Public Policy
Independent Sector Policy Update
March 24, 2006
Conference Meets on Charitable Incentives and Reforms Legislation
The House and Senate conferees on the Tax Relief Act of 2005 (H.R.
4297) held their first formal meeting the week of March 13th to begin discussions
about which provisions from the House and Senate bills, including the package
of charitable tax incentives and reforms included in the Senate version
of the bill, will survive in the final conference bill. Congress will be
out for a week-long recess the week of March 20th, but conference negotiations
will resume after that with a target completion date of April 7. IS and
other charitable organizations continue to push for changes to some of the
reforms. More on H.R. 4297..
Senate Passes FY07 Budget Resolution
The Senate passed its FY07 budget resolution on March 16th by
a vote of 51 to 49. The blueprint for next year’s federal spending
would have capped all discretionary spending at $873 billion; however
several amendments were adopted that will add $16.5 billion to total spending.
Thanks in large part to efforts by the charitable sector led by United
Way of America and YMCA of the USA, Congress passed an amendment sponsored
by Senators Arlen Specter (R-PA) and Tom Harkin (D-IA) that increased
spending for education, health care and job training by $7 billion.
While the budget resolution does not set spending amounts for specific
programs, the Appropriations Committees are bound by the limits it sets
for total discretionary funding. The House Budget Committee will begin
work on its budget resolution following next week’s recess. More
on the Budget Resolution.
Lobbying Reform Legislation Unveiled in House
House Republican leaders released their lobbying reform bill
on March 16th (H.R. 4975). Unlike the Senate proposal (S. 2349), the House
plan would include restrictions on Section 527 political organizations
and would ban all privately-funded travel for the remainder of 2006. The
House Ethics Committee would be required to come up with a plan for pre-approving
travel by mid-December. Like the Senate proposal, the House plan would
require increased disclosure on the part of lobbyists, including quarterly
reports and information about campaign contributions and gifts.
Senate consideration of lobbying reform legislation (S. 2349) was temporarily
put on hold, but Senate Majority Leader Bill Frist (R-TN) hopes to complete
action on the bill when the Senate returns from a week-long break on March
27.
More on lobbying reform proposals.
Ways and Means Committee Will Hold Hearings on Tax Reform
House Ways and Means Chairman William Thomas (R-CA) told reporters that
he will hold a series of hearings in May on overhauling the tax code.
It is not clear whether the hearings will consider suggestions put forth
by the President's Advisory Panel on Federal Tax Reform. That Panel’s
final report, released last November, included several recommendations
regarding charitable donations and charities. The report endorsed two
alternative simplified income tax plans that would both, among other changes,
allow all taxpayers to claim a deduction for charitable contributions
that exceed one percent of their income. The Panel also recommended allowing
taxpayers over age 65 to make donations from IRAs directly to charities
without negative tax consequences. This is similar to IRA rollover proposals
that have been considered in the House and Senate.
More on the President's Advisory
Panel on Federal Tax Reform.
IRS Plans to Expedite Review of Tax-Exempt
Applications
The IRS is working to expedite the approval process for applications
for tax-exempt status (Form 1023), according to an IRS official speaking
at a Washington, DC luncheon recently. The official said that the IRS
receives approximately 60,000 applications for tax-exempt status each
year and responds to 40 percent of them within 30 to 60 days of filing.
More complicated requests, however, may take several months or even years.
Applications that currently receive closer scrutiny include those for
supporting organizations, low-income housing providers, and credit counseling
agencies. The IRS Exempt Organizations division included in its priorities
for this year the development of automation systems for processing and
tracking Forms 1023 and developing an interactive application that provides
a “cyber assistant” to help in filling out the form.
Federal District Court Finds Federal Fax Law Preempts California Law
A Federal District Court in California found that California’s
fax law is preempted by federal law as it pertains to interstate faxes.
California’s law would have barred sending both interstate and intrastate
faxes without prior consent. The Court found that the California law conflicts
with federal law since it does not contain the established business relationship
exception that was added to federal law last July. As a result of this
ruling, nonprofits outside of California now will be able to fax to recipients
in California with whom they have an established business relationship.
California’s law will still apply with respect to intrastate faxes,
that is faxes to and from parties within that state.
More on fax regulations.
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Upcoming Events
IS Policy Action Network to Discuss Nonprofit Election Activity
Independent Sector’s Policy Action Network will be discussing
new guidance from the IRS on nonprofit political activity during its April
21st call. A representative from the IRS office of tax-exempt entities
will participate to review the guidance and answer questions. This will
be helpful and important information for our members who will be organizing
nonpartisan election-related activities leading up to the November elections.
The call follows the March 17th briefing, which focused on a similar theme
– engaging in voter education and outreach activities.
The April 21st call will begin at 2pm EST and will end by 3pm. Contact
Gloria Engelke at GloriaE@independentsector.org
if you would be interested in participating.
More on IRS Political Activity
Guidance.
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