IRS and Congressional enthusiasm in reporting for Charitable Organizations
The year is shaping up to be intriguing for nonprofits. After adding fresh legislation to IRS guidelines for donations, The US Senate Subcommittee on Finance has addressed further instances of intention to keep a watchful gaze on certain tax-exempt 501(c) organizations. Who knows what or where these discussions may lead to but the dialogue has begun. Let’s take a look at a few examples to be prepped for and consider the trajectory of future conversations.
It is common for nonprofits to receive donations and contributions of nonfinancial assets, more commonly known as in-kind contributions. Although nonprofits have been required to report the value of in-kind contributions in their financial statements for some time, there has not been consistency in the practice of this reporting. However, a new accounting standard, set to take effect on June 30, 2022, will bring regularity to how a nonprofit reports and discloses these types of transactions in their financial statements.
The U.S. Senate Committee on Finance’s Subcommittee on Taxation and IRS Oversight has announced that it has scheduled a hearing on Wednesday, May 4, 2022, to examine “Laws and Enforcement Governing the Political Activities of Tax Exempt Entities.”
The hearing’s scheduled witnesses are: University of California, Berkeley law professor and former Federal Election Commission (FEC) chair Ann Ravel; University of Pittsburgh law professor and former Internal Revenue Service attorney Philip Hackney, who has called for eliminating tax-exempt status for private foundations; Capital University law professor and former FEC chair Brad Smith, founder of the Institute for Free Speech and a Bradley Prize recipient; and Capital Research Center president Scott Walter.
Congressional interest in nonprofit goings-on seems to be increasing. Last month, the full Senate Finance Committee held a hearing, “Examining Charitable Giving and Trends in the Nonprofit Sector,” most of which focused on expanding the individual charitable deduction for charitable giving.
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