PND (2/15/2000) -- Joint Committee on Taxation Issues Recommendations on Tax-Exempt Organizations

Responding to a directive in the Internal Revenue Service Restructuring and Reform Act of 1998, the Joint Committee on Taxation has issued a report on confidentiality and disclosure provisions for tax-exempt organizations.

The report generally proposes expanding the information subject to disclosure, with specific recommendations providing for the disclosure of nonprofit documents including (but not limited to) all written determinations and background file documents involving tax-exempt organizations; the results of audits of tax-exempt organizations; applications for exempt status (and supporting documents), including those pending IRS approval; audit and examination information provided to attorneys general and other nontax state officials or agencies; Forms 990-T (the unrelated business income tax return); and any returns filed by affiliated organizations of tax-exempt organizations.

The committee also recommended that private foundations be required to file a summary of capital gains and losses reported on their 990-PFs. The report also recommends that the IRS require that foundations provide a full listing of their capital transactions to the agency and the public, upon request.

Let America Speak, a coalition of organizations committed to defending nonprofit advocacy rights, criticized several provisions in the report related to nonprofit lobbying. Among them were proposals that required 501(c)(3) organizations to provide information about their lobbying activities on their annual tax returns; disclose the amount of money they spent on activities under the "self-defense" exception to the lobbying rules; and disclose expenditures for nonpartisan research and analysis if the research or analysis includes a "limited 'call to action.' "

The Treasury Department, which also was directed by the Internal Revenue Service Restructuring and Reform Act to study the matter, has not yet issued its report. Congress will consider both reports and then decide whether to act on any of the recommendations.

To download the Joint Committee report in PDF format, visit: http://www.house.gov/jct/pubs00.html

"Joint Committee on Taxation Report Contains Nonprofit Advocacy Provisions; Proposals Would Create Burdensome New Recordkeeping Requirements for Nonprofits." Let America Speak News Release 1/28/2000.

McGovern, James J. "Exempt Organizations Update: What's Hot In Washington." February 2000. KPMG Washington National Tax. (Available through Independent Sector.)

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