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Public Policy
Independent Sector Policy Update
June 22, 2006
House Passes Estate Tax Alternative
The House of Representatives passed an alternative estate tax bill on
June 22 by a vote of 269 to 156. It will now go to the Senate, though
it is not clear whether it will win sufficient votes for passage. Earlier
this month the Senate rejected efforts to call a vote on full repeal of
the estate tax, but Majority Leader Frist (R-TN) is still pushing for
action on this issue before Congress leaves on its July 4th recess. The
measure passed by the House (H.R. 5638) would increase the exemption amount
to $5 million per person in 2010, and reduce the rate on tax on estates
up to $25 million to the capital gains tax rate (currently 15 percent).
Estates of over $25 million would be taxed at twice the capital gains
rate (currently 30 percent). This is similar to a proposal from Senator
Jon Kyl (R-AZ) which many Democrats view as tantamount to repeal, but
they have not yet produced their own consensus reform proposal. IS continues
to urge lawmakers to oppose any irresponsible "compromises"
and instead support responsible reform that would preserve incentives
for charitable giving and retain significant revenue for the federal treasury.
See a summary
and the legislative text of H.R. 5638, The Permanent Estate Tax Relief
Act, on the House Ways and Means website.
See the Center on Budget
and Policy Priorities analysis.
More
Charitable Incentives and Reforms
Talks have continued throughout the month between Senate Finance Committee
and House Ways and Means tax staff to resolve conflicts over which incentives
and reforms to move forward as part of other tax legislation. IS and other
charitable organizations have been successful in convincing staff to amend
a number of specific provisions that did not reflect recommendations of
the Panel on the Nonprofit Sector. More
Fate of Appropriations Bill Uncertain
Efforts by the nonprofit sector to engage in discussions about public
fiscal policy and government's obligations and priorities are never more
important than during periods of fiscal challenge. A number of nonprofits
were involved earlier this spring as Congress drafted a budget resolution,
and are continuing their efforts now as appropriations bills are coming
to the floor. For example, several IS member organizations are engaged
in efforts to encourage increased funding of Labor-HHS programs important
to their constituents. In addition to reaching out to moderate House and
Senate members, United Way submitted a letter
(PDF), signed by over 450 national and state
organizations, to House leaders on June 5, urging them to protect funding
of Labor-HHS and HUD programs that are particularly critical to low-income
and disadvantaged communities. A vote on the FY 2007 Labor-Health and
Human Services appropriations bill in the House has been postponed and
some speculate the bill will not reach the floor until after the November
elections. It is possible that programs funded through this measure could
be subject to funding under a continuing resolution or included as part
of an omnibus appropriations bill.
House Approves Internal Revenue Service Appropriations
The House of Representatives approved FY2007 IRS appropriations
$110 million below the President’s budget request and $63 million
less than the IRS received in FY 2006. The new budget amount was passed
as part of the Transportation-Treasury appropriations bill (H.R. 5576).
The bill would additionally restructure the Internal Revenue Service by
dividing it into three accounts – enforcement, taxpayer services,
and operations support. While disappointed with outcome in the House,
Independent Sector, along with several of our members, will continue to
advocate for increased funding of IRS enforcement activities, particularly
of the tax-exempt sector, as the appropriations process moves forward
in the Senate and later in conference. For more
information visit the IS website, or to get involved email us at publicpolicy@independentsector.org.
Commissions Proposed as Budget Process Reforms
As the federal deficit continues to grow, some legislators are looking
to reform the budget process as a way to control spending. Recent proposals
include the establishment of commissions made up of appointees outside
of Congress to help make difficult budget choices. Various types of sunset
commissions have been proposed to evaluate federal programs and recommend
some for elimination or realignment, subject to an up-or-down vote by
Congress. A comprehensive budget reform package (S.
