PROVIDENCE - A bill that allows charitable contributions to be made without fear that those contributions might be used to help determine state residency - and tax liability in Rhode Island - passed in both the House and Senate and will make its way to Gov. Donald L. Carcieri's desk.
The bill bars the state's tax authorities from using charitable contributions as a consideration when determining a person's residency. It amends the general laws entitled "Personal Income Tax" to read: "A resident individual means an individual who is domiciled in this state. In determining the domicile of an individual, the geographic location of professional advisors selected by an individual, including without limitation, advisors who render medical, financial, legal, insurance, fiduciary or investment services, as well as charitable contributions to Rhode Island organizations, (emphasis added) shall not be taken into consideration."
Expressing pleasure at the bill's easy passage in both the House (where it was passed unanimously) and the Senate, Father Bernard A. Healey, director of the diocesan Office of Government Liaison, said, "The bill codifies what the tax policy has always been. I have full confidence that the governor will see the merit of the bill and sign it."
Jeff Neal, spokesperson for Carcieri, said Monday the governor had not yet reviewed the bill, "and no decision has been made yet."
Healey expressed thanks to the main supporters of the bill, House Majority Leader Gordon D. Fox and Sen. Majority Leader M. Teresa Paiva Weed, and the other members of the General Assembly." He called the bill a "broad-based charitable concern," which, had it not passed, could have put contributions to a number of non-profit organizations, including Catholic agencies, at risk.
Charitable contributions were factored into the equation in a 2001 ruling by the state Supreme Court which accepted the claim of Florida residency by a former Rhode Island resident, using greater amount of charitable contributions made in Florida than in Rhode Island as one of its criteria. Since that time, some accountants and lawyers have advised their clients that their charitable contributions could be taken into account should their residency be called into question.
Anthony T. Gwiazdowski, executive director of the diocesan Stewardship and Development Office, said he is "very pleased" by passage of the bill. He said it is difficult to determine whether threats of tying residency to charitable contributions had a negative effect on last year's Catholic Charity Fund Appeal, but he is certain that some lawyers were advising their clients, "and rightly so," of possible tax consequences for donating to Rhode Island charities when they claim residency in another state. "As to whether those clients did not make donations to Rhode Island charities as a result, it is difficult to determine," he added.
He praised the generosity of Rhode Islanders, former Rhode Islanders and part-time Rhode Islanders, who have a "great affection for the state, regardless of where they might live." They should be able to make charitable contributions to their chosen charities without worrying that those donations might be a tax liability, he said.
"This bill will really help the entire state of Rhode Island - all the non-profits and charitable organizations ¬ and indicates a great concern about people and their needs," he said. Because so many agencies rely on philanthropic contributions to serve their clients, this is about "good stewardship and good citizenship."
"We should do everything we can to encourage people to give money to charities in our state," said Fox in a press release. "We certainly don't want people to be afraid that they might be punished for their generosity. This bill is meant to reassure part-time residents that they can give to our charities without fear."
Fox and Paiva-Weed said in a joint sstatement that "people who work for local charities have noticed an increasing number of donors - or would-be donors - who report that they would like to donate, but have been advised not to do so because of their tax status."
Paiva-Weed said, "This bill will help many worthy organizations in Rhode Island that rely on contributions to help the needy, promote the arts, preserve the environment and work toward many other commendable goals. There are organizations in our state that would suffer without gifts from major donors who live out of state or are part-time Rhode Islanders, and we want to protect those groups."
In addition to Fox, the House bill, H-5114, was sponsored by Reps. Raymond C. Church, Eileen S. Naughton, Paul W. Crowley and Elizabeth M. Dennigan. Senate sponsors of the bill, S-0009, in addition to Paiva-Weed, were Sens. Paul V. Jabour, Stephen D. Alves, Maryellen Goodwin and Rhoda E. Perry.
(This article originally appeared in The Providence Visitor)
