|
Call to Order / Approval of November 11, 1999 Minutes
Sue Talbot called the meeting to order at 10:15 a.m. and asked if there were any requested revisions to the 11-11-99 minutes. Sue questioned the middle paragraph on page 2, referring to Steve Browning's comment that the tax credit is "richer" in the case of outright gifts. Sharen clarified that an outright gift may receive a credit of 50% of the amount gifted, where a gift given in the form of an annuity generally receives a much smaller credit, percentage wise. Hearing no further corrections, Mick Maierle motioned to approve the minutes; Sharen seconded the motion, which passed unanimously.
Conference Call Participation in Future Task Force Meetings
Larry Houser had previously suggested in a memo distributed by Ti that T.F. members rotate responsibility for setting up and paying for conference phonecall participation for those who cannot attend the monthly meetings. Sue was concerned about the expense, having once spent $300 arranging such a call from her home. Ti said she can initiate calls from the NWPPC, hooking up at least 6 participants by phone, and could go through the state to connect more. Ti didn't know that cost, but didn't think it amounted to a significant expense. Sharen Peters wondered whether the T.F. wants to spend its money in that way. Ti thought it would be less expensive through the state, and will follow up to find out the actual costs. Sharen will investigate through the U of M as well. Sue pointed out that something is lost in a conference call as compared to face-to-face meetings. Sharen noted that the option might be helpful in winter, when travel from Missoula or elsewhere is difficult.
Sue asked Ti to find out costs through the state, and to ask Larry what it would cost his agency. Ti will send out a questionnaire/"ballot" asking members to indicate:
1) willingness to participate in conference phonecall meetings
2) ability/willingness to pick up the cost for one such meeting
[10:20 a.m.: Sherry Stevens Wulf joins in by phone.]
Sherry noted that the United Way uses Vialog Communications, where all call into a "chat room" at a cost of $19-21 for an hour. She'll share that information if others are interested. Ti thought the state rates might be even better, but she'll confirm.
Sue asked whether the Task Force wants to meet in January and February, noting that meetings were held last year at that time due to the Legislature, but not the year before. Amy suggested that perhaps that question would be better asked at the end of the meeting, when decisions have been made as to what the T.F. needs to accomplish in the coming months.
Internship Project Description
Ti distributed the draft description, and Amy reported on her correspondence with Rosalie Walsh at Carroll College about what they need from us in order to advertise an internship. Sue thought, putting herself in the place of a student, she would want to know if she'd get paid, how many credits she'd receive, and how many hours it would require; the description lacks that information. Sharen noted that she remembered Mary Bryson having said at the last meeting that the Dept. of Revenue had money available to pay an intern, and that Mary seemed willing to pursue that, since the DOR wants the work done as well. Amy will follow up with Mary Bryson on this. Sue suggested that Mary might also have a better idea about how much time would be required.
Amy asked whether the T.F. would have to approve a revision of the internship description: Sue said Amy should send out the revised description with a note indicating to members that it will be distributed as such unless she receives comment. Amy will also ask Rosalie Walsh whether waiting until January to advertise the internship would hurt us. Sharen requested that Amy incorporate the paragraph on p. 3 of the minutes in which Mary speaks about identifying trends in charitable giving. She suggested Amy get Mary's input on the DOR's goals and objectives in this area. Sue noted that this is something we will want to prove to the Legislature, and that Michigan found that its tax credit had no negative impact on charitable giving. She questioned whether the analysis would require historical research.
Amy reported on her conversations with Jim Soft and Dale Bergeson, asking for their feedback since they'd not be able to attend this meeting. Both had indicated the need for us to document the increase in taxable income for those receiving the credit; both thought the DOR should be able to track this data.
[Clark Pyfer joined the group at 10:40 a.m.]
Clark thought that Mary Bryson could probably figure that information out, but that the Dept. probably doesn't track that. Sharen thought that, in the case of a gift annuity, there's a line on the tax form that we could track. Clark said the problem is determining from what year the gift was made, and that it would be impossible for an intern to check last year's returns against this year's. He said it also would be hard to say where the annuity on that line came from, and that an intern would have to track other documents - like 1099s - if s/he is even allowed to do that.
Ti was unable to connect Steve Browning by phone. Sue suggested that, when Steve joins in, we ask him:
- does he think the DOR can track increased taxable income after an individual makes a credit-valid gift? Do we want this information and, if so, should we put this in the intern "job description"? She noted that, if labor intensive, we might consider obtaining a "significant sampling."
- 2) we're looking into whether we can offer an honorarium to the intern; would he think it a good idea to offer one?
