ACTION Blog

The Internal Revenue Service (IRS) announced on December 16 that the filing date for tax-exempt organizations with annual returns due in January and February will be pushed back to March 30, 2012.  This extension applies to organizations that electronically file Forms 990, 990-EZ, 990-PF, or 1120-POL.  No form needs to be filed to get the March 30 extension--it is automatic.  The IRS said it moved the filing deadline because the part of the service's modernized e-file system will be offline during the first two months of 2012. Source: BNA Daily Tax Report

Rep. Jim McDermott (D-WA), a senior Democratic member of the House Ways and Means Committee, introduced legislation recently to return the estate tax to 2001 levels.  The Sensible Estate Tax Act of 2011, which calls for a 55 percent marginal rate on estates above a $1 million exemption for individuals and a $2 million exemption for married couples, which would be indexed for inflation.  The current estate tax, with a $5 million exemption and a maximum rate of 35 percent, is set to expire at the end of 2012.  Republicans have previously supported the current estate tax regime and opposed attempts to lower the exemption and raise the tax rate.

The Sensible Estate Tax Act of 2011 would encourage more giving to charitable organizations, in order to reduce tax payments, and is likely to increase government revenue to help offset the deficit.  Encourage your Congressperson to co-sponsor this important legislation.

During a House Oversight and Government Reform Committee mark up of postal reform legislation recently, the committee adopted an amendment offered by Rep. Danny Davis (D-IL) to delay by three years the implementation of a proposed reduction in the discount postage rate available to nonprofit organizations.  The legislation now awaits action by the full House of Representatives.  Bipartisan postal reform legislation (S. 1789) recently introduced in the Senate does not include a reduction of the nonprofit postage discount rate and has earned the praise of both lawmakers and outside stakeholders.

The House Oversight and Government Reform Committee has marked up H.R. 2309, the Postal Reform Act of 2011, which would reform the United States Postal Service in the wake of an expected $8 billion in losses in FY 2011.  Among other things, section 403 of the legislation would reduce the current discount rate for nonprofit postage by 5 percent each year for 6 years, changing the discount rate from 40% to 10% by 2018.  On September 21, an amendment to fully repeal section 403 was offered by Rep. Danny Davis (D-IL) during subcommittee markup, and failed by a vote of 8-4.  

 

How much, if at all, will the reduction in the discount rate impact your organization?  Those who use bulk mail will especially feel the impact.  Tell us your story here. 

President Obama’s proposal to limit the value of charitable deductions for wealthy individuals would cost nonprofits at least $2.9 billion and perhaps as much as $5.6 billion, according to a study unveiled on Friday. The new research was presented at a conference by the Urban Institute’s Center on Nonprofits and Philanthropy and was paid for by a $1 million research grant from the Bill & Melinda Gates Foundation. Economists examined how people would be affected by Mr. Obama’s plan to limit to 28 percent the amount affluent people could write off in all itemized deductions. The wide range in the estimate is a sign of disagreements among economists about the exact impact of tax changes on giving. Source: The Chronicle of Philanthropy

The President's plan to reduce the value of itemized deductions for individuals earning more than $200,000 and married couples earning more than $250,000 has been replaced by a Senate Democratic plan to impose a 5.6 percent surtax on millionaires.  The new plan would raise $453 billion over 10 years and would more than offset the cost of a modified version of President Obama’s jobs bill (S 1660), which consists of $447 billion in tax cuts and new spending programs. According to a score released by the Congressional Budget Office and the Joint Committee on Taxation on Friday, the surtax would raise $3 billion more than the package of revenue raisers originally offered by the White House.

S 1660 will be taken up this week in the Senate.  Urge Senators Patty Murray and Maria Cantwell to support the replacement surtax on millionaires and to defeat any amendments that would reinstate a limit on itemized deductions.

A new regulation proposed this week by the Office of Government Ethics (OGE) would make the prohibition on federal government employees from accepting any gifts from lobbyists permanent.  The rule was implemented by President Obama’s executive order in 2009, but the OGE proposal would modify the 2009 rule.

The new regulation would eliminate certain exceptions to the gift ban, including prohibiting federal employees from attending functions sponsored by lobbying groups that are considered “widely attended events” and accepting social invitations.  It will, however, keep exceptions for birthday gifts from a lobbyist's spouse and for attending training courses provided by a lobbying organization that gives a discount to federal workers. 

The good news for nonprofits is that the regulation would also exclude four different groups from its definition of a lobbying organization:

• 501(c)(3) nonprofit organizations
• media companies acting in their news-making capacity
• institutions of higher learning
• professional associations that help with professional development.

OGE is accepting written comments on the proposed rule until November 14 by any of the following methods:

• E–Mail:  usoge@oge.gov.  Include the reference ‘‘Proposed Amendments to Part 2635’’ in the subject line of the message.
• Fax:  (202) 482–9237.
• Mail/Hand Delivery/Courier:  Office of Government Ethics, Suite 500, 1201 New York Avenue, NW., Washington, DC 20005–3917, Attention: Richard M. Thomas, Associate General Counsel.

All submissions must include OGE’s agency name and the Regulation Identifier Number (RIN ), 3209–AA04, for this proposed rulemaking.

