Tax Bill Glitch Endangers Future of Newmans Own and Actors Foundation
Washington – The Westport-based Newman’s Own Foundation was on the verge of securing a provision in the federal tax overhaul that would have spared it from an unusual 200 percent tax hike it is facing, when the Senate parliamentarian forced lawmakers to strip it out of the massive bill.
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Newman’s Own salad dressing at the market. (CLICK TO ENLARGE) Glearybasim via Creative Commons
That decision could result in the sale of late actor Paul Newman’s food company and “significantly damage the foundation’s ability to give grants at anywhere near the level we have been doing in the past,” said Bob Forrester, president and CEO of the Newman’s Own Foundation.
All profits from the sale of Newman’s Own food products are given away though the foundation, which has to date donated $512 million to charities helping veterans, children with cancer, low-income students and dozens of other causes.
The foundation had been seeking a permanent solution to its tax problem for years. The problem was created when Paul Newman died and left his food company to his foundation.
Foundations are barred by a 1969 tax law from owning more than a small stake in private businesses to prevent wealthy people from using foundations as tax shelters.
That tax law imposes a 200 percent excise tax on foundations that don’t unload their businesses after five years. When that grace period was up for the Newman’s Own Foundation in 2008, it received a five-year extension from the Internal Revenue Service. That extension expires next November, when the 200 percent tax rate for the foundation would kick in.
“This is a penalty that would make you go out of business,” Forrester said.
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