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Independent Sector
Policy Update
September 7, 2005
Congress Returns to New Priorities
Having returned to Washington, Congress has reordered its priorities in the wake of Hurricane Katrina. It is clear that Congress will provide immediate assistance for hurricane victims and address the long-term needs in the Gulf Coast region; the Senate also will focus on filling two vacancies on the Supreme Court.
Otherwise, however there is much uncertainty about the Congressional agenda. The timing and substance of budget reconciliation legislation, slated to be taken up in this month, is not clear. There is particularly doubt about whether Congress will still proceed with the cuts to entitlements such as Medicaid, food stamps, and other programs that serve low-income families and children that were supposed to be included in the reconciliation legislation. .
The timing of the introduction of major charitable reform legislation is also unclear, though a bill could be introduced this month. Senator Santorum (R-PA) has indicated that the Senate Finance Subcommittee on Social Security and Family Policy, which he chairs, will hold a September 13th hearing on the CARE Act and how charities are helping people across the country.
Estate Tax Vote Temporarily Postponed
Senate Majority Leader Bill First (R-TN) has temporarily put off plans to take up legislation to repeal the estate tax. He had intended to hold a vote as soon as the Senate returned, even though it appears he lacks the 60 votes necessary to overcome opposition to full repeal. If full repeal fails after the rescheduled vote occurs, Senator Jon Kyl (R-AZ) is prepared to offer a proposal that would greatly reduce the number of estates subject to the tax by increasing the exemption to $7 million (currently $2 million) and permanently linking the estate tax rate to the capital gains tax rate (currently 15%). IS opposes both full repeal and proposals that significantly reduce the top tax rate (currently 47%) because studies have shown that the most significant incentive for charitable contributions from estates is the top tax rate.
Take Action
Several IS members, including NCNA, National Council of La Raza, and Minnesota Council of Nonprofits, have already sent action alerts to their members on this issue. IS encourages all public charities to examine their positions on the estate tax and, if possible, toadd their voices to the growing number of organizations supporting reasonable reform.
More on estate tax reform
Policy Action Network Begins Monthly Policy Briefings
This month IS initiates our Policy Action Network (PAN) policy briefings. PAN will bring together sector leaders from across the country to learn about and take collaborative action on key nonprofit issues being addressed at the federal, state, and local levels. IS will convene monthly conference calls for our members in the Network; the first hour-long issue briefing, to be held September 22, will feature Martha Coven, Senior Legislative Associate at the Center on Budget and Policy Priorities. As Congress turns its attention to readying the nation’s FY ’06 budget, Martha will address how key issues in the budget could substantially affect the sector and how charitable organizations can engage more efficiently in the budget process.
Please let us know if you are interested in joining this unique network of policy advocates by emailing gloria@IndependentSector.org. Please indicate whether you will be participating in the first call on Thursday, September 22 at 2:00pm EDT.
FEC Proposes New Rule for 501(c)(3) Issue Ads
Nonprofits may have to change the type of issue ads they broadcast around election time if the Federal Elections Commission adopts a newly proposed rule. On August 24th, the FEC issued the proposed rule in response to a federal District Court decision (Shays v. FEC) that sent back some of the agency’s new campaign finance rules for revision. Included in the decision is the exemption 501(c)(3) organizations received from the electioneering communications regulations. “Electioneering communications” are currently defined as broadcast ads distributed for a fee that refer to a candidate for federal office aired within 30 days of a primary or 60 days of a general election. Among the options under consideration by the FEC are: narrowing the 501(c)(3) exemption; repealing it; or replacing it with a broad new exemption that covers all communications that do not “promote, support, attack or oppose” a federal candidate. The FEC is not proposing to further define the phrase “promote, support, attack or oppose.” Comments on the proposed rule are due September 30, 2005 and a hearing will be held on October 19.
More
IRS Releases New Vehicle Donation Form
IRS has released a new form for charities and donors to use in reporting vehicle donations. Charities will be required to complete Form 1098-C with information about the donated vehicle, whether it was sold or used by the charity, and the amount the vehicle sold for. One copy of the form will be filed with the IRS and another copy is to be sent to the donor as an acknowledgment of their contribution.
Form 1098-C (PDF)
Instructions for Form 1098-C (PDF)
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