Independent Sector reports that some "experts," including Alan Greenspan, whose policies brought us the 1991 recession and dot.com recession of 2000, recommend elimination of all tax expenditures, a "throwing the baby out with the bath water" approach to cutting the federal deficit. 

A panel of experts, including former Federal Reserve Chairman Alan Greenspan, strongly recommended either elimination or significant reform of tax expenditures in testimony during a Senate Finance Subcommittee hearing yesterday. Greenspan endorsed one of the tax reform approaches of the president’s deficit commission, under which all tax expenditures would be eliminated, with Congress subsequently deciding which expenditures to add back to the code. Edward Kleinbard, former Joint Committee on Taxation chief of staff, recommended phasing out personal itemized deductions, including the home mortgage interest deduction and the charitable contribution deduction.

Such statements are why we in the nonprofit sector must urge the Joint Committee established by the Deficit Reduction Act of 2011 to take a reasoned approach to the charitable deduction, one that does not cut off the communities we serve and increases revenue for the government. 

Former Reagan adviser Martin Feldstein suggested eliminating many tax expenditures, but disagreed with Kleinbard on the charitable deduction, arguing that every additional dollar the government collects under that change would come directly out of the pockets of charities.

Let Sen. Patty Murray, co-chair of the Committee, know that we should increase the incentive to contribute to nonprofit organizations, not eliminate it, and increase government revenue.  Send you comments to http://murray.senate.gov/public/index.cfm?p=ContactMe.

The 12-member bipartisan congressional committee charged with finding ways to cut $1.5 trillion from the budget deficit will hold its first meeting Thursday, Sept. 8. Co-chairs Sen. Patty Murray (D-WA) and Rep. Jeb Hensarling (R-TX) said the committee's operating rules would be adopted in the upcoming meeting. The co-chairs also announced that the panel’s first public hearing is scheduled for Tuesday, Sept. 13 and is titled, “The History and Drivers of Our Nation's Debt and Its Threats.” Douglas Elmendorf, director of the nonpartisan Congressional Budget Office, will be a witness.

If you have suggestions for reducing the deficit, Sen. Murray's office is taking input via letters.  Alliance of Nonprofits would also like to hear your suggestions here, to help us represent Washington state's nonprofit sector better.

Action alert from Independent Sector:

President Barack Obama will address a joint session of Congress on Thursday, September 8 to unveil his proposal to spur job creation.  Let’s make sure that nonprofits are not overlooked.

More than ever, families, communities and governments are turning to nonprofits for help.  Hiring incentives for nonprofits will benefit American communities and the economy, allowing nonprofits to employ more people and provide more services to our communities.  

The Nonprofit Sector Is a Major Employer

America’s nonprofits employ more than13 million people -- one of every 10 American workers.  We collectively pay nearly $670 billion in wages and benefits in the U.S., and employ more people than the finance, insurance and real estate sectors combined.  Each year, nonprofits spend $1.3 trillion, contributing to the economy and making important investments in communities across the country. Click here for more resources.

Take Action

Please join us in urging the President to include nonprofits in his jobs proposal.  You can do this by directly reaching out to the White House at the contact info provided below, and also by joining our social media campaign.

Our message to the President is that any provisions intended to encourage job creation by for-profit companies should be made available to nonprofit employers -- including new hire tax credits, tax credits for hiring veterans, government-backed loans, subsidies for particular investments, or other opportunities.

Please contact the White House directly here or call 202-456-1111 – even better, call any contacts you may have in the administration. You can also sign this Twitter petition and tell President Obama to include nonprofits in the jobs bill.  Encourage your networks to re-tweet and sign on.

We like what NCN says about the deficit reduction deal, and quote them here.  This is your opportunity to let us know how you think it will affect your organization.

What It Means to Nonprofits
No one can predict with any certainty how the forces unleashed by the deficit reduction deal will impact nonprofits and the people they serve, nor, for that matter, how the deal will impact businesses or state and local governments.  Here are a few observations to provide some perspective to the coming debates:

• Spending cuts:  As the New York Times, Washington Post, and the Christian Science Monitor report, governments at the state and local levels already are bracing for significantly reduced funding, which, in turn, limits their ability to work with nonprofits to provide services on behalf of governments in communities throughout the country. 
• Entitlement Reforms:  Since policymakers generally assume nonprofits will fill in the gaps the policymakers create, many of the reforms to Medicaid, Medicare, and Social Security are likely to increase demand for services and reduce funding.  Proposals on the table range from reducing eligibility and reimbursement rates, to delaying and taxing benefits. 
• Tax Reforms:  There is broad agreement that the tax code is too complicated and unfair, but no consensus exists on whether reforms should be designed primarily to simplify the law and reduce tax rates, or to generate increased revenues to reduce the deficit.  Lowering the individual tax rates from the current top rate of 36 percent to 25 percent, as discussed in the House, is expected also to lower the incentive for giving, as is the President’s proposal to limit the value of charitable and other itemized deductions. 

Tell us what you think:  How will the budget deal affect your ability to accomplish the mission of your nonprofit?  How will it affect the people you serve?