On June 11, the IRS published Treasury Decision 9864, which finalizes proposed regulations designed to clarify the relationship between state and local tax credits and federal tax rules for charitable contribution deductions.  

SCACPA has closely monitored the leadup to these rules and how they affect donations to South Carolina entities such as Exceptional SC and the South Carolina Research Association’s Industry Partnership Fund, and here are reactions from directors at each entity. 

Click here to read analysis by SCACPA federal tax expert E. Lynn Nichols on the Treasury Decision’s final regulations. 

Chad Connelly, Executive Director, Exceptional SC: 

We are relieved that the IRS has issued a clarification decision regarding the SALT regulation application. We have already seen an opening up of new donors, since the indecision certainly caused some CPAs and potential donors to hesitate while final reviews were completed.  

It’s a shame that tax avoidance schemes had such an affect across the nation in the 18 states with programs like Exceptional SC. These programs have long used tax credits to fund great programs that were, in a sense, already doing what tax reform intended  redirecting taxpayer dollars into efficient and effective programs that government can’t perform well.  

We’re thankful for hundreds of generous South Carolina taxpayers who would rather see their tax dollars be directed into our exceptional needs childrens program than just being dumped into the state’s coffers.  

We have met with our state’s two U.SSenators, and both have assured us they are continuing to work with decision-makers on the federal level to improve these regulations. We are committed to continuing to provide SC’s exceptional needs children with the specific educational settings that help them reach their goals. We anticipate raising the money children need and expanding the program to provide education for more children in South Carolina. 

(Click here to read Connelly’s June 4 “Letter to Business Owners” on how donations to Exceptional SC can affect your tax liability.) 

John E. Sircy, CPA, CMA, CFM, CSCADirector – Finance and Administration, South Carolina Research Authority: 

The final regulations are consistent with the regulations proposed in 2018, which is very disappointing because long-established programs like the Industry Partnership Fund are being treated the same as brand new programs that were established for the sole purpose of circumventing the Tax Cut and Jobs Act. The one positive change in the final regs deals with contributions less than the $10,000 SALT limit, which were disadvantaged under the proposed regulation and re-established in the final reg. 

The IPF remains an attractive option for companies of all stripes and a viable option for individuals, but the final regulations provided virtually no relief and did not reflect our contention that the right thing for Treasury to do was to grandfather long-standing programs under the previous regulatory rules.  

(Click here to read Sircy’s story on how the Industry Partnership Fund is an innovative way to invest in South Carolina’s economy.)