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Independent Sector
Policy Update
July 29, 2005
Nonprofit Reform Legislation Expected in September
Senate Finance Committee Chairman Charles Grassley (R-IA) said that the committee will not introduce a bill to reform charitable organizations until September. His original plan was to propose legislation this summer. Independent Sector members should use this opportunity to talk to their Senators over the August recess about the recommendations in the Final Report of the Panel on the Nonprofit Sector. The entire report is available online as well as a fact sheet that provides an overview of the Panel’s recommendations.
Estate Tax Vote Postponed Until September
Senate Majority Leader Bill First (R-TN) plans to bring estate tax legislation to the floor for a vote when the Senate returns from its August recess, though it does not seem likely that he has the 60 votes necessary to proceed on a full repeal.
IS encourages all public charities to examine their positions on the estate tax and, if possible, to add your voices to the growing number of organizations supporting reasonable reform and opposing full repeal of the estate tax. Contacting your Senators during the August recess could be critical to the outcome of estate tax legislation. IS’s Fact Sheet on the Estate Tax (PDF) can be downloaded from our website. More on estate tax reform
House Passes Postal Reform Bill
The House passed the Postal Accountability and Enhancement Act, HR 22, on July 26 by a vote of 410 to 20. The bill would, among other things, permit the U.S. Postal Service to use escrowed funds to pre-fund postal retiree health benefits, which could delay future postal rate increases for almost all types of mail, including for charitable organizations. The Senate Homeland Security and Governmental Affairs Committee approved the companion bill, S 662, on June 22.
Latest News on State Nonprofit Reform Legislation
Independent Sector now provides its members an extensive guide to legislation introduced in 28 states on subjects such as nonprofit oversight, accountability, and transparency. Many of the bills update regulation of charitable solicitations, including changes to registration requirements. For example, Virginia enacted legislation (HB 2871) to allow charitable organizations and professional solicitors to file their registration statements online; Connecticut and South Carolina proposed bills to limit the percentage of contributions an organization may pay a solicitor. In Rhode Island a resolution to create a special House commission to study the feasibility of creating an accountability system for nonprofits passed in the House. While typically only a small number of the bills are enacted, the chart provides an overview of the types of proposals that are being offered.
See the updated Nonprofit Reform State Legislation Tracker (PDF) (IS Members Only)
CBO Report on the “Untaxed Business Sector”
A recent report by The Congressional Budget Office examines the feasibility of taxing income from the sales of goods and services by tax-exempt organizations, including hospitals, universities, credit unions and utilities owned by state or local governments. CBO estimates that the tax-exempt entities contribute approximately 5.3 percent of the net national product. The report examines the likely revenue and economic effects of taxing the income of tax-exempt entities and concludes that such taxation would yield less revenue than expected and could have unintended economic costs.
Read the full CBO report (PDF).
IRS Outlines Nonprofit Advocacy Rules in Regards to Judicial Nominations
The IRS has posted on its website an explanation of lobbying rules for 501(c)(3), 501(c)4), and 527 organizations interested in advocating for or against a Supreme Court nomination. All three types of organizations are permitted by law to attempt to influence Senate confirmation of a federal judicial appointment, which is not considered campaign intervention. However, while 527 and 501(c)(4) organizations can expend unlimited resources, 501(c)(3) organizations are subject to normal lobbying rules – their advocacy efforts must further their exempt purpose and may not be a “substantial part of their activities.”
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