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Senators Lankford, Coons Re-introduce LIFT for Charities Act

WASHINGTON, DC – Senators James Lankford (R-OK) and Chris Coons (D-DE) today re-introduced bipartisan legislation to protect churches, charities, and other nonprofit organizations from a provision in the tax law that would tax some employee benefits for the first time. The Lessening Impediments from Taxes (LIFT) for Charities Act, would repeal a section of the tax code that requires some tax-exempt organizations to pay federal taxes on employee benefits, like parking, meals, or transportation benefits. Rep. Mark Walker (R-NC) plans to introduce the House companion legislation next week.

“Tax reform was designed to help simplify the tax code and reduce burdens on small businesses, not add burdens on nonprofits,” said Lankford. “Due to a provision in the tax reform bill, the law now requires some churches and some nonprofit organizations to pay new employee benefit taxes. Most nonprofits are not equipped to handle the additional compliance burden. Many, if not most, churches have never had to fill out IRS Form 990s. The legislation introduced today would eliminate this problem once and for all.” 

“As co-chairs of both the National Prayer Breakfast and the Senate Prayer Breakfast, Senator Lankford and I believe that we have a moral obligation to support our neighbors most in need, and nonprofits play an essential role in doing just that,” said Coons. “Nonprofits are organized around a cause, mission, or community need, and employees of nonprofits often have the same access to parking and meals that others in the community have because the nonprofit serves the whole community. Requiring these organizations to pay a federal tax on these employee benefits, something they have never been required to do before, will cause them to not only face an increased operating cost, but also an administrative burden. I am proud to join Senator Lankford in addressing this unfair and burdensome tax, and I urge my colleagues to consider this important piece of legislation so that America’s charitable nonprofits and houses of worship are able to continue providing critical services to communities without undue burden.”

“Churches and charities serve on the frontline of our battle against the generational cycles of poverty and the traps of government dependence,” said Walker. “Washington should ensure their work in our communities is not restricted by unnecessary taxes and strenuous compliance processes. The LIFT for Charities Act will maintain that non-profits and places of worship remain uninhibited by federal burdens.”

Tim Delaney, President and CEO of the National Council of Nonprofits, the largest network of charitable nonprofits in the US, said: “Taxing tax-exempts is the very definition of an oxymoron. But worse, this tax is also illogical, unworkable, and unfair. Almost everyone in Congress acknowledges it was a mistake, an error, and this legislation shows there is bipartisan support for its repeal. Hundreds of thousands of nonprofits, houses of worship, and foundations will be forced to divert money away from their missions to make tax payments soon, unless this tax is repealed – retroactively – in the coming weeks.”

“The Council supports the reintroduction of this bill, which would eliminate the tax imposed on nonprofits, foundations and charities for offering transportation benefits to their employees. We have heard from our members, whose mission is to serve the needs of their communities, about the burdens both financially and administratively that these provisions are now causing our members and their charitable grantees and will continue if not repealed. It is our hope that this bill is acted upon quickly to provide needed relief to the sector,” said Council on Foundations Interim President and CEO Gene Cochrane in support of the LIFT for Charities Act.

“If left unaddressed, the new tax on transportation fringe benefits will divert an average of $12,000 away from each nonprofit organization’s mission, hurting the individuals and communities who need help the most,” said Daniel J. Cardinali, President and CEO of Independent Sector. “The LIFT for Charities Act is a welcome recognition that this burden is unacceptable, and we urge Congress to act on it swiftly.”

In November 2018, Lankford and Coons sent a letter to the Secretary of the Treasury, Steven Mnuchin, expressing their concerns about the challenges faced by tax-exempt organizations, such as charitable nonprofits, houses of worship, and foundations, regarding compliance with new tax liabilities.

In November 2017, Lankford and Walker also introduced the Universal Charitable Giving Act in both the Senate and House, which would create a universal charitable deduction in addition to the standard deduction for individuals and married couples that do not itemize. Additionally, Lankford serves on the Senate Finance Committee.