New Tax Law Changes: The Pension Protection Act of 2006 (H.R. 4)

Here is the latest information from CAN's Public Policy Update, which you can subscribe to here if you are so inclined, From our Public Policy Director Ken Larsen. There are some big changes that will affect our reporting.

The Pension Protection Act of 2006 (H.R. 4) contains numerous changes to the federal laws affecting tax-exempt organizations. To help nonprofits and donors to be in compliance, the IRS has posted guidances on its web site (http://www.irs.gov/charities/article/0,,id=161145,00.html).

Key provisions of the legislation include the following:

• Section 501(c)(3) organizations that file unrelated business income tax returns (Forms 990-T) must now make them available for public inspection.
• Private foundation and excess benefit penalty excise taxes are doubled.
• Beginning in 2008, exempt organizations with gross receipts under $25,000 must file an annual notice with the IRS.
• Controlling organizations must report income from and loans to controlled organizations as well as transfers between controlled and controlling organizations. This provision is effective for returns due (without regard to extensions) after the date of enactment.
• Donor advised funds, supporting organizations, and credit counseling organizations are subject to new requirements.
• Supporting organizations that want to change their public charity classification should follow the procedures outlined in Announcement 2006-93.
  
• Notice 2006-109 provides interim guidance on issues affecting supporting organizations and sponsoring organizations of donor advised funds.
• Individual Retirement Account (IRA) owners age 70 ½ or older are permitted to directly transfer tax-free, up to $100,000 per year to an eligible charity. Notice 2007-7 clarifies several issues related to this provision.
• Charitable contribution deductions for food, book, and certain conservation property are increased.
• Charitable contribution deductions for monetary donations, certain easements, taxidermy property, clothing and household goods, and certain other items are limited.
• Notice 2006-96 provides guidance regarding appraisal requirements for non-cash charitable contributions, including transitional guidance relating to the definitions of qualified appraisals and qualified appraiser.
• Notice 2006-110 provides guidance on new recordkeeping requirements for charitable contributions made through payroll deductions.
• The IRS highlighted changes that may affect charitable giving in News Release IR-2006-92.