News from Washington - Possible Changes in Artist Charitable Donations

The current tax code restricts artists who wish to donate self created works of art to charitable organizations. The current code states that artists may only deduct the cost of materials, with no allowable deduction for the true market value of the property. Not a very fair system, especially for those artists who are considered collectible and in demand. The current code actually restrains donations of art by artists, and I strongly believe our cultural heritage is in fact being negatively impacted by the current code. Perhaps help is on the way.

Sen Patrick Leahy of Vermont introduced Senate bill S.548 (click to read) on February 12, 2007 to allow artist created property to be donated at fair market value. The House has a companion bill H.R. 1524 (click to read) introduced by Rep John Lewis on March 14, 2007. The Appraisers Association of American recently sent an email to members about the legislation, urging all to contact and encourage their Senators to support the bill.

The Senate bill has 30 co-sponsors while the House bill has 104 cosponsors. Each bill has been referred to a committee, for the Senate bill it is in front of the Finance Committee and for the House bill it is in front of the Ways and Means Committee.

I called Sen Leahy's office in an attempt to get additional information, but Congress is currently on break. I was promised an update, but I am still waiting. I was of course trying to determine when and if the bill would come out of the committee and if it might be scheduled for a full vote. Checking what limited information there is on the various databases, both bills appear to be working through the committees, but no news of the actual status. According to gov track both bills are "in the first step in the legislative process. Introduced bills go first to committees that deliberate, investigate, and revise them before they go to general debate. The majority of bills never make it out of committee." Given the large number of cosponsors for each of the bills, I would hope they do in fact make progress.

I will post additional updates as I gather more information. If passed, this of course could mean additional appraisal assignments. It is a bill we all as appraisers should support.

It appears government legislation which impacts appraisers is gaining in popularity in congress. Of course we are all aware of the Pension Protection Act, and now there are possible changes to portions of that the legislation (see the blog archives, July 29th post). My belief is Congress feels it can make the charitable donation laws more equitable, so long as the proper procedures and safe guards are in place, such as qualified appraisals and appraisers.