for all legislation reported by 
the Senate Committee on Finance, the House Committee on Ways 
and Means, or any committee of conference if the legislation 
includes a provision that directly or indirectly amends the 
Internal Revenue Code and has widespread applicability to 
individuals or small businesses.
    Pursuant to clause 3(h)(1) of rule XIII of the Rules of the 
House of Representatives, the staff of the Joint Committee on 
Taxation has determined that a complexity analysis is not 
required under section 4022(b) of the IRS Reform Act because 
the bill contains no provisions that amend the Code and that 
have ``widespread applicability'' to individuals or small 
businesses, within the meaning of the rule.

  F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill, and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                   G. Duplication of Federal Programs

    In compliance with Sec. 3(j)(2) of H. Res. 5 (113th 
Congress), the Committee states that no provision of the bill 
establishes or reauthorizes: (1) a program of the Federal 
Government known to be duplicative of another Federal program, 
(2) a program included in any report from the Government 
Accountability Office to Congress pursuant to section 21 of 
Public Law 111-139, or (3) a program related to a program 
identified in the most recent Catalog of Federal Domestic 
Assistance, published pursuant to the Federal Program 
Information Act (Public Law 95-220, as amended by Public Law 
98-169).

                 H. Disclosure of Directed Rule Makings

    In compliance with Sec. 3(k) of H. Res. 5 (113th Congress), 
the following statement is made concerning directed rule 
makings: The Committee estimates that the bill requires no 
directed rule makings within the meaning of such section.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

            SECTION 170 OF THE INTERNAL REVENUE CODE OF 1986


SEC. 170. CHARITABLE, ETC., CONTRIBUTIONS AND GIFTS.

  (a) Allowance of Deduction.--
          (1) * * *
          (2) Treatment of charitable contributions made by 
        individuals before due date of return.--If any 
        charitable contribution is made by an individual after 
        the close of a taxable year but not later than the due 
        date (determined without regard to extensions) for the 
        return of tax for such taxable year, then the taxpayer 
        may elect to treat such charitable contribution as made 
        in such taxable year. Such election shall be made at 
        such time and in such manner as the Secretary may 
        provide.
          [(2)] (3) Corporations on accrual basis.--In the case 
        of a corporation reporting its taxable income on the 
        accrual basis, if--
                  (A) * * *

           *       *       *       *       *       *       *

          [(3)] (4) Future interests in tangible personal 
        property.--For purposes of this section, payment of a 
        charitable contribution which consists of a future 
        interest in tangible personal property shall be treated 
        as made only when all intervening interests in, and 
        rights to the actual possession or enjoyment of, the 
        property have expired or are held by persons other than 
        the taxpayer or those standing in a relationship to the 
        taxpayer described in section 267(b) or 707(b). For 
        purposes of the preceding sentence, a fixture which is 
        intended to be severed from the real property shall be 
        treated as tangible personal property.

           *       *       *       *       *       *       *


                         VII. DISSENTING VIEWS

    The six bills approved by the Republicans at the markup 
would add $304 billion to the deficit. Combined with the $310 
billion that the six bills approved by Republicans on the 
Committee in April added to the deficit, Republicans have added 
$614 billion to the deficit in two short months--and there does 
not appear to be an end in sight. Even though some of these 
bills were introduced individually with some bipartisan 
support, the opposition to these bills was based on the 
position that these tax provisions should not be made permanent 
by adding to the deficit without any revenue offset.
    To put the combined cost ($614 billion) into context, it is 
25 percent more than the entire projected federal deficit this 
year and $86 billion more than total non-defense domestic 
discretionary spending (e.g., medical research, education, 
veterans' pensions and health care, transportation, etc.) will 
be in 2014. It is almost seven times what we spend annually on 
education, job training, and social services. It is ten times 
more than we spend on veterans. And, it is eleven times more 
than we spend on medical research and public health.
    More specifically, we opposed H.R. 3134 because it would 
add administrative hurdles to an already burdened tax filing 
system. One such administrative challenge relates to keeping 
accurate records of when a taxpayer has claimed a deduction 
with respect to a charitable contribution made between January 
1 and April 15. For example, a calendar year taxpayer making a 
charitable contribution on March 1, 2015 could claim a 
deduction with respect to that contribution on the 2014 return 
or on the 2015 return. And it is entirely possible that the 
taxpayer could inadvertently claim a deduction twice with 
respect to the same charitable contribution made during that 
``extended'' time period. Further, there is no concrete 
evidence that taxpayers are more likely to donate to charities 
because of the proposed time extension (or less likely to 
donate absent such time extension) for tax deduction purposes.
    We also opposed H.R. 3134 because this bill was not the 
subject of a hearing by the Committee to debate the merits of 
this specific policy. This bill would introduce a new tax 
policy and should have been the subject of debate and 
consideration in the Committee before being brought to a vote.
    The consideration of this bill should be part of 
comprehensive tax reform. It should not take priority over 
other reforms for the charitable sector.
            Sincerely,
                                           Sander M. Levin,
                                                    Ranking Member.

                                  