Sharen asked Clark if he remembered Mary saying there might be money available for an intern. Clark remembered her saying obtaining an intern wouldn't be a problem, but not that they had money available. Sue repeated that, if we have money to offer, we should include that in the description along with hours required and credits offered. Amy informed the group that a Carroll intern receives 1 credit per 3 hours of work per week for 14 weeks; a co-op ed student (paid position) receives 1 credit per 5 hours of work per week for 14 weeks. Sharen and Sue asked whether the student is required to submit a report at the end; Amy will find out.
Clark thought we should have the intern determine what areas of the state are benefiting from the credit. He noted it would be easy to track the zip codes from the tax returns, if recorded from the start of the project. Sue pointed out that we want to fill in the piece about the difference between the size of the gifts being given vs the size of the credit claimed (that more is being given than is indicated by the size of the credit claimed). Sharen asked whether the MT Schedule A mirrors the Federal. Clark said many times the Fed. Form is attached to the State return, but he wasn't sure if that was required. He made a call to find out.
Sue said she thought we might need to see the Fed. Returns in order to determine the size of the gift (since on the federal form you can deduct the entire amount as opposed to only a portion deductible on the state form) and we want this data to make the case that the credit claimed (i.e. what is "lost" by the state) is less than what is being given, and that there is an increase in taxable income on top of that. Sharen reiterated that this information will be critical in the effort to renew the credit.
Sue mentioned that, in follow-up phonecalling to financial advisors, someone told her about a situation where an S-corp was being set up through a church such that Mrs. Smith, giving to the church, gives an outright gift to the S-corp, which then claims the tax credit. Both Sharen and Mick had questions about how that could work. Mick noted that, while people are getting creative in taking advantage of the credit, we need to ask if abuse is entering the picture. Sue was unsure about the specifics of that situation, and will follow up and report back to the group whether this might be a loophole for potential abuse.
[John Delano arrived at 11 a.m.]
Clark returned to report that the State does not require attachment of the Fed. Form, but it does require attaching a notice from the charity of how much of an annuity is taxable. In most cases that would show how much revenue is being generated by the annuity. The intern should be able to obtain data from that form, assuming s/he has that privilege.
Sue asked whether we need to look at last year's returns in order to determine the increase in taxable income. Clark said that, in most cases, we could assume it is new money, because if it were appreciated stock, most likely it wasn't earning anything before. But he thought that determining what was exchanged in creating the annuity would be very difficult. He thought having an intern compare 2 years' worth of returns would be impossible.
Sue asked Amy to call Judy Paynter or Mary Bryson at DOR to talk about analyzing the trends in charitable giving and how that might work. Clark added that we need a plan of work laid out for the intern, determining what is practical and doable. He was not optimistic about receiving a good response from the mailing to financial advisors.
Phonecalls to Financial Advisors
Sue noted that, while it was difficult to get through to people, she received a very positive response in follow-up calling to financial advisors. Amy reminded that the task was actually pre-phonecalling, letting people know that a new survey would be sent out in January. Ideally they will send it back, so that an intern will not have to follow-up to get the information. Mick thought a personal call from a T.F. member would be better than a call from an intern. Amy reiterated that the T.F. decided at the last meeting to mail out the revised survey along with a personalized letter in January. Sue suggested we add to the bottom of the form a request that it be distributed to others in the firm, if appropriate. Sharen agreed. Amy will add to the revised survey.
Ti shared a note written on the sample survey mailed out, which Bill Hughes of AZ & Co had filled out and returned. He asked whether we were asking for the actual value of the gift or the amount that qualified for the credit. Sharen suggested we could ask for both. Amy will clarify this on the revised survey.
Mick said he would add names to the list of financial advisors, since he did not participate in generating the original list. Sherry didn't realize we were supposed to be calling people. Sue added that she'd taken the opportunity to explain to those she called that we'll need this information to present to legislators in attempting to renew the credit. Most responded that this is a really good thing.
Clark thought the question Bill Hughes raised was good. He said we want to know how much the charity received. In a cash gift that's clear. He thought we should stick to the value of the gift rather than the qualifying amount.
[Steve joined by phone at 11:30 a.m.]
Sue reiterated the agenda to Steve, and what had been discussed thus far. She suggested to him that the group might not meet in January since we won't even have an intern until later in the month. Sue asked Steve whether he thought we should add to the intern job description a sentence about researching any changes in charitable giving trends. Steve said yes. Steve reminded that at the last meeting we'd discussed appointing a small group of "technical experts" to work with the intern and the DOR as advisors. Sue suggested that group meet in January rather than the whole Task Force. Steve agreed; he suggested Jim Standaert be asked to attend as well.
