Wednesday, May 11, 2011

ABA Tax Section Meetings - Roundup

The Daily Tax Report reports on the Treasury, IRS, and Congressional staff representatives' updates on exempt organizations at the ABA Tax Section meetings in Washington, DC at the end of last week.

Program-Related Investments

Treasury attorney-adviser Ruth Madrigal provided updates on the guidance regarding program-related investments for private foundations under IRS §4944 (excise tax on jeopardy investments), stating that Treasury is considering "the double bottom line," "doing well by doing good," and "impact investing" as part of the guidance.  Program-related investments are being considered as a vehicle for redirecting charitable donations into communities.

Health Care

Guidance projects related to health care reform include the exemption of accountable care organizations and the provision of insurance thorugh exempt health care exchanges.

Remaining projects from the Pension Protection Act include Type III supporting organizations, §4943 excess business holding rules, and donor-advised funds.

Exempt Org-Related Legislation

A Senate Finance Committee staffer discussed proposed hearings on exempt organizations with respect to tax reform, including making permanent certain temporary provisions applying to exempts, a limitation on the amount of charitable donations a taxpayer can itemize, and a flat excise tax on private foundations (which is included in President Obama's 2012 proposed budget).

Joint Tax Committee tax legislative counsel, Gordon Clay, opined that the defintion of "charity" has been substantially broadened over the years, raising the question of whether "preferential treatment should be given to exempts that engage in the traditional helping the poor-type purposes."  In addition, the commerciality doctrine (exempts with a direct taxable counterpart) continues to rear its ugly head, raising the viability of exemption for organizations plagued with that problem.


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