BRUCE R. HOPKINS LAW FIRM, LLC

Parade of Legislation, 1996-1999

Nonprofit organizations have been inundated, in recent years, with federal tax legislation that is directly and indirectly having an impact on their operations. Here is a summary of that legislation enacted during the period 1996-1999.

Tax Relief Extension Act [Public Law 106-170]:

• Permanent extension of the special rule in the private foundation context by which contributions of qualified appreciated securities can be deductible based on their full fair market value (IRC § 170(e)(5))

• Document disclosure requirements (IRC § 6104(d) imposed on private foundations

• Legislation summarized in the December 1998 issue of The Nonprofit Counsel

 

IRS Restructuring and Reform Act of 1998 [Public Law 105-206]:

• Creation of 9-member oversight board

• Commissioner of Internal Revenue, with a 5-year term

• Statutory basis for Office of Employee Plans and Exempt Organizations repealed, although IRS created Exempt Organizations Division

• Legislation summarized in September 1998 issue of The Nonprofit Counsel

 

Taxpayer Relief Act of 1997 [Public Law 105-34]:

• Revision of tax treatment of qualified state tuition programs (IRC § 529)

• Extension of exclusion for employer-provided educational assistance (IRC § 127)

• Augmented charitable deduction for corporate gifts of computer equipment and technology for  elementary or secondary school purposes (IRC § 170(e)(6))

• Increase in estate and gift tax unified credit (IRC § 2010)

• Extension of special fair market value deduction for contributions of appreciated securities to private foundations (IRC § 170(e)(5))

• Exclusion from unrelated business income taxation for qualified corporate sponsorship payments (IRC § 513(i))

• Change in the control and taxation rules with respect to taxable subsidiaries (IRC § 512(b)(13))

• Maximum 50 percent payout by charitable remainder trusts and minimum value of remainder interests in these trusts of 10 percent (IRC § 664)

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Health Insurance Portability and Accountability Act of 1996 [Public Law 104-191]:

• Tax-exempt status for a membership organization established by a state exclusively to provide coverage for medical care on a nonprofit basis to high-risk individuals through insurance issued by the organization or a health maintenance organization (IRC § 501(c)(26))

• Tax-exempt status for a membership organization, established before June 1, 1996, by a state exclusively to reimburse its members for losses arising under workers’ compensation acts (IRC § 501(c)(27))

• Legislation summarized in the October 1996 issue of The Nonprofit Counsel

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Small Business Job Protection Act of 1996 [Public Law 104-188]:

• Extension of the special fair market value deduction for contributions of appreciated securities to private foundations (IRC § 170(e)(5))
  (IRC § 1361(b)(1)(B))

• Charitable organizations allowed to be shareholders in S corporations

• New rule in unrelated business area, causing insurance income from offshore captives of exempt organizations to be treated as unrelated business income (IRC § 512(b)(17))

• Tax-exempt status for qualified charitable risk pools (IRC § 501(n)

• Tax-exempt status for qualified state tuition programs (IRC § 529)

• Tax treatment of dues paid to tax-exempt agricultural and horticultural organizations (IRC § 512(d))

• Tax-exempt organizations allowed to maintain qualified cash or deferred arrangements (401(k) plans) (IRC § 401(k)(4)(B)(i))

• Extension of exclusion for employer-provided educational assistance (IRC § 127)

• Legislation summarized in the October 1996 issue of The Nonprofit Counsel
   

Taxpayer Bill of Rights 2 [Public Law 104-168]:

• Enactment of intermediate sanctions rules (IRC § 4958)

• Proscription on private inurement transactions added to qualifications for tax exemption for social welfare organizations (IRC § 501(c)(4))

• Enactment of document disclosure requirements (IRC § 6104(d))

• Penalties for failure to file timely and complete annual information return increased (IRC § 6652)

• Legislation summarized in September 1996 issue of The Nonprofit Counsel

• Legislation enacted during the period 1984-1995 is summarized in § 2.4 of The Law of Tax-Exempt Organizations, Eighth Edition (Wiley 2003).

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