3521) introduced by Senate Budget Committee Chair Judd Gregg (R-NH)
includes a sunset commission, an entitlements commission, and a number
of other budget items such as the line-item veto, discretionary spending
caps, and biennial budgeting. S. 3521 was passed by the Senate Budget
Committee on June 20th, but it is not clear whether the measure will move
to the Senate floor. See the CBPP
analysis of sunset proposals.
Legislation has also been introduced that would create a commission
to address long-term federal spending and entitlements. The sponsor of
the House measure (H.R.
5552), Representative Frank Wolf (R-VA), said that everything would
be on the table, including all federal government programs, entitlement
benefits, and tax policies. Congress would be required to vote up or down
on its recommendations in their entirety. Senator George Voinovich (R-OH)
introduced the same bill (S.
3491) in the Senate.
Rep.
Wolf statement.
FEC Will Provide Explanation of 527 Decision
The Federal Election Commission has decided the not to issue a new rule
with respect to Section 527 organizations, but it will issue a more thorough
justification for its existing rule. In March of this year, a Federal
District Court ordered the FEC to either issue new regulations or further
articulate the reasons for its 2004 rulemaking that imposed some new fundraising
and expense allocation rules on Section 527 organizations, but did not
regulate them as political action committees. More
ACT Issues Recommendations for Form 990 Revision
The Advisory Committee on Tax Exempt and Government Entities (ACT), an
IRS advisory group made up of practitioners in various tax-exempt fields,
issued their annual report of recommendations to the TE/GE division of
the IRS on June 7. This year’s report addressed revision of the
Form 990 as well as document requirements for 403(b) arrangements. The
entire report can be found on the IRS
website.
Michigan Bill Would Restrict Foundation Grants
A bill recently introduced in the Michigan legislature would restrict
the ability of foundations to fund charities outside of the state. The
measure (HB 6153) would give Michigan’s attorney general authority
to enforce the intent of those who set up charitable trusts, and to determine
that intent based on the original geographic location of the trust and
the earliest grants made by the trust. IS member, the Council of Michigan
Foundations, has met with the sponsors of the legislation who have now
agreed not to move the bill in its current form. The Council is also working
to convene a team of legal advisors to work with the bill sponsors and
the Attorney General’s office on an analysis of the oversight function
of the attorney general.
Read a copy
of the bill (PDF).
Read about steps
that the Council of Michigan Foundations is taking.
States Enact Restrictions on Voter Registration Drives
Several states have recently enacted laws that will restrict how voter
registration drives are conducted in their states. The laws include requirements
such as registration of the drive organizers with the state, volunteer
training, and a set turnaround time for submitting completed registration
forms. A summary of the new laws enacted in Colorado, Florida, Ohio, Maryland
and New Mexico is available on the Brennan
Center’s website (PDF).
Election 2006 Reminder – as the November elections
draw closer, be sure to check the IS website for resources
to support your election activities and to help your organization
stay within the rules. We encourage you to email
your stories and resources to IS so other members can benefit from
them.
IS Annual Conference Early Bird Deadline is June 23
Many Voices, Shared Purpose: Working Together to Improve Lives
October 22-24 in Minneapolis/St. Paul
The early bird deadline for the IS Annual Conference has been
extended to Friday, June 23, to give you a few more days
to take advantage of the savings offered to IS members only. Join your
fellow leaders from across the diverse charitable community at the Independent
Sector Annual Conference, October 22-24 in Minneapolis/St. Paul. Organized
around the theme, Many Voices, Shared Purpose: Working Together to Improve
Lives, its program will examine a wide range of approaches to caring for
our nation's most vulnerable citizens, addressing budget challenges, and
building and sustaining vibrant communities.
IS will also once again be holding a Public Policy Action Institute starting
on Saturday before the conference opens. Now in its third year, the Public
Policy Action Institute is designed to help nonprofit advocates increase
their effectiveness in shaping public policies, laws and regulations that
impact the ability of charitable organizations to fulfill their missions.
PPAI will start on Saturday October 21 and run through Sunday morning.
Visit the IS website to register
or view
the program.
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