April federal nonprofit policy update

From the National Council of Nonprofit Associations

House approves $3 trillion FY 2008 budget resolution – On March 29, the House passed a nearly $3 trillion budget resolution for fiscal year 2008 (H. Con. Res. 99). While the resolution includes $7 billion more in domestic discretionary spending than the Senate plan – and $25 billion more than the President’s proposal – it also predicts a surplus by 2012 by adhering to strict pay-as-you-go budget rules. The Senate passed a $2.9 trillion budget resolution (S. Con. Res. 21) on March 23 that would permanently extend the estate tax at a $3.5 million exemption level ($7 million for couples) and a 45 percent rate.

House expected to revisit grassroots disclosure – House Democrats hope to mark up a bill in April that would require disclosure from organizations that receive more than $100,000 quarterly from contributions to grassroots campaigns. A recent survey and op-ed show support for the provision.

Report details abuse of non-cash deductions – The Treasury Inspector General for Tax Administration (TIGTA) released a report that estimates more than 100,000 taxpayers claimed $1.8 billion in unsubstantiated non-cash contributions in 2006. The report includes recommendations for IRS to educate taxpayers and practitioners about compliance. Senate Finance Committee Ranking Member Charles Grassley (R-IA) issued a press release urging the IRS to implement the recommendations.

U.S. Postal Service price changes finalized – The USPS posted final mailing standards for the domestic price changes effective on May 14.

IRS news impacting nonprofits:

• The IRS Report on Exempt Organizations Executive Compensation has been released. It details reporting errors in annual returns and recommends additional education of charitable organizations. Comments on the report were released by Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Charles Grassley (R-Iowa).
• The IRS seeks public comment for the Form 990-N, a new return required for tax-exempt organizations with less than $25,000 in gross receipts.
• Publication 4589 describes the process for exempt organizations to file for a telephone excise tax refund.
• A new webpage outlines revised exempt organization tax rules as part of the enactment of the Pension Protection Act of 2006.
• The 2006 IRS Data Book summarizes activities conducted by the IRS between October 2005 and September 2006 and includes the number of tax-exempt organizations registered and the number of tax-exempt returns filed and processed.

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