Senate Finance Committee - Tax reform options concerning tax-exempt organizations, charitable giving 

June 14: The Senate Finance Committee this week issued, as part of a series of papers compiling tax reform options, a paper on options regarding tax-exempt organizations and charitable giving.

The Finance Committee’s June 13 paper [PDF 612 KB] describes tax reform options covering a broad range of topics, including the charitable contribution deduction, the taxation of business activities of nonprofits, and “broad” tax-exempt issues.

One of the more interesting sections of the paper, in light of recent events regarding the IRS’s treatment of exemption applications from organizations potentially involved in political activities, is the section on political activity and lobbying of tax-exempts. Options listed in this section of the paper include the following:

  • Limit political activity of 501(c)(4), (c)(5) and (c)(6) organizations
  • Change the categories of tax-exempt organizations that may engage in political activities
  • Reform reporting and disclosure rules
  • Clarify that payments to 501(c)(4) organizations are excluded from the gift tax

There are numerous options listed under each heading.

The options contained in the paper are merely discussion options. None is necessarily endorsed by either Finance Committee Chairman Max Baucus (D-MT) or ranking member Orrin Hatch (R-UT). The timetable for action on tax reform remains unclear.

For more information, contact:

Rick Speizman, Partner-in-Charge of KPMG's Washington National Tax Exempt Organizations Tax group

+1 (202) 533-3084

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