Protecting the architectural heritage handed down to us in our hometown communities gives our generation the obligation and opportunity to preserve history for our children and grandchildren.
Whether renovating and restoring Main Street or preserving the charm of a riverfront community, Iowans across the state understand the economic and cultural benefits that come with responsible stewardship of their community's heritage.
Just in December, nine Iowa communities were awarded $500,000 federal dollars to revitalize buildings of historical significance on their Main Streets. Projects in Bedford, Burlington, Charles City, Corning, Dubuque, Jewell, State Center, Waterloo, and West Des Moines will leverage the federal money with private investment to restore structures in the community, including a bank, opera house, hotel and restaurant.
Preserving the charm and character of Main Streets and historic neighborhoods is a noble enterprise.
In an effort to provide incentives for community leaders, businesses and homeowners to join forces in this worthy cause, policymakers from the federal, state and local levels of government have instituted laws and ordinances aimed at promoting historical preservation for posterity.
Regrettably, some are exploiting the good intentions behind a federal tax incentive to line their own pockets. It seems some upscale homeowners, aggressive promoters and enabling appraisers are abusing a charitable deduction in the tax code as a vehicle for personal enrichment.
Written to encourage preservation of historic building facades, the provision allows homeowners to donate property easements to a charitable organization and deduct a percentage of the home's value.
Recent news reports have exposed abuses made by wealthy homeowners who are claiming a tax write-off for 11 percent of the value of their home.
Let's make this clear. Well-to-do homeowners in Georgetown and Capitol Hill are making promises not to say, put aluminum siding on their brick-front homes in the some of the nation's most historic neighborhoods.
In exchange for not doing the unthinkable, they are claiming a hefty tax write-off.
Local ordinances already exist that prohibit such changes to the architecture of these homes. Nonetheless, some are choosing to game the system and write off a double-digit easement valuation of their home. Their donation of the façade easement to a charitable organization arguably in no way causes their property value to drop. Yet, some well-heeled folks are walking away with inflated, six-figure tax deductions.
As chairman of the U.S. Senate Finance Committee, I've put these folks on notice. And as the chief Senate lawmaker who bears primary oversight over the Internal Revenue Service, I've also advised the IRS Commissioner to consider the façade easement deduction as a red flag for audit.
Alongside my efforts aimed at cracking down on corporate tax loopholes, I'll work in the new Congress to advance my bipartisan legislation drafted to curb abusive practices among charitable organizations.
What's more, in an effort to stem a tide of end-of-the-year façade easements by greedy promoters of these schemes, I announced my legislation would create an effective date retroactive to December 17, 2004.
Specifically, my legislation would increase fines on homeowners, marketers and appraisers who abuse the tax break. And it would hold all parties accountable, not just the "tax expert."
As a federal policymaker, I agree with efforts intended to encourage historic preservation for the greater public good.
But a mockery out should not be made out of good public policy intended to benefit the public good.
From tougher enforcement by the IRS to stricter oversight by Congress, I'll continue to work from my leadership position in the U.S. Senate to root out abusive practices riddling the U.S. tax system. From my point of view, this is no laughing matter.