U.S. Senate Finance Committee Report Highlights Potential Tax Reforms for Tax-Exempt Organizations

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On June 13, 2013, the majority and minority staffs of the U.S. Senate Finance Committee (the “Committee”) released a 19-page compilation of federal tax reform options addressing various rules and laws applicable to tax-exempt organizations and charitable giving. Click here to view the Committee’s report. This report does not represent a particular plan or approach suggested by the Committee staff; rather, it includes a wide variety of reforms suggested in the past by bipartisan commissions, tax policy experts, members of Congress, and witnesses at Committee hearings. Thus, while not reflecting current or proposed law, the report nevertheless merits attention and discussion as a closer look at the types of reforms that the Committee is likely to consider as it delves further into tax reform efforts.

Goals and Concerns -

The report lists six broad areas of concern that pertain to the tax-exempt community. These issues include the fairness of the current charitable contribution deduction mechanism; the economic efficiency of that deduction in its current form; the extent to which certain tax-exempt organizations may currently engage in political activity; the overall public and societal benefits arising from the tax-exempt sector; the question of whether tax-exempt organizations compete unfairly with taxable counterparts, notwithstanding the unrelated business income tax (“UBIT”) regime designed to minimize such unfairness; and a perceived lack of accountability and oversight of tax-exempt organizations that allows for waste, fraud, and abuse. At the same time, the report notes “several potential goals that could serve as guidelines for the Committee when reviewing the tax rules for exempt organizations and charitable contributions.” Those goals include...

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Topics:  Charitable Organizations, Exempt Organizations, Tax Exemptions, Tax Reform, UBIT

Published In: Elections & Politics Updates, Nonprofits Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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