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A proposal to give the Pennsylvania General Assembly the authority to decide when hospitals and other not-for-profit organizations receive tax exemptions was approved by the Pennsylvania Senate. The proposal, which would amend the state Constitution, passed both legislative chambers in 2013. If it passes the House this year or next, it will appear on a ballot for approval by the voters.

Who says charity regulation isn’t political?

Americans for Prosperity Foundation, co-founded by billionaires Charles and David Koch, contends California Attorney General Kamala Harris has no business demanding the names and addresses of its donors, who might face “grotesque threats” if identified. They argue in federal court in Los Angeles that compelling disclosure of the nonprofit organization’s contributors may put them at risk of being targeted by the group’s opponents and intimidate would-be donors. Harris is running for the Senate from California to replace Barbara Boxer.

The Supreme Court previously addressed a similar question in NAACP v. Alabama, 360 U.S. 240 (1959) when it held that the State of Alabama could not require disclosure of NAACP membership lists. It said then “We hold that the immunity from state scrutiny of membership lists which the Association claims on behalf of its members is here so related to the right of the members to pursue their lawful private interests privately and to associate freely with others in so doing as to come within the protection of the Fourteenth Amendment.”

On the Hill

Paul Ryan (R-WI) the House Ways and Means Committee Chairman said that he will look to make progress on a tax code overhaul by the August recess. “Tax reform is a 2015 thing for sure, and I think it has to be done by the end of the summer,” He has also said that complete overhaul of the tax code could take as long as three years. Watch for issues relating to nonprofits, tax exemption and tax deduction to be amongst those debated

Rep. Trey Gowdy (R-SC), has called on the House of Representatives to convene a select committee to investigate the alleged IRS’s targeting of conservative political groups.

The House passed H.R.644 – Fighting Hunger Incentive Act of 2015 in mid-February. Amongst other things the bill if passed by the Senate and signed by the President would:

  • Reinstate and make permanent a provision that would allow people age 70 ½ or older to donate up to $100,000 to charity directly from their IRAs without incurring a tax on the withdrawal.
  • Reinstate and make permanent a provision that would allow property owners to reduce their taxable income by giving up development rights to property for purposes of preserving natural resources.
  • Reinstate and make permanent a provision that would extend and expand the charitable deductions for contributions of food inventory and land conservation easements, increasing from 10 to 15 percent of taxpayer aggregate net income the amount of deductible food inventory contributions, which a taxpayer may make in a taxable year, and set forth rules for determining the basis of contributed food for taxpayers other than C corporations, and the fair market value of the food.

Senate action is pending.

The Senate Finance Committee marked up and approved several miscellaneous tax bills which affect the nonprofit sector. Amongst those were: one which provides the charitable deduction to agricultural research organizations and one which requires the IRS to give nonprofit organizations advance notice if their 501(c)(3) status is in jeopardy.

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