An eye on the law: Recent updates and rulings

The team at the community foundation stays on top of tax cases, IRS rulings, and legislation that could impact the advice and counsel you provide your clients on matters involving charitable giving.

Here are a few current highlights and reminders we recommend you skim over and note.

Electronic filing is now required for private foundations

For tax years 2020 and beyond, all private foundations must file Form 4720 (Return of Certain Excise Taxes) electronically, beginning with returns due on or after July 15, 2021. The Internal Revenue Service will no longer accept paper returns filed by a private foundation with a due date on or after July 15, 2021. More information is available from the IRS in a special notice and on a reference list of software providers.

Charitable giving legislation introduced

Senate Bill 1981 was introduced on June 9, 2021, by Senators Angus King and Chuck Grassley. The Accelerating Charitable Efforts (ACE) Act, as it is called, aims to increase the flow of support to nonprofits’ efforts to help the communities they serve. The Act would impose new requirements and limitations on private foundations and donor-advised funds.

The professionals at the community foundation are watching this legislation closely. We encourage you to reach out to our team if you have questions or concerns about how potential changes to the law might affect the charitable planning work you do for your clients.

Conservation easements remain on the radar

If any of your clients have deployed a conservation easement as a charitable planning tool, you’ll want to keep a close eye on the law in this area. Long the subject of scrutiny, arguably due to the behavior of a few bad actors claiming aggressive deductions, conservation easements may soon be subject to the provisions of the Charitable Conservation Easement Program Integrity Act introduced in both the House and the Senate on June 24, 2021. The proposed legislation intends to prevent abuse while still encouraging the proper use of the conservation easement as a vehicle for the long-term protection of public land.

Indeed, TOT Property Holdings LLC et al. v. Commissioner, a recent Eleventh Circuit case affirming the Tax Court’s decision to disallow a deduction for a charitable gift of a conservation easement, is one of 80 cases currently being pursued by the Internal Revenue Service to challenge aggressive “syndicate” forms of conservation easements.

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