Bills
| 3.23.22

Should Donations to the Virginia Beach Tragedy Fund Benefiting Victims of the Shooting be Tax-Deductible? (H.R. 4566)

Do you support or oppose this bill?

What is H.R. 4566?

(Updated December 24, 2019)

This bill — the Virginia Beach Strong Act — would confirm that cash contributions made to the Virginia Beach Tragedy Fund for the exclusive benefit of the families of the dead or wounded victims of the mass shooting in Virginia Beach, Virginia, on May 31, 2019, shall be treated as tax deductible contributions. This bill would also apply retroactively to donations made on or after May 31, 2019.

Argument in favor

In the aftermath of the May 31, 2019, shooting in Virginia Beach, many individuals and businesses stepped up to donate money to help with the costs of medical care and funeral expenses for the 12 dead and four wounded. These kind-hearted citizens and businesses deserve to see tax deductions for their generous donations. Moreover, making donations to the Virginia Beach Tragedy Fund tax-deductible may also spur further donations.

Argument opposed

The IRS rule against nonprofits being set up to benefit specific individuals is grounded in the agency’s need to guard against fraudulent nonprofits set up to enable tax-dodging. Instead of passing this one-time exemption to this IRS rule for the Virginia Beach Tragedy Fund, it’d be better for Congress to take up and debate an exemption to this IRS rule for all funds set up for the benefit of groups of victims.

Impact

Families of the dead or wounded victims of the May 31, 2019 mass shooting in Virginia Beach, Virginia; donations made to the Virginia Beach Tragedy Fund; and granting of tax deductions for donations to the Virginia Beach Tragedy Fund.

Cost of H.R. 4566

A CBO cost estimate is unavailable.

Additional Info

In-Depth: Sponsoring Rep. Elaine Luria (D-VA) introduced this bill to ensure that donations to families of victims of the May 31, 2019, Virginia Beach mass shooting are tax-deductible: 

“On May 31st, our Virginia Beach community experienced an unspeakable tragedy that led to the loss of 12 wonderful people. In the wake of our community’s darkest day, we saw countless selfless people donate to provide relief for grieving families. I am introducing the Virginia Beach Strong Act to make it easier to help bring more urgently-needed support to grieving families.”

In a joint statement, Senate sponsor Sen. Mark Warner (D-VA) and original Senate cosponsor Sen. Tim Kaine (D-VA) add: 

“There is nothing we can do to undo this tragedy or bring back the individuals we lost in this senseless act of violence, but we can try to make it as easy as possible for families and those injured to get the relief they need. This legislation will further incentivize donations to the Virginia Beach Tragedy Fund by making sure that contributions to victims and families are permitted to be treated as charitable contributions.”

George Washington University professor Joseph Cordes says that the IRS’ rule against allowing nonprofits to benefit specific individuals is an important protection against fraud. He explains, “People will set up nonprofits and essentially the benefits really go to family members or specific individuals, and the IRS wants to prevent that from happening.” In light of this context, Cordes believes this legislation may face criticism because it applies to only one situation. Instead, he suggests, “One could as a public policy matter decide to make an exception for specifically those kinds of funds, but that would be better done at a national level.”

This legislation has eight bipartisan House cosponsors, including six Democrats and two Republicans. Its Senate companion, sponsored by Sen. Mark Warner (D-VA), has one Senate cosponsor, Sen. Tim Kaine (D-VA).


Of Note: On May 31, 2019, a gunman opened fire at the Virginia Beach Municipal Center. He killed 12 people and injured four. 

Soon after the shooting, the United Way of South Hampton Roads established a fund, the Virginia Beach Tragedy Fund, to help victims, survivors, and their families. However, because the fund was set up exclusively for the benefit of the shooting victims, it violates a 501(c)(3) nonprofit charitable tax rule that prohibits charitable funds from being earmarked for specific individuals. Consequently, donations to the fund aren’t currently tax-deductible.

As of mid-October 2019, the Fund had raised over $4 million from individuals and businesses.


Media:

Summary by Lorelei Yang

(Photo Credit: iStockphoto.com / CatLane)