Thursday, June 11, 2009
The Advisory Committee on Tax Exempt and Government Entities (ACT) issued its latest Report of Recommendations to the Internal Revenue Service yesterday. Of most interest to nonprofits will be the set of recommendations relating to clarifying and facilitating cross-border philanthropy by private foundations. Those recommendations are:
1. Creating a depository of equivalency determinations - i.e., determinations that a foreign entity is the equivalent of a U.S. charity.
2. Publishing guidance clarifying that certain foreign sources of income count as public support for purposes of classifying a foreign entity as a public charity (as opposed to as a private foundation).
3. Simplifying and enhancing the private foundation expenditure responsibility rules by providing various safe harbors.
4. Providing additional examples of program-related investments.
The seven earlier ACT reports are also available. To the best of my knowledge, no one has analyzed these reports to see to what extent the IRS followed ACT's recommendations.