Policy Update

Next Steps on Senate Tax Bill

11/29/2005

Source: Independent Sector

On November 18, Independent Sector noted that the U.S. Senate had just passed the Tax Relief Act of 2005 (S. 2020), which includes a package of charitable giving incentives and reforms important to our sector. Our staff has analyzed the final bill, including the modifications in the manager's amendment, and has posted an expanded summary of the provisions on our website.

The new version also contains one correction to our previous email: the current bill's mandatory payout requirement would apply only to Type III supporting organizations, not to Type I or to Type II organizations.

With assistance from our members, IS has identified concerns about specific provisions in the legislation. We are now working to have those areas revised so that:

Charitable organizations with unrelated business income (UBIT) will not be forced to make their UBIT returns (generally Form 990-T) public nor have independent auditors certify those returns.
Restrictions on payments from donor-advised funds do not impede legitimate charitable activities.
Prohibitions on private foundation grants to supporting organizations apply only to Type III organizations, not to Type I or Type II.
Prohibitions on transactions between supporting organizations and disqualified persons apply only to Type III organizations.

The House of Representatives is expected to act on its $56.1 billion tax reconciliation package (H.R. 4297), which does not include any of the charitable incentives or reforms, during the week of December 5. If they complete this work quickly, it is possible that there will be a conference before the end of the year to iron out differences between the two bills.

Independent Sector will be working closely with both the House and Senate to move forward a package of charitable incentives and reforms that are consistent with the Panel on the Nonprofit Sector's recommendations.

As you may know, these charitable reforms and incentives are only a part of an overall tax bill that would extend certain tax cuts and implement other tax policy changes. Independent Sector has not taken a position on the overall bill.

Please do not hesitate to contact Pat Read, IS's senior vice president of public policy, at patr@independentsector.org if you have questions or would like to offer feedback concerning this bill.