Sue asked what would be considered a "significant sampling," assuming the intern only had a limited number of hours to pursue this data. Steve again suggested consulting Jim Standaert.
Survey of Financial Advisors
Clark shared with Steve the question raised about what we mean by "total value" on the old survey. Steve said we meant gross value of the gift, not some future discounted value or the value on which the credit is based. Clark agreed, that we want the value of the gift at the time it was given, the amount that would be allowed by IRS. Steve disagreed with that statement, that we want to know the total amount transferred. Clark thought perhaps we ought to put an example on the survey, but the group decided that wouldn't be necessary if we clarify what we are asking for on the survey. Sharen suggested we change the line to read "FAIR MARKET VALUE OF ASSETS TRANSFERRED."
Steve suggested we need to be gathering stories for the Legislature: examples such as someone giving land to a hospital. We'd talk about the value of the land, not its taxable value. Steve said he'd send Amy his new FAX number once it's hooked up so she can send him the revised survey.
Amy asked who should draft the personalized letter the Task Force wants to include with the January mailing to financial advisors. Clark thought Amy could do that. Ti said she could sign the letters. The group agreed to enclose a stamped return envelope.
Amy will draft the letter and run it by Sue and Ti for approval. Sue suggested we add, "An intern will be working on this; if you have no questions please return the survey and the intern will not have to call you." Steve suggested we add, "Since the Task Force last wrote you, the impact of the tax credit is far greater than we expected. In order to renew the credit in 2001, the Legislature will need to know how positive this impact has been. We need your help in documenting this. We've enclosed a self-addressed stamped envelope to make it easier for you to participate in this effort."
Sharen posed a question to Steve: the survey participants will have to look at the detail in order to fill out the survey; are we shooting ourselves in the foot by only asking for the totals? Steve agreed, remembering that Mike Munck provided all the detail from St. Pete's foundation, which was really helpful. Sharen suggested we use Mike's example as a "worksheet" for survey participants. We could ask for gift type, income rate being generated, and income from new gift instrument. Sue warned that, if perceived as daunting, we might get nothing; perhaps we should attach this as a second page. Steve thought we could add to the text of the letter: "One concern the T.F. has is that policy-makers are only looking at the credit claimed and not at the taxable income being generated. If you could look at the 2nd page and fill out that info - which you will probably have to do anyway in order to fill out this survey - that would be really helpful." Sharen suggested we say: "A worksheet has been attached to make this more convenient," with a disclaimer, "please leave blank if this information is not applicable." Amy will work with Sharen to create this "worksheet."
Steve pointed out Mary Bryson's interest in tracking new taxable income generated as a result of the tax credit. Clark mentioned that Judy Paynter is a good person for Mary to have named point person on this, as she is very knowledgeable about these issues.
Clark suggested that we add to the mailing an insert highlighting the points we'd added to the web site about the positive impact of the credit, perhaps on colored paper. Sue warned that we don't want too much stuff in one envelope. Amy thought that perhaps we could squeeze something into the text of the cover letter.
Revision of Interim Report
Sue asked Steve how he thought we might go about revising the report, now that its numbers are out of date. After having reviewed it with Amy following the last meeting, Steve concluded that it would be difficult to use the same format. We need to get more information from the work by the intern. Sue raised the question of when the report would need to be sent out, and Steve said we'd be better off waiting for new information, as we cannot send the current report out as is. Sharen added that, once we get that data, we'll have a lot more information about the character of those gifts, which will change the text and assumptions we'd made. She pointed out that we should get this information out to legislators before they get too inundated with information for the session.
Sue noted that the T.F. had discussed this issue before: what is the ideal window (i.e. not too early such that legislators are not thinking about this issue, but not so late that it gets lost in the mass of information they'll receive). John Delano suggested we wait until after the primary. Sue asked what would be the benefit of sending information to those who will not be returning? John said that the outgoing legislators will still have an influence on the next Legislature.
Sue wanted to narrow down a target date for a mailing of the revised report. Steve suggested April, which is after the filing deadline (March 31). Sue asked whether the intern would have enough information by April. Steve said we would only have data from 1997 and 1998 (the 1999 data will not even come out until October 2000), but that we don't want to delay too much as there may be a Special Session in which they discuss the coal tax. If that happens, and if there's an unanticipated revenue shortfall, they'll want to look at the tax credit.
