Policy Update

Tax-Exempt Organizations, 2007 Outlook

12/01/2006

Supporting Organizations Seeking Reclassification
At an American Bar Association workshop yesterday, Chief of Rulings and Agreements for the Internal Revenue Service Marvin Friedlander reported that over 70 supporting organizations (509(a)(3) groups) have submitted requests for reclassification of their public charity status. 

The requests follow the IRS’ issuance of new guidance on November 7 explaining how qualified supporting organizations can change their tax-exempt status. 

The IRS released the guidance in anticipation that some supporting organizations would be interested in changing their classification as a result of charitable provisions enacted as part of the Pension Protection Act of 2006 (Pub. Law 109-280).  Source: BNA Daily Tax Report and Tax Analysts
See more from Independent Sector on the IRS’ new guidance regarding reclassification of tax-exempt status.

Tax-Exempt Organizations, 2007 Outlook

...In the Internal Revenue Service
IRS staffer Marvin Friedlander yesterday said the IRS will issue soon short-term guidance that will help supporting organizations verify their Type I, II, or III status to private foundations.  The IRS is also considering how to manage in the long-term reclassification requests by supporting organizations. 

Friedlander additionally said that the Form 990 information return series for 2006 will be released in January, along with a new form, Form 8913, that exempt organizations will be required to file in order to claim a telephone excise tax refund.  The 2006 Form 990 will include more questions on donor-advised funds and controlled organizations, and will include a separate schedule on credit counseling organizations.  Source: BNA Daily Tax Report and Tax Analysts

...In Congress
Echoing comments by congressional staffers and members of the charitable community, Roger Colinvaux of the Joint Committee on Taxation told attendees at a conference yesterday that the results of November’s elections are likely to have an impact on tax legislation affecting tax-exempt organizations. 

Colinvaux said it is difficult to predict what Congress’ tax-writing committees are likely to do on this front.  At the same time, he said that the Senate Finance Committee is likely to take action on political campaign activities by exempt organizations.  He also said the tax committees will consider technical corrections to the Pension Protection Act of 2006.  Source: Tax Analysts

Congress Expected to Pass CR Next Week

The House and Senate are expected to pass a continuing resolution that will fund the government until February 15 next week.  The Senate continues to be unable to pass its 10 remaining FY 2007 spending bills.  Appropriators and Office of Management and Budget Director Rob Portman still prefer to complete as many individual appropriations bills as possible before adjourning the 109th Congress. 

However, GOP conservatives continue to hinder the bills’ passage, preferring to pass a CR funding the government at lower levels.  Source: Congress Daily AM and Congress Daily PM