New on the Blog! Public Policy Round Up

Wednesday, February 20, 2013

30791_CapitalwithRaysThere’s so much policy news, we’ve decided to launch a new feature: a weekly round up of top policy news for the philanthropic and nonprofit sector:

Ways and Means Chairman creates “working groups” on tax reform 

House Ways and Means Committee Chairman Dave Camp (R-MI) is considering breaking up the panel into smaller “working groups” to tackle specific aspects of tax reform, according to a senior aide. Ray Beeman, Ways and Means tax counsel, said that Camp is working with committee ranking member Sander Levin (D-MI) to create the bipartisan working groups and decide on the specific subject areas to be addressed. The groups will likely call upon stakeholders on tax reform issues, but would not hold public hearings of their own.

Senate Democrats expected to unveil sequester replacement legislation this week

Senate Democrats are expected to unveil legislation to further delay the implementation of across-the-board sequestration spending cuts until the end of 2013, which could require as much as $120 billion in savings to be fully offset. Although full details are unknown, Democratic leaders have been working to construct a package that is a 50/50 mix of spending reductions and revenue. The package will reportedly include the return of a proposal known as the Buffett Rule, which would impose a 30 percent minimum effective tax rate on income above $1 million for joint filers ($500,000 for individuals).

IRS implements 27-month rule for 501(c)(4) organizations

The IRS issued new guidance for certain organizations, including those classified as 501(c)(4)s, aimed at discouraging organizations from “self-declaring” their exempt status. The ruling (Rev. Rul. 2013-9) issued on January 7, gives non-501(c)(3) organizations 27 months after their formation to apply for exempt status if they wish to have that status apply retroactively. Prior to the ruling, 501(c)(4) organizations could “self-declare” their tax-exempt status by filing a 990 form during tax season. In an effort to learn more about self-declarers, the IRS announced in itsfiscal year 2013 workplan its intention to send questionnaires to “self-declared” organizations who filed Form 990s in tax years 2010 and 2011. Source: BNA Daily Tax Report

 OMB proposed guidance toward full reimbursement of nonprofits

The federal government may soon be helping nonprofit organizations receive full (or at least, more) reimbursement of indirect costs from states and local governments for services nonprofits perform under federal programs. The White House Office of Management and Budget (OMB) released its long-awaited proposed guidance on February 1, that, among other things, would explicitly require pass-through entities (typically states and local governments receiving federal funding) to either honor a nonprofit’s negotiated indirect cost rate, negotiate a rate in accordance with federal guidelines, or pay a minimum rate of 10 percent for up to four years while a nonprofit works to obtain a negotiated rate. The proposal would also consolidate and streamline eight OMB circulars, raise the Single Audit (A-133) threshold from $500,000 to $750,000, and eliminate duplication and unnecessary audit criteria. OMB invited the National Council of Nonprofits and representatives of the states, CPAs, research institutions, and Native American groups to participate in a webcast on February 8. In response to our questions, OMB provided clarity on how it arrived at 10 percent as an appropriate minimum indirect cost rate, and federal officials expressed support that pass-through entities would pay this amount fairly and not by reducing direct cost rates. The public is invited to offer comments on the proposed regulations before May 2, 2013. Source: Council of Nonprofits