Latest Policy News

Thune, Wyden introduce CHARITY Act
April 7, 2016
Senate Finance Committee member John Thune (R-SD) and Committee Ranking Member Ron Wyden (D-OR) have introduced the Charities Helping Americans Regularly Throughout the Year (CHARITY) Act (S.2750). Along with sense of the Senate language expressing that the promotion of charitable giving should be one of the goals of comprehensive tax reform, the CHARITY Act would:

  •         Make donor-advised funds an eligible charity for purposes of the IRA charitable rollover provision that was made permanent in 2015;
  •         Simplify how foundations are required to calculate the federal excise tax imposed on investment income;
  •         Promote transparency by requiring nonprofits to file their Form 990 information returns electronically;
  •         Encourage philanthropic enterprises wishing to donate profits to charity by creating a limited exception to the excess business holding tax rules; and
  •         Enable the Treasury Department to increase the volunteer mileage rate for tax deduction purposes, aligning it with the currently higher rate allowed for medical and moving purposes.

“There’s more we can do in Washington to encourage Americans to participate in charitable activities, and that starts with ensuring our tax code doesn’t hamstring those who wish to give,” Thune said.

IRS to make Forms 990 available online in machine-readable format
March 18, 2016
Acting Exempt Organizations director Margaret Von Lienen, speaking before the Washington Non-Profit Legal & Tax conference, said that the IRS is planning to post machine-readable Forms 990 on its website soon. This marks the next step in a process begun by the agency last summer and is a change from its previous policy of posting only non-searchable images. At first, the forms will only be made available on an as-requested basis. Von Lienen noted that e-filing and automated redaction has made the production of the machine-readable forms possible. She further indicated that the Exempt Organizations unit has begun testing a data-driven method to streamline its process for identifying possible noncompliance issues in filed Forms 990, resulting in an “overall audit change rate of 90 percent for the cases selected” in initial testing.

Hatch corporate tax integration bill could impact nonprofits’ dividend income
January 29, 2016
Senate Finance Chair Orrin Hatch (R-UT) has begun work on a bill to end the current double tax on corporate income and move to a so-called “integrated” system. The still-evolving plan would likely give companies a deduction for the money paid out to shareholders in dividends and effectively cancel out corporate income taxes. While the plan would thus ease the tax burden on corporations, it would also mean an increase in taxes on dividends received by corporate shareholders, many of whom are nonprofits, particularly foundations and organizations with endowments. Hatch has indicated to reporters that before finalizing any legislation, he’s awaiting some figures from the Joint Committee on Taxation, especially an estimate on how much revenue this tax change would lose. Regardless, observers believe that work on the bill is primarily useful as an exercise in working through a number of political and policy challenges and like other tax legislation being proposed, has little chance of becoming law during an election year.

IRS not closing the door on new 501(c)(4) regulations later this year
January 19, 2016
During a conference call with reporters, IRS Commissioner John Koskinen told members of the media that his agency is not scrapping plans to draft and promulgate new regulations governing political spending by 501(c)(4) advocacy groups.  This comes despite a provision within the Fiscal Year 2016 omnibus appropriations bill that prevents the IRS from issuing new regulations for the rest of the current fiscal year—and thus realistically during the remainder of President Obama’s tenure.  "We'll continue to have a dialogue with the Congress about where we're going," Koskinen said. "We'll see what happens in October."  The IRS originally issued proposed regulations on the issue in November 2013, and after receiving over 160,000 public comments and withdrawing the initial proposal, has been working to develop a revised rule.  Several leading Republican lawmakers have introduced legislation to delay or prevent the implementation of new rules, arguing that they may infringe on free speech rights.

IRS withdraws donation substantiation proposal
January 7, 2016
After pushback from the charitable sector as well as from a number of lawmakers, the Internal Revenue Service withdrew a rule proposed in September to create an alternative method of substantiating charitable donations of $250 or more. The proposed rule, an alternative to the “contemporaneous written acknowledgement” requirement, would have enabled charities to file a new information return each year, listing donors who gave contributions of more than $250 along with their taxpayer identification numbers or Social Security numbers. Nonprofit organizations expressed concern about the risks involved with collection of Social Security numbers and submitted thousands of public comments in opposition to the proposal. Additionally, legislation was introduced in both chambers of Congress to limit or block the proposal. The withdrawal came in a Federal Register notice scheduled to be published tomorrow.

Permanent tax extenders, including charitable giving incentives, become law
January 4, 2016
Following passage by Congress of a tax bill including 22 permanent tax breaks, including the three charitable giving incentives, President Obama signed the measure into law on December 18, 2015.  The measure also includes a two-year delay in implementation for the so-called “Cadillac tax.” The giving incentives restored and made permanent are the IRA charitable rollover and enhanced deductions for donations of food inventory and conservation easements. Independent Sector with partners had urged Congress to address the measures as soon as possible to restore much needed certainty to the tax code.

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Independent Sector submits comments urging revisions to overtime proposal 
September 4, 2015
Independent Sector submitted 
comments to the Department of Labor.  While IS believes that employees should be paid a living wage and similarly supports an increase in the salary threshold for eligibility to receive overtime compensation, there are many concerns that IS and others in the nonprofit sector have regarding this rule.  As expressed in the submitted comments, IS is troubled by the agency's lack of engagement with nonprofit organizations in developing its proposed new overtime rule, and urged four specific revisions to the plan before it is implemented: moving to a phased-in implementation; revising the terms of federal grants and contracts with nonprofit organizations; allowing for regional market differences to the proposed salary threshold; and implementing an open process for any changes to the duties tests.

Senate probe concludes, finds IRS mishandled exempt-sector oversight
August 6, 2015
The Senate Finance  Committee has published a report of its investigation into the IRS processing of exempt-status applications, finding pervasive mismanagement within the tax agency’s Exempt Organizations (EO) Division between 2010 and 2013. Despite being the first bipartisan probe on the matter to conclude, the report presented disparate interpretations regarding the cause of these IRS failures, with Republicans suggesting a connection to the White House political agenda and Democrats saying no political interference occurred. The committee recommended several ways for the IRS to address the issue. The IRS in a statement welcomed the suggestions for further improvement beyond the measures it already has adopted.

Nonprofits join in requesting more time for overtime proposal comments

August 5, 2015
Independent Sector, National Council of Nonprofits, and 145 organizations from across the charitable and philanthropic sector have sent a letter to the Department of Labor, requesting a 60-day extension of the public comment period for the proposed rule revising overtime pay regulations. "This multi-part proposal is particularly complex for the more than 1.5 million charitable organizations across America," the letter states, "as each attempts to determine not only the proposal's potential impact on its own workforce, but also on the individuals and communities it serves." Learn more

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