Exempt Organizations Advisory - Senate Health Care Reform Bill Changes and Amendments

Catherine W. Wilkinson (cwilkinson@steptoe.com)
Suzanne Ross McDowell (smcdowell@steptoe.com)

Senator Max Baucus (D-MT) has modified the Chairman’s Mark of the America’s Healthy Future Act of 2009 to extend the small business tax credit to 501(c)(3) organizations that would otherwise qualify for the credit. The credit for tax exempt organizations would be more limited than the standard small business tax credit, but organizations would be eligible to apply the credit against their payroll tax liability. A complete description of the modification is available here (see page 34). An earlier Exempt Organizations Advisory described how provisions for small businesses in the House version of the health care bill in the form of tax credits would not help exempt organizations and contrasted the House version with the Senate HELP committee version which provided for direct subsidies. The earlier Advisory is available here.

Senator Chuck Grassley (R-Iowa) has proposed two amendments to Senator Max Baucus’ health care reform bill. These amendments would affect tax-exempt organizations outside of the health care sector. The first amendment proposes adding language to section 6033(a)(1), which provides reporting requirements for organizations exempt under section 501(a). The amendment would specifically authorize the IRS to require that governance and management information be reported in annual filings. The second amendment would eliminate the rebuttable presumption of reasonableness, which applies to compensation paid by exempt organizations that meet requirements included in the regulations under section 4958. The amendment would also require organizations to disclose in annual filings with the IRS a summary of the comparable information used to determine an executive’s compensation.
    
Descriptions of the amendments are available here on pages 29 and 30.