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(April 18, 2005) Following in the footsteps of the Senate Finance Committee's April 5, 2005, hearing on the charitable sector, the House Ways and Means Committee will hold a hearing titled 'An Overview of the Tax-Exempt Sector.' The hearing will take place on Wednesday, April 20, 2005, in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 10:30 a.m.

The hearing will examine the legal history of the tax-exempt sector; its size, scope and impact on the economy; the need for congressional oversight; IRS oversight of the sector and what the IRS is doing to improve compliance with the law. The hearing likely will cover the Joint Committee on Taxation report that contained several reforms affecting the charitable sector; however, unlike the Senate Finance Committee, the House Ways and Means Committee has not drafted its own specific proposals.

Invited witnesses include Honorable David Walker of the U.S. Government Accountability Office, Douglas Holtz-Eakin of the Congressional Budget Office, George Yin of the Joint Committee on Taxation and several legal experts.

In announcing the hearing, Chairman Thomas stated, 'This continues the series of hearings we held last year examining the tax-exempt sector. Congress needs a better understanding of how vast and diverse this sector is today. Tax-exemption is an important benefit, and the Congress has a responsibility to oversee and assure the American taxpayer that the tax-exempt sector is living up to its legal responsibilities.'

AFP to Send Written Testimony to the Committee

AFP plans to submit a written submission for the record. As was the case when AFP drafted a letter to the Senate Finance Committee, we will urge the House Ways and Means Committee to oppose any proposals that overly burden the charitable sector. In particular, AFP will ask committee members to resist changes to the non-cash gift deduction rules.

We also will highlight other proposals that would adversely affect the nonprofit sector such as the implementation of a federal accreditation program (possibly requiring charities to pay accreditation fees and dues), the creation of Form 990 filing fees to be imposed on charities, state enforcement of federal tax laws that likely would result in 50 different interpretations, restrictions on the size of boards and a requirement compelling charities to submit extensive and detailed information to the IRS every five years justifying their tax-exempt status.

AFP Urges Its Members to Contact Their House Members!

Given the attention that the House is now giving to the charitable sector, it is vital that House Members hear from you! We urge you to do the following:

  1. Send the draft letter below to your House Member. Click here you don't know who your Member is:
  2. Personalize your letter - it will receive more attention if it doesn't look like every other letter.
  3. Fax your letters. Mail takes too long, and emails receive scant attention. Click here for your Member's fax number.
  4. A written expression of your concern is best, but if you can't write, please call your House Member at 202-224-3121.

Sample Letter

The Honorable _______

U.S. House of Representatives

Washington, DC 20515

Dear Congressman/Congresswoman _______:

I am writing to urge you to protect the charitable sector from unnecessary and overly burdensome regulations such as those presented by the Senate Finance Committee, particularly those proposals that would modify the tax rules regarding non-cash charitable contributions (known as 'in-kind' contributions).

The new proposals include recommendations to completely eliminate or substantially modify deductions for in-kind contributions. Many charities heavily rely upon non-cash donations, and there is no legitimate reason to attack this lifeline. [Please insert a sentence or two here about how your organization relies on in-kind gifts.]

Changing the in-kind contribution rules would unfairly compel charities to divert valuable time and resources to new valuation compliance schemes. The inability of the Internal Revenue Service to address improper donor behavior should not result in penalties for charities and the communities and populations which they serve. Significant revision of the in-kind contribution rules would greatly diminish my organization's ability to provide altruistic services.

Furthermore, these proposals are not based on any credible evidence of wide-spread abuse. In fact, empirical data indicates that there is NOT widespread abuse among the charitable sector and that proposals are unnecessary. Reports collected by the FBI, the Federal Trade Commission, State Attorneys General and even watchdog groups like the Better Business Bureau show that reports of charity fraud are less than 1 percent of all complaints of fraud. This is consistent with every single year's annual findings in the annual report on Fraud in the United States published by the FTC.

It appears that many of the suggestions are driven by a desire to raise federal revenues from the charitable sector. Such an effort is completely inconsistent with the notion of tax-exempt status, and I hope you will strongly oppose such proposals.

The Senate Finance Committee's proposals to alter the non-cash charitable gift incentives come at a precarious time for charities. Americans are a generous people, but many charities are still recovering from the past several years when charitable giving has been flat and even decreased for many organizations.

Again, I urge you to oppose changes to the in-kind contribution rules as well as any unreasonable and burdensome legislation that would harm the charitable sector. I very much appreciate your support.

Thank you for your consideration.


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