Two-Year Extenders Bill Would Affect Exempt Organizations

House Ways and Means Committee Chair Kevin Brady introduced legislation that would reinstate a set of tax provisions that expired at the end of 2014 and extend them through the end of 2016.  It is expected that this two-year extension will only be moved forward if a permanent agreement cannot be reached.   The bill includes four extenders as well as several new provisions that would affect tax-exempt organizations:

• An extension of the special rule for contributions of capital gain real property made for conservation purposes; the rule would also be modified with respect to certain contributions of land conveyed by the Alaska Native Claims Settlement Act
• An extension of tax-free distributions from individual retirement plans for charitable purposes
• An extension of the charitable deduction for contributions of food inventory; the deduction would also be modified to limit the amount of the deduction for C corporations to the lesser of 15% of taxable income or 15% of the aggregate net income from all trades or businesses from which contributions are made in a given year
• An extension of the treatment of certain interest, annuity, royalty, or rent payments received by exempt organizations from controlled entities as derived from an unrelated trade or business
• A requirement that the Treasury Department prescribe procedures under which an organization that claims to be described in section 501(c) may request an administrative appeal of an adverse determination of tax-exempt status, private foundation classification, and private operating foundation classification
• A provision to enable organizations applying for tax-exempt status under section 501(c) and 501(d) to seek declaratory judgments with respect to adverse determinations of tax-exempt status (in addition to section 501(c)(3) organizations that already have this right)
• A requirement for organizations to notify the Treasury Department of their intent to operate under section 501(c)(4) within 60 days of being established
• A provision that transfers of money or other property to section 501(c)(4), (5), and (6) organizations made for the use of such organization are not subject to gift tax

IRS Announces Payroll Tax Compliance Initiative  

The IRS announced the launch of the Early Interaction Initiative, a new effort designed to more quickly identify employers who are falling behind of their payroll or employment taxes.  The initiative will monitor deposit patterns and identify employers whose payments decline or are late.