Cap On Charitable Deduction will Hurt SVDP
The “$500 cap on tax deductions for donations of clothing and household goods is arbitrary and unfair” and threatens the 350+ charitable thrift shops the Society of St. Vincent de Paul operates in the United States to help fund soup kitchens, social services, food pantries and emergency shelters etc.
Thanks for your help in distributing this call to action and for making your individual call to the Capitol Hill switchboard (202) 224-3121. Senator Schumer (D) NY is on the Senate Finance Committee.
From Roger Playwin, Executive Director SVDP USA
Society of St. Vincent de Paul Talking Points
Issue
∑ On February 27, 2005, the Joint Committee on Taxation released a report entitled Options to Improve Tax Compliance and Reform Tax Expenditures. The 500-page report includes recommendations for both for-profit and nonprofit organizations on closing the so-called tax compliance gap.
∑ In particular, the report recommends that the deduction for clothing and household goods be limited to $500 per year — regardless of tax status. Goodwill Industries International, Inc., along with Volunteers of America, Salvation Army, and St. Vincent de Paul, oppose this proposal.
∑ The Joint Committee on Taxation assumes revenue savings of $1.9 billion over a 10-year period if this proposal were enacted. We believe the potential cost to the taxpayer and the government would be higher than the $190 million annually in lost revenue to charities and a decline in the services they provide.
Society of St. Vincent de Paul in [your state]
∑ Last year, Society of St. Vincent de Paul entities in [your state] employed [ # ] individuals and served [# ] individuals – many of whom are disabled.
∑ Retail revenues from Society of St. Vincent de Paul Thrift Stores in [your state] help to fund out vital mission. The entire state of [your state] is served by Society of St. Vincent de Paul.
Overview
∑ Society of St. Vincent de Paul collectively served more than _______ individuals last year, and helped nearly _______ individuals find competitive employment.
∑ Society of St. Vincent de Paul provided jobs to over _______ individuals, paid wages and salaries to its employees in excess of ___________. _________ percent of the revenues for Society of St. Vincent de Paul entities comes from the _________ retail stores operated by Society of St. Vincent de Paul.
∑ The recommendations from the Joint Committee on Taxation are based, at best, on anecdotal information. The report assumes that individuals substantially overvalue their donated clothing and household goods; we do not support the notion that all taxpayers are abusing the system.
∑ Currently, if the total charitable deduction claimed for non-cash property exceeds $500, the taxpayer must filed Form 8283 (Non-Cash Charitable Contributions) with the Internal Revenue Service (IRS). The system places the responsibility on the taxpayer to value these items correctly, as it should.
∑ Fair market value is a valuation we have used for years, and a deviation from this standard is problematic. The tools for compliance with respect to this section of the tax code are already in place. IRS publication 526 provides guidance on determining the fair market value of clothes and household goods; however, the publication could provide more detailed instructions.
∑ The proposal to cap donations of clothing and household goods to $500 per year is both an arbitrary and unfair cap. The proposal would unfairly penalize charities. Cases of overvaluation should be dealt with appropriately through audits and other measures and not through proposals that would seriously discourage giving.
Recommendation
∑ We urge that if legislation that is introduced on nonprofit governance or tax policy the proposal from the Joint Committee on Taxation to limit the deductions for clothing and household goods to $500 not be included.
∑ This proposal, if enacted, would possibly mean the loss of jobs to individuals who often have difficulty find work.
∑ The revenues derived from these donations support other significant services of the Society of St. Vincent de Paul, i.e. food and meal distribution; job training; prison ministries; help with utility payment; monetary costs, medical emergencies, burial costs, etc.
N.R. (The source for state and local statistics is the 2003 Society of St. Vincent de Paul Annual report, which you already have.)
April 28, 2005 – Society of St. Vincent de Paul
Tags: Advocacy