New Tax Law Encourages Immediate Relief to Haiti
President Obama has signed into law the Haiti Assistance Income Tax Act. The new law accelerates the tax benefit of charitable contributions made to assist Haiti in recovering from the recent earthquake. The bill provides that contributions
- of cash,
- made after January 11 and before March 1, 2010,
- made “for the relief of victims in areas affected by the earthquake in Haiti,” and
- eligible for deduction under the standard rules for the deduction of charitable contributions
will be deductible in 2009, rather than 2010. The legislation also specifies that taxpayers may substantiate gifts made via cell phone by producing a copy of their telephone bills, as long as the name of the charitable recipient is specified.
The legislation accelerates the tax benefit, but does not change the normal rules for deductibility. It is thus important to remember that individuals may not deduct contributions made directly to foreign charitable organizations. To determine whether you may deduct a payment to a particular organization, you may consult IRS Publication 78: http://www.irs.gov/charities/article/0,,id=96136,00.html
The I.R.S. has designated the earthquake in Haiti a “qualified disaster” for purposes of section 139 of the Internal Revenue Code. The designation allows certain employer-sponsored private foundation to make otherwise restricted grants, and allows individuals taxable in the U.S. and receiving certain recovery aid in Haiti to exclude the assistance from their taxable income.
Other legislation relating to the taxation of donations to Haiti is possible. For instance, Senators Schumer and Gillibrand have introduced legislation which would lift the “50% of adjusted gross income” limitation on the amount of charitable deductions which may be taken in a given year; the legislation would also allow corporations making donations of food to deduct the market value of the contributed food.
Questions regarding this advisory should be addressed to Dan Pittman (212-238-8854, firstname.lastname@example.org) or Howard J. Barnet (212-238-8606, email@example.com).
Carter Ledyard & Milburn LLP uses Client Advisories to inform clients and other interested parties of noteworthy issues, decisions and legislation which may affect them or their businesses. A Client Advisory does not constitute legal advice or an opinion. This document was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.
© 2018 Carter Ledyard & Milburn LLP.
© Copyright 2010