HANO: August federal nonprofit policy updates

August federal nonprofit policy updates

From the National Council of Nonprofit Associations

House Subcommittee Holds Hearings on Nonprofits – The House Ways and Means Oversight Subcommittee held an “Overview Hearing on Tax-Exempt Organizations” on July 24th. Witnesses from government and the nonprofit sector discussed government support of nonprofits, including policy issues such as the IRA Charitable Rollover, as well as enforcement efforts. Steven Miller, Commissioner of the Tax Exempt Division of the IRS, stated that compliance problems within the nonprofit sector are “not widespread,” but listed several areas of concern outlined in an IRS letter released the same day (see below for details). For more information on the hearing, see the official transcript.

IRS Releases Report on Nonprofits – Also on July 24, an IRS letter outlining the top compliance issues in the tax-exempt sector was released. Areas of concern included overvaluation of non-cash charitable donations, abusive donor advised fund arrangements, executive compensation and difficulty in determining Unrelated Business Taxable Income. The report was issued in response to a request from Senate Finance Committee Chair Max Baucus (D-Mont.) and Ranking Member Charles Grassley (R-Iowa). Read the report and the response from Baucus and Grassley.

FEC Drafting Rule on Issue Ads – The Federal Election Commission has taken several significant actions since the U.S. Supreme Court ruling on FEC v. Wisconsin Right to Life in June. The ruling found the federal electioneering communications ban unconstitutional when applied to genuine issue ads. In response, the FEC has announced it will release a notice of proposed rulemaking in August to implement the Supreme Court’s decision and has filed motions to end a related case against the Christian Civic League of Maine.

Relief for Student Debt – The House and Senate each passed a version of College Cost Reduction Act, H.R. 2669, which would qualify employees of certain public services organizations for federal support in repaying student loans. In the House version of the bill, employees of charitable 501(c)(3) organizations qualify for the program. The Senate version of the bill does not include 501(c)(3) organizations, imposes a salary cap of $65,000, and sunsets in 2012. The bill is expected to emerge from conference after August recess.

Retirement Plan for Employees of Charities Finalized – Treasury Department and the IRS released new regulations related to retirement benefits sponsored by charitable organizations. The first revision to section 403(b) plans since 1964, the regulations incorporate provisions from the 2006 Pension Protection Act and other related legislation. The new regulations are effective Dec. 31, 2008.

Federal Budget News – The House passed a $154.2 billion funding bill for Labor, Health and Human Services, and Education with bipartisan support on July 19. The bill includes above-inflation increases in many programs, and exceeds the president’s proposal by $12.5 billion. The bill is one of seven the president has threatened to veto. The reauthorization of the State Children’s Health Insurance Program (SCHIP) is also moving forward.

Philanthropy Caucus Recruiting Members – Representatives Stephanie Tubbs Jones (D-Ohio) and Robin Hayes (R-N. Car.) will co-chair the new bipartisan Congressional Philanthropy Caucus in the House and are recruiting members. The goal of the Caucus will be to inform members of Congress about the role of foundations, issues of mutual interest to foundations and lawmakers and legislative issues affecting the charitable sector. For more information, read the Dear Colleague Letter from the co-chairs.

IRS News

File or Die Letters Sent – The IRS has started sending educational letters to 650,000 small tax-exempt organizations that may be required to complete the new Form 990-N. The Form will be required of charities will annual gross receipts of $25,000 or less and asks for a legal organizational name and mailing address, a Web address if one applicable, and the name and address of a principal officer. Electronic filing will be available.
Draft Revised Form 990 – The IRS has released a draft redesign of the Form 990, the annual information return filed by tax-exempt entities. The draft includes a “core” form for each filing organization to complete and 15 separate schedules requiring additional information from only those organizations engaged in certain activities. Schedules cover topics such as compensation, lobbying, fundraising, and non-cash contributions. Comments on the draft are due to the IRS by Sept. 14.
Opportunity for Information and Comment on IRS 990 – The IRS is accepting comments on its draft revision of the Form 990 until Sept. 14. The National Council of Nonprofit Associations has been asked to provide comments from the perspective of small and midsized nonprofits, and would like to hear from you. Please send your comments directly to publicpolicy@ncna.org or join us for a conference call on Aug. 9 at 9 a.m. Hawai‘i Time. During the call, IRS representative Theresa Patarra will answer questions and clarify issues related to the revision process. Space is limited, so register today.

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