Notices of Intent to Object to Proceeding
Floor Speech
NOTICES OF INTENT TO OBJECT TO PROCEEDING -- (Senate - September 29, 2008)
BREAK IN TRANSCRIPT
Mr. GRASSLEY, pursuant to the provisions of section 512 of Public Law 110-81, submitted his notice of intent to object to proceed to consider the bill (H.R. 7083) to amend the Internal Revenue Code of 1986 to enhance charitable giving and improve disclosure and tax administration, dated September 26, 2008, for the following reasons:
I wrote a series of charitable reforms that became law in the Pension Protection Act of 2006. The reforms grew out of my oversight of tax-exempt organizations and laws, which had not been updated substantially since 1969. This legislation would unwind some of the 2006 reforms as they apply to certain supporting organizations.
Private foundations and supporting organizations enjoy tax-exempt status on their money. In exchange for that special status, they have to comply with a few requirements. One is that they pay out 5 percent of their assets each year. This pay-out requirement is meant to make sure the organization offers some public benefit in exchange for tax exemption and doesn't exist simply to invest its money and pay a staff and a board of directors--often family members--in perpetuity. Another requirement is that private foundations and certain supporting organizations are subject to a tax on excess business holdings. In general, the tax applies to substantial interests these organizations may hold in corporations and other businesses. The tax is designed to make sure tax-exempt organizations don't shelter oil refineries and yacht clubs from paying taxes.
A handful of organizations argue that these requirements are onerous or that they should be exempt because they were created before 1969. There may be legitimate reasons to look at some of these issues, but this legislation as written is much too broad. Thousands of organizations could be carved out of the payout requirement and business holdings prohibition. The bill would unwind regulations implementing the 2006 reforms before the regulations are even finished. It contains several provisions that need much more study before being enacted. For all of these reasons, the legislation needs more work.
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