Congressional Report Proposes Dramatic Changes For Nonprofit Organizations

In a recent congressional report, the Joint Committee on Taxation (the "Committee") found that tax abuses are costing the federal treasury more than $370 billion in lost revenue annually.¹ The 430-page report, entitled "Options to Improve Tax Compliance and Reform Tax Expenditures," identifies tax abuses by nonprofit organizations as a significant contributor to the loss of revenue. The report contains 12 proposals for new legislation reforming tax-exempt laws and oversight, including:

The Committee suggests that lawmakers require all Section 501(c)(3) exempt organizations (except certain religious organizations) to file a detailed information return with the Internal Revenue Service every five years. The Service’s review of the five-year information returns would enable the Service to determine whether charitable organizations are organized and operated for the purposes described in