Legislative Status: June 14, 2007

UBIT Update: Late Wednesday afternoon, the Managed Funds Association (MFA) held a conference call updating the status of a potential revenue raiser in the Senate Finance Committee that would subject certain offshore investments to unrelated business income tax (UBIT).  Following up on a series of meetings that MFA has held with staff of both Senate Finance and House Ways and Means Committee members, they said they have yet to find support for this provision outside the Baucus/Grassley committee staff.  That said, this provision is still very much "in play" - although it is not yet concrete and the Joint Committee on Taxation has yet to issue a "score" for the proposal.  In other words, Baucus and Grassley can drive this without universal support.

Right now, the United States Senate and the Senate Finance Committee have been busy working on an energy tax bill.  As a result, the mark-up of the higher education tax bill continues to be delayed.  Though the higher education tax bill is still being discussed as a vehicle for this provision, depending on the timing of the mark-up, the proposal might have to find another vehicle in search of revenue.  Since the UBIT proposal is still not ready, MFA believes that deferred compensation has resurfaced as a potential revenue raiser.  The deferred compensation language would be similar to the proposal that was stripped from the minimum wage bill that was enacted into law earlier this year. 

The Managed Funds Association still believes that now is the time, before legislative language is drafted, to weigh in with Committee members on how such a proposal would affect the community.  As a result, the MFA is weighing options to garner support from those who would be impacted and is considering circulating a letter highlighting the effects of this proposal. 

As always, once we have more information on this letter or any other updates on the UBIT issue, we will circulate to all interested parties.

At the IRS:  The IRS's Advisory Committee on Tax Exempt and Government Entities (ACT) issued its 6th annual report of recommendations on June 13th.  Click here to view report.  Among other items, the ACT recommended a proposal for an Exempt Organizations Voluntary Compliance Program, noting that under current law there is no formal mechanism for a tax-exempt to self-correct if it realizes an error in its filings. 

Please click on the link above the view the report.  You may want pay special attention to the following pages in the report:

Beginning on Page 5 -- A list of the Members of ACT
Beginning on Page 61 -- A description of the recommendation noted above.

House Ways and Means Committee: Thought you might be interested to know that on Tuesday the Chairman of the House Ways & Means Subcommittee on Oversight, John Lewis, issued an advisory (see attached) requesting written comments from the tax-exempt community on provisions relating to tax-exempt organizations in the Pension Protection Act of 2006 (PPA).  The Subcommittee is soliciting input about how those provisions have impacted charities and foundations and “how these new rules affect, or will affect, charitable efforts and the difficulties that have arisen in implementing these provisions.”

Of particular interest however, is the way the advisory was written, stating that the bulk of the relevant PPA provisions were “never discussed on a bipartisan basis, nor the subject of Committee hearings, during the 109th Congress.”  It’s hard to read this any other way than a not-so-subtle dig at the Republican leadership in the last Congress that allowed this bill to pass.

The second thing of interest in this advisory is the public comment deadline, which is July 31, 2007.  If the Oversight Subcommittee wants to make use of any of these comments for its planned overview hearing on the tax-exempt sector, it could signal that the hearing may be put off until after the August recess, and it could also mean that we’re not likely to see a technical corrections bill before the fall as well.

We’ll be meeting with the Ways and Means tax counsel for the Oversight Subcommittee next week, so it will be interesting to get her take on this.  In the meantime, we’ll keep you posted on anything else that comes up.

ADVISORY

FROM THE COMMITTEE ON WAYS AND MEANS SUBCOMMITTEE ON OVERSIGHT

FOR IMMEDIATE RELEASE
CONTACT:  (202) 225-5522
June 12, 2007
No. OV-4

Chairman Lewis Announces Request for Written Comments on
Provisions Relating to Tax-Exempt Organizations in the Pension Protection Act of 2006

House Ways and Means Oversight Subcommittee Chairman John Lewis (D-GA) announced today that the Subcommittee is requesting written comments for the record on the provisions relating to tax-exempt organizations contained in the Pension Protection Act of 2006 (P.L. 109-280).

BACKGROUND:

On August 17, 2006, the Pension Protection Act of 2006 (Act) was enacted into law.  The Act contains over thirty provisions relating to tax-exempt organizations, including charitable giving incentives and exempt organization reforms.  Certain provisions were intended to improve accountability among donor advised funds and supporting organizations.  Most of the provisions were never discussed on a bipartisan basis, nor the subject of Committee hearings, during the 109th Congress.

The Subcommittee is interested in the tax-exempt community's views on the impact of these recently-enacted provisions on charities and foundations.  The Subcommittee is particularly interested in how these new rules affect, or will affect, charitable efforts and the difficulties that have arisen in implementing these provisions.  Further, the Subcommittee requests comments on the provisions scheduled to expire on December 31, 2007.  The deadline to submit written comments is Tuesday, July 31, 2007.

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

Please Note:  Any person(s) and/or organization(s) wishing to submit for the record must follow the appropriate link on the hearing page of the Committee website and complete the informational forms.  From the Committee homepage, select "110th Congress" from the menu entitled, "Committee Hearings".  Select the request for written comments for which you would like to submit, and click on the link entitled, "Click here to provide a submission for the record."  Once you have followed the online instructions, completing all informational forms and clicking "submit" on the final page, an email will be sent to the address which you supply confirming your interest in providing a submission for the record.  You MUST REPLY to the email and ATTACH your submission as a Word or WordPerfect document, in compliance with the formatting requirements listed below, by close of business Tuesday, July 31, 2007.  Finally, please note that due to the change in House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings.  For questions, or if you encounter technical problems, please call (202) 225-1721.

FORMATTING REQUIREMENTS:

The Committee relies on electronic submissions for printing the official record. As always, submissions will be included in the record according to the discretion of the Committee. The Committee will not alter the content of your submission, but we reserve the right to format it according to our guidelines.

Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response to a request for written comments must conform to the guidelines listed below. Any submission or supplementary item not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.

1. All submissions and supplementary materials must be provided in Word or WordPerfect format and MUST NOT exceed a total of 10 pages, including attachments.  Submitters are advised that the Committee relies on electronic submissions for printing the official record.
2. Copies of whole documents submitted as exhibit material will not be accepted for printing.  Instead, exhibit material should be referenced and quoted or paraphrased.  All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.
3. All submissions must include a list of all clients, persons, and/or organizations on whose behalf the submission is made.

Note:  All Committee advisories and news releases are available on the World Wide Web at http://waysandmeans.house.gov.

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