Policy Update

IRS Announces New Procedures to Change Public Charity Classification

11/08/2006

Source: Independent Sector

IRS Announces New Procedures to Change Public Charity Classification

Providing new guidance related to charitable provisions recently enacted as part of the Pension Protection Act of 2006 (Pub. Law 109-280), the Internal Revenue Service issued Announcement 2006-93 explaining how a 501(c)(3) tax-exempt organization can seek to change its public charity classification.  Explaining the guidance, the IRS said it anticipates that some supporting organizations (classified under Internal Revenue Code Section 509(a)(3)) will be interested in changing their tax-exempt classification (to either 509(a)(1) or 509(a)(2)) as a result of certain new provisions.  

In particular, the Pension Protection Act includes a provision – the IRA Charitable Rollover – permitting taxpayers to make tax-free charitable contributions from Individual Retirement Accounts (IRAs), however, excludes distributions to supporting organizations.  The Act additionally restricts distributions from private foundations to certain supporting organizations.  Source: BNA Daily Tax Report, Tax Analysts, IRS Guidewire

IRS Releases Form Related to Unrelated Business Income Tax

The Internal Revenue Service recently released the 2006 Form 990-W (pdf), Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations.  Source: BNA Daily Tax Report

Comptroller General Offers Recommendations to Improve Nation’s Fiscal Outlook

U.S. Comptroller General David M. Walker yesterday called for comprehensive tax reform, telling attendees at an event sponsored by the American Institute of Certified Public Accountants that it is necessary to “stimulate economic growth, and make sure that decisions are made because of their economic merits, rather than their tax advantages." 

In addition, Walker encouraged the restoration of expired budget controls and highlighted the severity of the developing healthcare crisis, saying "If there is one thing that could bankrupt our country, it's healthcare."  Source: Tax Analysts