Tax law is changing; here’s how

By Josh Dukelow, gift planning officer

Potential tax reform has seemed ever-present on the federal legislative agenda for the last few years. There are signs, though, that we may be getting clarity soon.

First, SECURE 2.0 could pass through Congress by the end of the year. Philanthropic individuals and families and their advisors continue to watch the status of SECURE 2.0 because of the enhancements it proposes to the rules for Qualified Charitable Distributions.

Second, a scaled-back version of the reconciliation package has passed (after swapping the “Build Back Better” branding for the timely “Inflation Reduction Act”). While it includes a few tax provisions, the proposed legislation is far less sweeping than reforms proposed in earlier versions. In brief, it creates a 15% minimum tax for certain corporations with a three-year average of more than $1 billion in financial statement income, and imposes a 1% tax on stock buybacks. A change to taxation for carried interest was removed before passage.

Additional revenue is generated from $80 billion in additional funding for the Internal Revenue Service to hire agents and enhance enforcement efforts. Taxpayers and their advisors can likely expect greater scrutiny from the IRS on complex or aggressive transactions in the years ahead. Note, the bill also includes $15 million to help the IRS launch a free “direct file” tax return system.

As always, the Community Foundation for Greater Atlanta is here to help you serve your clients by setting up a tax-wise charitable fund, providing guidance regarding their charitable giving plan, discussing strategies to maximize their charitable impact, involving multiple generations in their philanthropy, and much more.

For more information, please contact Alison O’Carroll, director and philanthropic counsel, at 404.333.0421 or aocarroll@cfgreateratlanta.org.