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PRESS RELEASE: New York Local Governments and School Districts Join Together to Challenge IRS on Treatment of Contributions to Charitable Funds
The Coalition for the Charitable Contribution Deduction (3CD) Submits Letter to the IRS Airing Concerns on Behalf of Counties, Municipalities, School Districts, and Taxpayers
NEW YORK, NY – A newly-formed coalition of counties, cities, towns, villages, and school districts in the State of New York, along with state and countywide professional and advocacy organizations, filed a letter with the Treasury Department and the Internal Revenue Service requesting withdrawal of the proposed regulations issued on August 23 that, if finalized, would deny a full charitable deduction for donations to the charitable funds authorized by a number of red and blue states.
The letter, prepared on behalf of the Coalition for the Charitable Contribution Deduction (3CD) by the globally recognized law firm Baker & McKenzie, takes aim at the arbitrary legal reasoning and abandonment of past IRS precedent that underpins the proposed regulations. In laying out their analysis and argument as part of the public comment period, the group hopes to persuade the Treasury Department and the IRS to withdraw the regulations and preserve full deductibility for voluntary contributions made by individuals to charitable funds established by counties, municipalities, and school districts in a number of states.
“The denial of charitable deductions for donations to charitable reserve funds disproportionately hits communities like mine,” said Assemblymember Amy R. Paulin, who took the lead role in coordinating the coalition and whose district includes the Village of Scarsdale, where both the municipal government and school district acted to establish charitable funds prior to the IRS proposing new regulations. “Charitable reserve funds serving a public mission and encouraged by tax credits have proven to be a critical tool for taxpayers and local governments alike. But these proposed regulations break IRS precedent and undermine the effectiveness of the new charitable funds established as well as the over 70 existing funds—in red states and blue states alike. Given the arbitrary and capricious distinctions being drawn, and the potential for real harm for taxpayers across the country struggling to remain in the communities they fell in love with and to send their children to the same nurturing, high-quality schools, we felt we needed to speak out.”
“This letter reminds the IRS that they do not have the authority from Congress to upend longstanding principles of tax law and, in the process, harm so many New Yorkers and the local governments and school districts that serve them,” said Assemblyman David Buchwald, one of the lead sponsors for the original legislation to authorize charitable reserve funds under New York State law. “When businesses organize their finances to take advantage of eligible deductions, we call it a sound business practice. Families and homeowners should not be treated differently. United with representatives of all levels of government, we are acting to protect New Yorkers from the prospect of serious harm stemming from arbitrary decisions made in Washington.”
“It is patently unfair for the federal government to place a ‘tax target’ on the backs of the citizens of New York State, whether by law or by regulations that depart from precedent and make arbitrary distinctions,” said Nassau County Executive Laura Curran. “Limiting their charitable tax deductions is just another way of increasing their taxes. Nassau County taxpayers already pay more than their fair share of federal taxes, and I am determined to fight on their behalf against any attempt to make them pay even more.”
“A significant number of Suffolk County residents would be negatively and unfairly impacted by these proposed regulations from Washington,” said Suffolk County Executive Steven Bellone. “It is imperative that we come together with other local governments across New York to fight these regulations that would effectively raise taxes on working and middle class suburban homeowners.”
“New proposed regulations issued by the IRS to limit charitable deductions for publicly established charitable funds are hitting Westchester taxpayers already struggling with the new cap for state and local tax (SALT) deductions,” said Westchester County Executive George Latimer. “While the Federal Government claims only 5% of the nation will be impacted by the new limits on charitable deductions, we know here in Westchester that is not the case. These regulations will hurt our County’s working families, our property values and our way of life. I am calling on the Treasury Department and the IRS to rescind their proposed regulations. This is the right thing to do for New Yorkers and Americans.”
3CD is comprised of Nassau, Suffolk, and Westchester Counties, 17 municipalities, 17 school districts, the Association of Towns of the State of New York, the Lower Hudson Education Coalition, the New York Conference of Mayors, the New York State Association of Counties, the New York State Council of School Superintendents, the New York State School Boards Association, the Association of School Business Officials of New York, and the Westchester Putnam School Boards Association. 3CD’s members each serve a significant number of residents whose individual financial circumstances will cause them to be adversely affected by the proposed regulations. 3CD estimates that hundreds of thousands of taxpayers served by the local governments involved will be affected if the proposed regulations are finalized in their current form.
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