Client Alert: Delaware HB 240: Draft Legislation Regarding Charitable Deduction to Impact Delaware Nonprofits

The Delaware General Assembly is currently reviewing legislation that, if passed, will have a significant impact on all Delaware nonprofits and charitable organizations. As discussed herein, House Bill 240, related to taxes on personal income ("HB 240"), contains a provision (Section 4) to eliminate itemized deductions. This provision seeks to impact only those taxpayers who itemize their state returns, or about a third of the Delaware tax filer population. While this may have some positive effect on the state treasury, Delaware nonprofits and the communities they serve will be impacted adversely by this legislation. As such, Section 4 to HB 240 should not become law in its current form.

The elimination of the state charitable deduction in Section 4 to HB 240 will negatively impact individual charitable giving in Delaware. When comparing outcomes in other states that passed similar legislation, Section 4 to HB 240 could result in Delaware charitable organizations such as nonprofits and houses of worship collectively receiving anywhere from $30 million and $60 million less from individual donors in FY18 than FY17. Consequently, these groups will likely be forced to lean more heavily on the State in the future and reduce services to the communities and constituents they serve, offsetting any potential revenue gains since local governments will be forced to pick up the slack with their own funds and resources.

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CLIENT ALERT: IRS Proposing Regulations That Could Require Nonprofits to Collect Social Security Numbers

Delaware nonprofit organizations should be concerned that the IRS is proposing regulations that would create a new donor disclosure form for donations over $250, which may lead to requirements that charities collect their donors' social security numbers. To express your concern, comments are due to the IRS via an online submission form by December 16, 2015.

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Client Alert: Delaware HB 187: Draft Legislation Regarding Charitable Solicitation To Impact Delaware Nonprofits

The Delaware General Assembly is currently reviewing extensive legislation that, if passed, will have a significant impact on all Delaware nonprofits, including their staff, board, volunteers, and professional advisors. As discussed herein, House Bill 187, the Delaware Charitable Solicitation Act ("HB 187"), seeks to impose several new and potentially harmful state registration and reporting requirements on Delaware nonprofits and related parties, including in some cases the submission of annual audited financial statements and other registration information that greatly enhances the risk of disclosure of confidential donor information. 

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