Final Regulations Issued Concerning Charitable Deductions and Salt Cap

Published date01 September 2019
Date01 September 2019
September 2019 3
Bruce R. Hopkins’ Nonpr ofit Counsel DOI:10.10 02/n pc
successful implementation of the priorities specified by
Congress in the act; (2) prioritize taxpayer services to
ensure that all taxpayers “easily and readily” receive the
assistance they need; (3) streamline the structure of the
IRS, including minimizing duplication of services and
responsibilities within it; (4) best position the IRS to com-
bat cybersecurity and other threats to the agency; and
(5) address whether the Criminal Investigation Division
of the IRS should report directly to the IRS commissioner.
Customer Service Strategy
Within one year, Treasury is to submit to Congress a
written comprehensive customer service strategy for the
IRS. This strategy must include a plan to provide assistance
to taxpayers that is secure and designed to meet reason-
able taxpayer expectations, and adopts appropriate best
practices of customer service provided in the private sec-
tor, including online services, telephone call-back services,
and training of employees providing customer services.
This strategy must also include (1) a thorough assessment
of the services the IRS can co-locate with other federal
services or offer as self-service options and (2) proposals
to improve IRS customer service in the short term (cur-
rent and following fiscal year), medium term (three to
five fiscal years), and long term (about 10 fiscal years).
Management of Information Technology
The act created the position in the IRS of a chief
information officer, to be appointed by the IRS commis-
sioner. This CIO is to develop, implement, and maintain
information technology for the IRS. The CIO is also
required to develop and implement a multiyear strategic
plan for the information technology needs of the IRS.
Cybersecurity and Identity Protection
The Treasury Department is directed to work collab-
oratively with the public and private sectors to protect
taxpayers from identity theft tax refund fraud.
Treasury is to ensure that the Electronic Tax Admin-
istration Advisory Committee studies and makes recom-
mendations to the department regarding methods to
prevent this type of fraud.
Treasury is authorized to participate in an informa-
tion-sharing and -analysis center to centralize, stan-
dardize, and enhance data compilation and analysis to
facilitate sharing actionable data and information with
respect to this type of fraud.
Independent Office of Appeals
The act establishes within the IRS an Internal Rev-
enue Service Independent Office of Appeals. This office
will be under the supervision of a chief of appeals, who
will report directly to the IRS commissioner. The chief
must have experience and expertise in administration
of and compliance with the federal tax laws, a broad
range of compliance cases, and management of large
service organizations. The function of this office will be
to resolve federal tax controversies without litigation
on a basis that is fair and impartial to the government
and the taxpayer, promote a consistent application and
interpretation and voluntary compliance with the federal
tax laws, and enhance public confidence and efficiency
of the IRS. [2.2(a)]
Final regulations (T.D. 9873) were issued on July 19
that flesh out the law, added in 2015 (summarized in the
March 2016 issue), requiring organizations to notify the
IRS of their intent to operate as tax-exempt social welfare
entities. These regulations are not substantially differ-
ent from those issued in proposed and temporary form
(summarized in the September 2016 issue). Three sets of
comments were received on the proposals; one was with-
drawn. A public hearing was neither requested nor held.
Generally, a social welfare organization must, no later
than 60 days after its establishment, notify the IRS that it
is operating as an IRC § 501(c)(4) entity (IRC § 506). There
are additional first-year reporting requirements. This
notice is provided by means of Form 8976. [26.13]
As noted last month, the Department of the Trea-
sury, on June 11, issued final regulations governing the
availability of federal income tax charitable contribution
deductions where donors receive or expect to receive a
corresponding state or local tax credit (T.D. 9864).
Essence of Regulations
The general rule in these regulations is that if a per-
son makes a payment or transfers property to or for the
use of a charitable organization, the amount of the per-
son’s charitable contribution deduction must be reduced
by the amount of any state or local tax credit that the
person receives or expects to receive in consideration for
the payment or transfer (Reg. § 1.170A-1(h)(3)(i)).
This rule does not apply to any payment or transfer
of property where the amount of state and local tax
credits received or expected to be received is no more
than 15 percent of the payment or value involved (Reg.
§ 1.170A-1(h)(3)(vi)).

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