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Tax law mastermen: Will states' SALT cap workarounds stand up in court?
| laughsome fanboi | 05/23/18 |
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Date: May 23rd, 2018 9:25 PM Author: laughsome fanboi “State tax credits for charitable contributions to qualifying organizations in a state have historically been respected as charitable contributions in federal law, and indeed the I.R.S. once issued a memorandum to that general effect,” said Itai Grinberg, a tax professor at Georgetown University’s law school.
The prospect of the I.R.S. determining that a contribution to a private or religious school would be deductible, but a contribution to a charitable fund established by a public school district or by the public school district’s parents’ association would not be deductible “just seems both hard to maintain on its face and politically difficult to reach,” Mr. Grinberg said.
Carl Davis, the research director for the Institute on Taxation and Economic Policy in Washington, said that Alabama provides a 100 percent state tax credit for taxpayers who donate money to organizations that give children vouchers to attend private school. Under its new law, New York gives an 85 percent state tax credit to residents who donate to a state fund that supports education.
Treating Alabama taxpayers as compliant with I.R.S. law but New Yorkers as not would be largely indefensible, he said.
Daniel Rosen, a partner at the law firm Baker McKenzie, said that the I.R.S. is likely to face litigation to block its efforts.
“This notice was issued with the intention of dissuading taxpayers from making donations to state charitable contribution funds,” Mr. Rosen, who is a former lawyer for the I.R.S., said. “I would anticipate challenges to this notice fairly quickly.” |