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 a hearing examining operations and oversight of tax-exempt organizations. This will be the first in a series of hearings by the Subcommittee on the tax-exempt sector and IRS oversight of tax-exempt activities. The hearing will take place on Wednesday, May 16, 2012, in Room 1100 of the Longworth House Office Building, beginning at 10:00 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.
Tax-exempt organizations have long played an important role in the United States. Since the first income tax was imposed in 1913, certain organizations have been exempt from taxation, including those organized and operated for religious, charitable, scientific, or educational purposes. Such organizations remain the most common types of exempt organizations and are defined in section 501(c)(3) of the Internal Revenue Code (“IRC”). In addition to the longstanding exemption for such organizations under section 501(c)(3), there are 28 other types of organizations that may qualify for tax-exempt status.
As of 2008, 1.85 million organizations qualified for tax-exempt status, and 1.18 million qualified as charitable organizations under section 501(c)(3). In 2008, charitable organizations had $2.5 trillion in assets. It is estimated that tax-exempt organizations employ approximately 10% of the U.S. workforce (charitable organizations employ 7% of the U.S. workforce).
Tax-exempt organizations are subject to a variety of rules to ensure compliance with Federal tax law and limit abuses, including rules that prevent private inurement, limit certain activities, and subject business income related to for-profit activities to income tax.
On October 6, 2011, Chairman Boustany sent a letter to the Internal Revenue Service (IRS) seeking information related to the agency’s administration and oversight of tax-exempt organizations (including charitable organizations). The letter sought information on a variety of topics to help the Committee understand the current state of relations between the IRS and tax-exempt entities, and provide a foundation for further engagement in overseeing this important sector of the U.S. economy. The letter focused on a number of issues related to corporate governance and compliance, requested information related to new reporting requirements for tax-exempt hospitals, and asked for an update on the ongoing Colleges and University Compliance Project that was launched in 2008.
In announcing this hearing, Chairman Boustany said, “Oversight of the tax-exempt sector is an important priority for the Subcommittee, and it has been an area that both Republicans and Democrats agree needs greater attention. In my letter to the IRS last October, I asked the IRS about recent efforts to address certain concerns that have been raised regarding the operation of tax-exempt organizations, including corporate governance issues and mishandling of funds by officers. It is now time for the Subcommittee to hear from members of the tax-exempt community for a more complete picture of the current state of affairs. This review allows us to examine the state of the tax-exempt sector, as it currently exists today and consider this information as we continue the Committee’s efforts toward comprehensive tax reform. In both cases the goal is the same – to ensure that the tax-exempt sector is operating in an efficient manner and that the laws governing tax-exempt organizations are being applied fairly and evenly.”
FOCUS OF THE HEARING:
The hearing will focus on certain current issues related to tax-exempt organizations, including the current IRS compliance initiative related to Universities, recently enacted reporting requirements for tax-exempt hospitals, recent efforts by tax-exempt organizations to design and implement good governance standards, and taxpayer involvement in redesigning the Form 990. In addition, the hearing will discuss the history of recent legislative changes to the tax code dealing with tax-exempt organizations and what prompted those changes.
DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:
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, May 30, 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/.