On May 23, 2018, Treasury released Notice 2018-54, stating that proposed regulations are forthcoming related to the federal income tax treatment of certain payments made by taxpayers for which a credit is received against their state and local taxes. These future regulations may affect the federal deductibility of charitable contributions under the Georgia Qualified Rural Hospital Organization Expense Tax Credit Program (RHO Tax Credit Program).
It appears that the IRS and Treasury are particularly concerned with income and property tax programs being proposed in California, Illinois, New York and other states. There appear to be meaningful and substantive differences in the RHO Tax Credit Program and some of the recently proposed programs in other states.
Some of the differences include, but are not limited to:
- RHO Tax Credit Program contributions go directly to individual hospital organizations (which are not controlled by the state) versus a state-controlled fund;
- RHO Tax Credit Program monies are administered by the recipient hospitals to meet program service needs versus fulfilling state obligations;
- RHO Tax Credit Program enactment date was prior to the federal tax reform bill; and
- Georgia’s history of utilizing state tax credit programs for strategic economic and public policy purposes.
While these distinguishing characteristics appear to allow for the RHO Tax Credit Program to continue unaffected by Notice 2018-54, the impact of the forthcoming regulations on the program is unknown at this time. It is possible future guidance could have an adverse impact on the RHO Tax Credit Program.
We are monitoring the progress of this initiative closely. As additional information and guidance is issued, we will provide updates to our clients and friends. Should you have specific questions or concerns, please reach out to your Draffin & Tucker team at the numbers below. You can also find general information and updates related to the RHO Credit Program by clicking the link to the Draffin & Tucker website.