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| home > legislative update > 11.19.07
Legislative Status: November 19, 2007 Update from Congress: On Friday, November 9th, the House of Representatives passed its version of the AMT/Extenders bill, formally known as the “Temporary Tax Relief Act of 2007” (H.R. 3996), by a vote of 216 to 193. As expected, the House vote was largely along partisan lines. The legislation, which provides a one-year “fix” to address the expanding Alternative Minimum Tax, is fully offset (paid for) and currently awaits Senate consideration. In addition, the House legislation includes a package of provisions that extend expiring tax provisions, including a one-year extension of the IRA charitable rollover provision (slated to expire on December 31st). In addition, the legislation included a provision that would allow pension plans, universities and other tax-exempt entities to invest directly in hedge funds and other investment funds without incurring Unrelated Business Income Tax (UBIT). This approach has not been embraced by some on the Senate Finance Committee, so the fate of this provision is currently unclear. In the Senate, there is significant opposition to the House-passed AMT/extenders bill. In general, Republicans oppose providing relief from the AMT by increasing tax rates in other areas, believing that relief from the AMT and the extension of other expiring tax provisions should occur without offsets. Now, Chairman Max Baucus has been discussing a compromise that would pay for the extension of the expiring tax measures – estimated to cost approximately $40 billion – but would not pay for the one-year “fix” to the AMT. At the White House, the President’s senior advisors have released a Statement of Administrative Policy (SAP), indicating their intent to recommend that the President -- if presented with the House language -- veto the legislation and wait for legislation that does not “provide tax relief for some Americans by increasing taxes on others.” Congress adjourned Friday for a two-week recess for Thanksgiving. Action on this AMT/extenders will will resume when they return in December.
Usually, technical corrections legislation is noncontroversial and is often attached to other moving legislative vehicles. Thus, it is likely that this legislation will be added to legislation designed to patch the alternative minimum tax (AMT). If this happens, the package of technical corrections could move quickly upon Congress’ return in December. Give this possibility, the Alliance for Charitable Reform advises all interested parties to review the attached description to see if any of these changes are helpful or hurtful to their particular organization.
Update from the IRS: Last week The Philanthropy Roundtable welcomed Commissioner Steve Miller from the tax-exempt section of the IRS to its annual conference where Miller addressed the role of the IRS in an evolving tax-exempt sector. Miller’s remarks touched on a range of issues, including a new initiative on promoting standards of good governance and accountability. Miller also raised the issue of inefficient and ineffective organizations and whether the IRS should have in identifying those entities. For a recap of Miller’s comments, please click here for an article in the Chronicle of Philanthropy. Click here to read Commissioner Miller's comments.
More Press: An article in the New York Times entitled “How Long Should Gifts Just Grow?” (click to here view the article) focuses on university endowments as well as private foundations and the issue of payout and perpetuity. Current law mandates that private foundations pay out five percent of their assets each year as a condition of their tax exemption. This article not only questions whether requiring private foundations to pay out five percent of their assets each year is sufficient, but also whether other nonprofit institutions should be held to a similar standard. From the Charitable Community – The Independent Sector recently released a document entitled, “Principles for Good Governance and Ethical Practice” (click here to view the document. For comments on and concerns with this document from Adam Meyerson, President of The Philanthropy Roundtable, please click here). |
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