Read the Proposed Everyday Philanthropist Act

Everyday Philanthropist Act Proposed Text

To implement the creation of a Flexible Giving Account (FGA), Congress should amend the regulations governing fringe benefit plans, which already authorize another employee benefit—transportation. The following language we would implement is based on the statute/regulation similar to Section 132 and could easily be adopted by Congress/Treasury and applied to a FGA.

     26 U.S. Code §132 – Certain fringe benefits

  1. Exclusion from gross income. Gross income shall not include any fringe benefit which qualifies as a—
     
    1. no-additional-cost service,
    2. qualified employee discount,
    3. working condition fringe,
    4. de minimis fringe,
    5. qualified transportation fringe,
    6. qualified moving expense reimbursement,
    7. qualified retirement planning services,
    8. qualified military base realignment and closure fringe, or
    9. flexible giving account

 

  1. Flexible Giving Account
    1. In General
      1. In order for a charitable contribution reimbursement to be a qualified benefit that is excludible from gross income if elected through a fringe benefits plan, the plan must satisfy §132 and the charitable contribution must satisfy §170.
      2. Section 170 provides an employee with a deduction from gross income for qualifying donations to charitable organizations.
      3. For the purposes of this section, a flexible giving account program is a separate written plan of an employer for the exclusive benefit of his/her employees to provide such employees with charitable donation assistance which meets the requirements of this subsection.
      4. The amount which may be excluded for charitable donations provided during a taxable year shall not exceed $5,000.
         
    2. Reimbursement
      1. A flexible giving account may not provide reimbursements other than for charitable donations; in particular, if an employee makes charitable contributions less than the amount specified by salary reduction, the plan may not provide other taxable or nontaxable benefits for any portion of the specified amount not used for the reimbursement of charitable donations. Thus, if an employee has elected coverage under the flexible giving account and the period of coverage has commenced, the employee must not receive amounts from the program other than as reimbursements for charitable donations. An employee may, however, designate one or more charitable organizations that are to receive funds from the account. THE GREATER GIVE FLEXIBLE GIVING ACCOUNT PROPOSED LEGISLATION
      2. In order to satisfy §170, charitable expenses may not be reimbursed before the donations are expended. For purposes of this rule, charitable donations are expended when the employee irrevocably transfers funds to a charity and not when the employee pledges or otherwise agrees to make a transfer in the future.
      3. In order for charitable donations provided through a flexible giving account to be eligible for the §170 deduction, the donations must be made on behalf of the employee during the period for which the employee is covered. If for the plan period, an employee elects a flexible giving account providing for reimbursement of charitable donations, only reimbursements for charitable donations actually made during that plan period are provided from a flexible giving account within the scope of §170. Also, for purposes of this rule, expenses incurred before the later of the program’s effective date and the date the employee is enrolled in the program are not incurred during the period when the employee is covered by the program.
         
    3. Deduction: An employee who participates in a flexible giving account shall not take a deduction under §170 for a contribution that is reimbursed from the flexible giving account. A participating employee may claim deductions under §170 for contributions that are not reimbursed via a flexible giving account, to the extent the employee otherwise qualifies for a deduction under that section.
    4. Notification of Eligible Employees: Reasonable notification of the availability and terms of the program shall be provided to all eligible employees.
    5. Statement of Expenses: Unless otherwise satisfied, the plan shall furnish to an employee, on or before January 31, a written statement showing the amounts paid or expenses incurred by the employer in providing charitable donation assistance to such employee during the previous calendar year
    6. Identifying Information: No amount paid or incurred by an employer for a flexible giving account provided to an employee shall be excluded from the gross income of such employee unless—
      1. If such person is an organization described in §501(c)(3) and exempt from tax under 501(a), the
        name and address of such entity are included on the return to which the exclusion relates.
      2. In the case of a failure to provide the information required under the preceding sentence/
        paragraph, the preceding sentence/paragraph shall not apply if it is shown that the taxpayer
        exercised due diligence in attempting to provide the information so required.
         
  2. Regulations: The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purpose of this section.