Washington, D.C. (February 5, 2024) The American Institute of CPAs (AICPA) submitted a letter to the Department of Treasury and the Internal Revenue Service (IRS) last week asking both agencies to consider several important recommendations before finalizing the regulations that deal with Donor Advised Funds (DAF).
Notably, the AICPA is asking Treasury and the IRS to postpone the effective date of the final regulations to give taxpayers more time to adapt and comply with the new rules. The AICPA has also requested that Treasury and the IRS clarify definitions of certain key terms and to ensure that the final regulations, when issued, are fair and reasonable for donors and Donor Advisor Fund sponsors.
AICPA’s recommendations include the following:
Effective date of final regulations should be postponed
Certain advisory rights connected with a restricted gift should not create a DAF
A fund established at a single charity (for the sole benefit of that organization) over which a donor has advisory privileges with respect to use and/or investment of funds should not be considered a DAF
Investment advisors (including personal investment advisors) should be explicitly excluded from the definition of donor-advisor
Definition of significant contributor should follow Section 507(d)(2)(A) and Section 507 (d)(2)(C)
Extend exception from the definition of a DAF provided for scholarship funds of section 501(c)(4) organizations to section 501(c)(5) and section 501(c)(6) organizations
Modify expenditure responsibility rules and provide additional guidance
“Sponsors of, and donors to, Donor Advised Funds need clear and consistent rules from the IRS to ensure that this multi-billion-dollar branch of philanthropy, which has received little IRS guidance in the past, remains viable and effective in the charitable sector,” says Christopher Anderson, Chair, AICPA Exempt Organizations Tax Technical Resource Panel. “Our recommendations would help donors, sponsors of Donor Advised Funds, charitable organizations that are recipients of Donor Advised Fund grants, and tax professionals who assist tax-exempt organizations.”
About the American Institute of CPAs
The American Institute of CPAs® (AICPA®) is the world’s largest member association representing the CPA profession, with more than 415,000 members in the United States and worldwide, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. AICPA sets ethical standards for its members and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives continuing education to advance the vitality, relevance and quality of the profession.
Contact: Veronica L. Vera
202-434-9215
Veronica.Vera@aicpa-cima.com
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