Nonprofit policy updates from across the nation

From the National Council of Nonprofit Associations

Federal nonprofit policy updates

http://www.ncna.org/index.cfm?fuseaction=Page.viewPage&pageId=696

College Cost Reduction and Access Act – A residual issue under the CCRAA (H.R. 2669) was the impact of a “marriage penalty.” Both the House (HR 4153) and Senate have taken action to correct this by enabling married borrowers to file separate income tax returns that calculate the borrower’s income-based repayment solely on the borrower’s own loan and adjusted gross income. The Department of Education is establishing a negotiated rulemaking committee to prepare proposed regulations under CCRAA including loan forgiveness for public service employees (covers nonprofits). NCNA has nominated Professor Philip G. Schrag of the Georgetown University Law Center to be a member of the committee because of his extensive work in the area of college cost reduction.
 
Nonprofits May Run Issue Ads with Disclosure – A new rule of the Federal Election Commission allows nonprofits to run issue ads during election periods that mention federal candidates under certain conditions including urging a candidate to take a particular position or action with respect to an issue. Disclosure rules regarding sources of funding and donors must be followed. The rule implements the Supreme Court decision, FEC v. Wisconsin Right to Life that had overturned a ban on such ads. 

Estate Tax Developments — On Nov. 14, while Senate Finance Committee Chair, Sen. Max Baucus (D-MT) and Sen. Charles Grassley (R-IA) both expressed personal support for estate tax repeal, Baucus acknowledged that it is off their agenda in the Senate. Warren Buffett testified before the committee and argued that the repeal of the tax would be a windfall for a few wealthy families and widen income disparity. Other speakers testified that the tax has severely impacted their family’s business and argued to repeal the tax.

To track developments, a bit of history helps. NCNA was the first national organization to take a formal position opposing the repeal of the estate tax in 2000 during President Clinton’s term. In 2001, President Bush made reducing the estate tax a priority. Faced with this opposition, and the need to limit the cost of the tax cut, Congress passed a tax cut bill that slowly phases the estate tax out until 2009, repeals it entirely in 2010, and then brings it back to life in 2011. As a result, three new Estate Tax Bills, HR 4235, HR 4172, and HR 4242, were just introduced in the House by Democrats to retain the estate tax but with reduced rates or higher tax credits. We will continue to monitor the issue in partnership with other national organizations.

IRA Charitable Rollover Provision — The House has passed the Temporary Tax Relief Act of 2007 (HR 3996) which would prevent taxpayers from being subjected to the Alternative Minimum Tax. It would extend the IRA Charitable Rollover provision that provides persons aged 70½ and older with the opportunity to contribute to charity out of their IRAs without suffering adverse tax consequences. It is set to expire at the end of this year.

Possible Relief for Certain Charities from Vehicle Donation Rules – Rep. Bob Filner (D-CA) introduced a bill (HR 4090) to exempt vehicle donation programs managed in-house from deduction limits and reporting requirements that were enacted by the American Jobs Creation Act (AJCA) in 2004. Vehicle donations were limited by the law to the sale price obtained by the charity.

Louisiana’s “Road Home” Housing Funding Approved Over Veto – Southwest Louisiana’s recovery plan received $3 billion in additional authorized funding for its “Road Home” housing program when the House and Senate overrode a presidential veto of the Water Resources Development Act (HR 1495). WRDA will help prevent the devastation of future storms in Louisiana through additional funding authorized for critical flood control, hurricane protection, and coastal restoration projects.

IRS Updates

• The IRS has sent a reminder to 501(c)(3) organizations that federal law prohibits them from becoming directly or indirectly involved in campaigns of political candidates. These organizations can, according to the IRS news release, engage in advocating for or against issues and, to a certain extent, ballot initiatives or other legislative activities. Violation of the law can result in imposition of an excise tax or, in extreme cases, a loss of tax-exempt status. Revenue Ruling 2007-41 provides scenarios to help nonprofits understand the ban on political campaign activity.
• On Jan. 1, 2008, the requirement for small tax-exempt organizations to submit Form 990-N, the e-Postcard, will be implented. Nonprofits with gross receipts of $25,000 or less, which were formerly exempt from notification, will be able to access a simple, web-based process for submitting the e-Postcard. There will not be a paper form. It will ask for basic identifying information such as the organization’s legal name, name under which it operates, address, employer identification number, and the name and address of its principal officer. This annual notification will be due the 15th of the fifth month after the close of the organization’s tax period. If your tax period ends Dec. 31, 2007, the e-Postcard is due May 15, 2008. For more information, see the IRS notice.

State Nonprofit Policy Updates

In November, state legislators introduced dozens of bills that impact all nonprofits in their respective states. Below is a partial list of these bills, listed alphabetically by state. Unless otherwise noted, the bills below have not become law.

Maryland: Budget Reconciliation Act – HB 1, despite using bipartisan compromise to pass in the overnight hours and preclude a government shutdown, still leaves state service providers facing a $1.7 billion deficit. As citizens seeking assistance overwhelm under-funded government service providers, nonprofit organizations may be confronted with the same disparity between needs and resources. For more information, as well as opportunities to take action, visit the policy and advocacy page of Maryland Association of Nonprofit Organizations’ website.

New Jersey: Additional Lobbyist Reporting Requirements – SB 2505/AB 4013 would require registered lobbyists to include in their quarterly reports to the Election Law Enforcement Commission “the particular items in the annual appropriation legislation or appropriation legislation that is supplemental to that legislation," in addition to currently required reporting information. For more information, refer to the advocacy information provided by the Center for Non-Profit Corporations.

New Jersey: Limitation on Charitable Disbursement of Campaign Funds – SB 2506/AB 4014 would prohibit the distribution of campaign funds to any charity in which a candidate or a member of his/her immediate family is a paid officer, director or employee or receives compensation for goods or services provided to the organization.

New York: Nonprofit Contribution Disclosure Requirement – A 9497 requires those nonprofit organizations “who dedicate more than fifty percent of their resources toward changing public policy” to file statements with the attorney general regarding contributions they receive over $10,000.

Pennsylvania: Proposed State Coverage of Tax-Exempt Property Tax – HB 2018 would compensate municipalities with high concentrations of tax exempt properties. The state’s $240 million annual revenue stream from the 1936 Johnstown Flood Liquor Tax would compensate municipalities with at least 17 percent of the land not on the tax rolls for up to $36 million per year. For more information, visit the Pennsylvania Association of Nonprofit Organization’s policy page.

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