On March 21, 2006, I had the great pleasure of moderating a panel for the California Association of Nonprofits Policy Days conference in Sacramento focused on "Keeping Up With the Law." The panelists were David Levitt, principal with Silk, Adler & Colvin; and Mark Krausse, executive director of the California Fair Political Practices Commission. The panel discussed some of the many legal developments affecting nonprofit organizations over the past 15 months. Mr. Levitt focused on mostly federal issues, while Mr. Krausse focused on state issues regarding lobbying and political activities.
Here is a list of some of the highlights of the past 15 months:
- Nonprofit Integrity Act went into effect.
- Joint Committee on Taxation released a report, "Options to Improve Tax Compliance and Reform Tax Expenditures," suggesting tax law changes and a number of reforms affecting exempt organizations (including a five-year filing requirement to maintain exempt status and a limitation on the deduction of gifts of certain appreciated property to donor’s basis).
- IRS issued an audit summons to the NAACP regarding the organization’s alleged political campaign intervention; NAACP informed the IRS that is would not respond because the IRS did not follow proper procedures and its actions were politically motivated.
- Senate Finance Committee held a hearing on "Charities and Charitable Giving: Proposals for Reform."
- Ways and Means Committee held a hearing on an Overview of the Tax-Exempt Sector, including its legal history, size, scope, impact on the economy, need for congressional and IRS oversight, and what the IRS is doing to improve compliance with the law.
- Charity Life Insurance Bill (S. 993) introduced. The bill would place a 100% excise tax on the acquisition costs of certain life insurance contracts purchased by charities which primarily benefit unrelated private investors. Read Independent Sector’s post here.
- Ways and Means Committee held a hearing on "The Tax Exempt Hospital Sector." Committee Chair indicated that the purpose of the hearing was to probe the differences between tax-exempt and for-profit hospitals, and to discern the benefits taxpayers receive for the tax subsidy afforded tax-exempt hospitals.
- Senate Finance Committee held a hearing on "The Tax Code and Land Conservation: Report on Investigations and Proposals for Reform." The hearing featured testimony about the Committee’s report on The Nature Conservancy.
- Panel on the Nonprofit Sector presented its Final Report to Congress.
- Katrina Emergency Tax Relief Act signed into law.
- Senate Finance Committee hearing on "Hurricane Katrina: Community Rebuilding Needs and Effectiveness of Past Proposals."
- IRS and Treasury published proposed regulations regarding excess benefit transactions.
- Nonprofit gag provision included in Federal Housing Reform Act.
- The provision disqualifies nonprofits from applying for grants under a new affordable housing program if they, or an affiliated organization, have engaged in any one of the following activities during the preceding 12 months prior to applying for the funds or throughout the duration of the grant period: voter participation activities, publicly promotion or attack of an elected official who may be seeking reelection, lobbying (except for 501(c)(3)s). Read OMB Watch’s post here.
- Senate passes Tax Relief Act of 2005.
- Reflects many of the reforms recommended by the Panel on the Nonprofit Sector and some of the incentives for giving in the CARE Act.
- Department of Treasury revised its Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities originally released in November 2002 and solicited additional comments through February 1, 2006.
- L.A. Times reports on the IRS threat to revoke the exempt status of All Saints Episcopal Church because of an antiwar sermon delivered during the 2004 Presidential election. Read the article here.
- Ways and Means Oversight Subcommittee held a hearing on the response of charities to Hurricane Katrina. Read the transcript here.
- IRS released guidance regarding the reporting requirements for charitable organizations that receive vehicle donations (Notice 2006-1).
- Supreme Court of the United States overturned a decision that barred Wisconsin Right to Life from broadcasting ads that mentioned a senator during his re-election campaign and held that the McCain-Feingold Bilateral Campaign Reform Act’s ban on electioneering communications can be challenged on a case-by-case basis.
- Read Independent Sector’s post about the decision here.
- Deficit Reduction Act of 2005 enacted, creating a major change in the Medicaid Transfer of Assets rules, including a phase-in provision that will result in a denial of long-term care to older Americans who have made charitable donations during the 5 years prior to applying for Medicaid. Read the Social Security Legislative Bulletin here.
- IRS released its report on political activity by 501(c)(3) organizations. Read more here.
- IRS released a revised Form 990. Find 990 packages available for download here.
- IRS increases user fees (e.g., exemption application increased to $750 for organizations with annual receipts over $10,000 effective July 1, 2006). Read more here.
- President’s budget released – includes charitable incentives and reforms regarding conservation easements.
- Washington Post reported on the IRS audit of Texans for Public Justice, a 501(c)(4) organization that was critical of campaign spending by Tom DeLay. The nonprofit claimed the audit, which discovered no tax violations, was political retaliation by allies of DeLay. Read the article here.
- House and Senate conferees held first meeting to begin working out differences in tax reconciliation legislation (H.R. 4297).
- Lobbying Accountability and Transparency Act (H.R. 4975) introduced in the House;
Legislative Transparency and Accountability Act (S. 2349) passed by the Senate.
- Read Independent Sector’s updated post on these lobbying reform bills here.