HEARING ADVISORY: Boustany Announces Hearing on Public Charity Organizational Issues, Unrelated Business Income Tax, and the Revised Form 990

July 25, 2012 — Hearing Advisory   

Congressman Charles W. Boustany Jr., MD (R-LA), Chairman of the Subcommittee on Oversight of the Committee on Ways and Means, today announced that the Subcommittee will hold the second in its series of hearings on tax-exempt organizations, this time examining the revised Form 990, reasons for the increasing organizational complexity of public charities, including unrelated business income tax issues, and their effect on transparency and tax compliance.  The hearing will take place on Wednesday, July, 25, 2012, in Room 1100 of the Longworth House Office Building, beginning at 9:30 A.M.

In view of the limited time available to hear witnesses, oral testimony at this hearing will be from invited witnesses only.  However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for inclusion in the printed record of the hearing.  A list of invited witnesses will follow.


Over the last two decades, public charities have grown increasingly more complex in their organizational structures and operations. Contributing to the complexity is the prevalence of profit-generating arms and investment activities within the tax-exempt organizational structure.  Tax-exempt organizations are governed by a variety of rules to ensure compliance with Federal tax law and limit abuses, including rules that subject business income from for-profit activities to income tax (the unrelated business income tax, “UBIT”), unless explicitly exempted.  These issues, among others, may affect how a public charity chooses to organize and operate.     

To address increased complexity and to promote greater transparency and compliance within the sector generally, the Internal Revenue Service (“IRS”) released a redesigned Form 990, Return of Organization Exempt from Income Tax, in 2008.  The principal goal behind the redesigned Form 990 was to facilitate improved IRS compliance efforts.  The Form was also intended to provide all interested parties with a clearer picture of a tax-exempt organization’s activities, including those that further its exempt purpose and related party transactions.  In an October 6, 2011 letter to the IRS, Chairman Boustany sought to assess whether the goals for the newly redesigned Form 990 have been achieved, the challenges the IRS faces with respect to compliance areas such as UBIT, and how the information required on the new form is being used.  The hearing will, in part, follow up on this inquiry.

In addition to the importance of continuing oversight by this Subcommittee of the IRS and the tax-exempt sector, the Committee is working on comprehensive tax reform.  Thus, the hearing will also provide an opportunity to discuss how current issues for public charities may inform the Committee’s ongoing tax reform efforts.   

In announcing this hearing, Chairman Boustany said, “Given the size and scale of the operations of public charities, which in 2008 had over $2.5 trillion in assets, it is critical that the Subcommittee continue its review of the tax-exempt sector.  Indeed, over the last two decades, the organizational structures of public charities have become increasingly complex, creating compliance and transparency issues.  This hearing is an excellent opportunity for the Subcommittee to hear from the IRS and experts in the tax-exempt community.  Their insight will allow the Subcommittee to better understand what is driving organizational complexity, and to learn about the new compliance efforts by the IRS and the UBIT rules.”


The hearing will focus on organizational and compliance issues related to public charities, including the increased complexity of public charity organizational structures, the rules governing profit-generating activities giving rise to unrelated business income tax, and whether the newly redesigned Form 990 is promoting increased compliance and transparency.


Please Note: Any person(s) and/or organization(s) wishing to submit written comments for the hearing record must follow the appropriate link on the hearing page of the Committee website and complete the informational forms. From the Committee homepage, https://waysandmeans.house.gov, select “Hearings.”  Select the hearing for which you would like to submit, and click on the link entitled, “Click here to provide a submission for the record.”  Once you have followed the online instructions, submit all requested information. ATTACH your submission as a Word document, in compliance with the formatting requirements listed below, by the close of business on Wednesday, July 25, 2012.  Finally, please note that due to the change in House mail policy, the U.S. Capitol Police will refuse sealed-package deliveries to all House Office Buildings. For questions, or if you encounter technical problems, please call (202) 225-3625 or (202) 225-2610.


The Committee relies on electronic submissions for printing the official hearing record.  As always, submissions will be included in the record according to the discretion of the Committee.  The Committee will not alter the content of your submission, but we reserve the right to format it according to our guidelines.  Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response to a request for written comments must conform to the guidelines listed below.  Any submission or supplementary item not in compliance with these guidelines will not be printed, but will be maintained in the Committee files for review and use by the Committee.

1. All submissions and supplementary materials must be provided in Word format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official hearing record.

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. Instead, exhibit material should be referenced and quoted or paraphrased.  All exhibit material not meeting these specifications will be maintained in the Committee files for review and use by the Committee.

3. All submissions must include a list of all clients, persons and/or organizations on whose behalf the witness appears.  A supplemental sheet must accompany each submission listing the name, company, address, telephone, and fax numbers of each witness.

The Committee seeks to make its facilities accessible to persons with disabilities.  If you are in need of special accommodations, please call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four business days notice is requested).  Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above.

Note: All Committee advisories and news releases are available on the World Wide Web at http://www.waysandmeans.house.gov/.