Friday, June 1, 2012
Read the latest updates below or with full articles online.
ACR Blog Roundup
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The ACR blog (www.acreform.com/blog) highlights our thoughts on news of the day. For regular blog updates, follow us @acrefom on Twitter.
Here is a highlight from the ACR blog:
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Growing Trend of Local and State Governments Looking to Tax Exempt Organizations for Revenue
Many tax-exempt nonprofit organizations such as universities, nonprofit hospitals and museums occupy property that would otherwise be taxable to businesses or individuals. With being tax exempt, an organization is typically providing some kind of benefit to the public. However, with the economic slump, many state and local governments have been running budgets into the red and have been looking for alternate ways to find revenue.
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Washington Roundup
Current State of Play
While the Senate has been out on recess this week, the House of Representatives returned on Wednesday for a busy month ahead to finish work on various funding authorization bills. While the Senate is scheduled to be in for the entire month of June, the House will take a recess for one week, meaning the chances of a long-term compromise on these funding measures could prove difficult and short-term extensions are increasingly likely.
CBO Report Enters the Mix
Earlier this month, the non-partisan Congressional Budget Office (which is charged with reviewing legislation that impacts the budget) issued a report saying that the country would likely revert back into a recession next year if Congress does not avoid the year-end “fiscal cliff.” This cliff is the combination of automatic spending cuts and tax increases set to take effect overnight at the end of the year. Speaking out publicly on this issue was a rare act for the CBO –which typically goes to great lengths to stay out of the political fray– and underscores the severity of the situation at the end of the year.
Tax Reform Markers Are Taking Shape
On May 17th, House Ways and Means Committee Chairman Dave Camp (R-MI) laid out his plans for tax reform. He noted
there was strong support for using the impending January 1st massive tax increase as leverage to force action in 2013 on comprehensive tax reform. Chairman Camp noted that Republicans are proposing to use the lame duck session of Congress to pass “fast track” procedures to facilitate the process. This would send “a clear, strong message to the markets, to employers and families that Washington is serious about reforming our tax code and putting us on a path to sustained economic growth.” He added
that there are 34 examples of fast track procedures already in law and that Ways and Means staff are currently examining the various options, although the most common form of this procedure involves a bill that is brought to the floor and cannot be amended or debated. This echoes a statement made by Speaker John Boehner (R-OH) two weeks
ago. With both the Speaker and the Ways and Means Chairman advocating the fast track approach, it is becoming clear that this will likely serve as the House game-plan for the lame duck session that will begin after the November election... (Continue reading)
Consider This
Another Game Changer
Over the last few weeks, when officials in Washington talk about the economy, the terms are positively apocalyptic. Federal Reserve Chairman Ben Bernanke warns that we are headed over a “fiscal cliff” if we don’t mend our ways. Congressional staffers fret about the coming “taxmageddon.” And even the normally mild-mannered Congressional Budget Office released a report in late May which predicted another recession next year if policymakers fail to deal with all the tax and budget provisions that are on the table by the end of this year.
But wait, there’s more: another potential wrench is in the works...(Continue reading)
Making Headlines
Tax Reform
Bloomberg reports on the challenges Republican Members of Congress face as they consider limiting or ending popular tax breaks to pay for lower tax rates as part of tax reform.
As we reported, on May 16th the House Ways and Means Oversight Subcommittee held a hearing on tax issues affecting nonprofit organizations. The sector continues to respond to issues raised during the hearing including the preferential treatment for some charities over others. For more on the hearing click here
and here.
Federal
Tax Exemption: In the New York Times, five religion experts and activists debate the legitimacy of churches’ eligibility for tax-exempt status and receiving tax-deductible donations. For a summary of the arguments see: Tax-exempt Status for Churches Debated, Nonprofit Quarterly
States/Local
Charitable Deduction: Both Oklahoma and Kansas legislatures have reached tax agreements that reduce income tax rates for residents by eliminating some tax credits and deductions but maintain the charitable deduction.
Nonprofit Compensation: Measures are underway in New York and Massachusetts that impact compensation at charitable organizations:
Tax Exemption: The Illinois House approved legislation (Senate Bill 2194) that more clearly defines how much charity care nonprofit hospitals must provide to qualify for property and sales tax exemption. The bill would require that the value of free or discounted care to the poor be equal to or greater than the hospital’s annual estimated property tax liability, an expansion of the current definition. Also see: Illinois Hospital Association Statement.
Transparency
IRS Reporting: Robert Huberty of the Congressional Research Center highlights another issue raised during the recent Ways and Means Oversight Committee hearing: the growing cumbersome nature of the IRS 990 Form and the extensive costs involved with completing the reporting.
Research (Studies & Reports)
Donor Advised Funds: According to The Chronicle of Philanthropy’s biennial survey
of 126 large donor-advised funds, assets at the biggest funds were 10 percent higher than they were in 2007, just prior to the economic downturn. For an interactive look at the assets and grants of some of the largest donor advised funds visit Inside the Big Donor-Advised Funds. Also see: Columbus Survey 2011, Guideposts for Navigating Peaks and Valleys
This Caught Our Eye…
Telling Our Story - Kevin Murphy, president of the Berks County Community Foundation and Council on Foundations board chair, says American philanthropy is failing to communicate to the public the tremendous impact of its work, adding that transparency is not the same as storytelling.
Philanthropy and Journalism: The charitable sector continues to grapple with its role in aiding traditional journalism and supporting new forms of media.
D5: The D5 Coalition reports on progress toward its 5-year effort to help U.S. foundations and grantmaking organizations at making philanthropy more diverse, equitable, and inclusive.
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