Sue explained that she sees this internship in two pieces: numbers and trends. Steve thought we would want the intern to look at contributions made in 1997 and compare to 98 returns to find the increase in taxable income. He noted Mary had said an intern would be able to look at that. He said, assuming we don't get an intern to start until February 1, we need to think through the parameters of the report to determine what we need; perhaps Judy Paynter would be the best person to advise us on what's possible. We would tell her: this is what we want to study, you need to tell us how. She would do a good job grounding us. Amy will do a short memo to Judy outlining what information we want to come out of this internship. She will ask Judy whether she can meet with a Task Force sub-group in January. The group present decided that this sub-group would consist of:
Sharen Peters
Dale Bergeson
Jim Soft
Mike Munck
Clark Pyfer
Sharen asked about surveying the charities that participated the year before (e.g. U of M, the major hospitals, etc.), asking them to put together information in the way Mike had done. We could do that right away, asking for '97 and '98 information. Sharen shared Steve's concern about a Special Session. That data might at least give us a better sense of trends. Steve agreed. He said Ralph had designed a form that he'd sent out to the charities, and Mike had sent out one to the hospitals - we'd identified 35 that had foundations. We mailed to universities and libraries as well. Amy will get this information from Ralph, and ask the Community Foundation for that information about their funds.
Sue pointed out that we want to look at the "holes" in the map in order to get an overall geographic picture of the credit's impact on the state. Clark said the intern would have to be instructed to add zip codes to the data collected.
2001 Legislative Strategy
Clark suggested we look into potential abuses of the tax credit. Sue agreed that we need to find out this information so that legislators don't think the system is being abused. She asked who would be the point person for lobbying in Steve's absence? Steve noted that John Delano had worked with him on the past effort, but that he has retired. Sue pointed out that we'll not have the same Governor, who's been one of our biggest supporters, and that the next Governor might not see the need for this Task Force at all. Clark suggested the mailing (i.e. the revised report on the impact of the tax credit) be sent to all the Governor candidates as well.
Sue reiterated the general strategy:
- sending out the revised interim report to all candidates
- asking those we know how they feel about it
educating them before the session begins
Steve suggested we get Governor Racicot to incorporate a continuation of the tax credit into the budget he'll have to present to the new Legislature. Unless he does that, the assumption will be NO TAX CREDIT, because of the sunset in 2001. We need to ask Racicot and the new Governor to take our side, pointing out the benefits of the credit - that money is staying in Montana because of it (i.e. not being lost in federal capital gains and estate taxes). Clark mentioned that he'd be meeting with Dave Lewis in the afternoon, and he'd talk to him about it.
Clark raised the issue of whether we should reconsider the list of Task Force members to remove those who've never attended a meeting. Ti said she always asks all members whether they want to remain an "active" member, and that some have moved themselves onto the "advisory committee" list. Sue thought that all of the members are helpful, that they are influential, and that we should keep them involved. She noted her appreciation for Ti's work.
[At noon, sandwiches were passed around; Mick had to leave, Steve disconnected, and Clark had to leave at 12:30. The group that remained watched a short (8-minute) video, "1999 Western Philanthropy Outlook: Remarks by Gov. Racicot," about the Montana tax credit. Ti will investigate the cost and logistics of distributing that video to interested Task Force members.)
The Task Force Web Site
The group reviewed the draft by Amy and Josh Turner of new introductory material about the Task Force for the web site. She questioned whether the group at hand could approve this, whether there was a quorum with only Sue, Sharen, and John present. The group decided to approve the addition to the web site. Amy will pass the data on to Galen.
Tasks List
Sue asked Amy to postpone typing up the minutes in favor of putting together a list of all the tasks that need to be done by T.F. members and staff, as decided at this meeting. Ti will distribute to all active members.
Next Meeting
Sue suggested that the sub-group meet together for a strategy discussion before meeting with Mary Bryson and/or Judy Paynter. Sharen thought the group could meet in January by phone to discuss legislative strategy and the group's thoughts/fears about people maximizing the credit (to ensure that our success does not turn out to be our downfall with the Legislature). John suggested we be prepared to come up with amendments to the legislation. Ti added that in the calls to the financial advisors, we should be asking them to put a call in to their legislators in support of renewing the credit. Amy thought that perhaps we could add a line in the cover letter (in the mailing/survey to financial advisors and to the charities) that we are "looking for your stories." Both Sue and John reiterated that we especially need to get examples from the lesser-populated areas of the state (i.e. the east and north).
Closing Comments
Sharen noted that the Task Force needs to focus on what the tax credit has brought in terms of value to the communities. Sue said we need to focus as well on the spirit behind the intent, that we are encouraging philanthropy, and succeeding.
Meeting adjourned at 1:15 p.m.
|
Montana's Home Page
mtcf@mt.net
