Spotlight

Maryland Government to Support Nonprofit Capacity Building
The Maryland Department of Business and Economic Development will be providing services for small nonprofits due to HB1214 enacted this month. Similar to capacity building already available for small businesses, services for nonprofits will include areas of governance, regulatory compliance, finance, board and organizational development, fundraising and staff management, and be available to serve IRS approved 501(c)(3),(4) and (6) organizations, less than 10 years old, with revenues under $750,000, who provide services in the community. Funding comes from a one-time $50 additional fee paid at incorporation only by the types of new tax exempt organizations covered.

The Maryland Association of Nonprofit Organizations advocated for capacity building support for over ten years under the leadership of Executive Director Peter Berns, but the funding issue had remained a challenge in a state coping with budget cutbacks. Henry Bogdan, Public Policy Director of Maryland Nonprofits, stated: "Maryland is taking a very positive step to recognize the importance of nonprofits as contributors to both the economic and social well-being of the states and its communities."

From the national perspective of NCNA’s Nonprofit Capacity Building Initiative, and for other states where state nonprofit associations are active, the Maryland program will provide useful insights and support.

Bill Delaying Medicaid Cuts Passed by House
The House, with broad bipartisan support and a veto-proof vote, has sent to the Senate a measure (HR 5316) to delay implementation of the Administration’s rules substantially reducing payments to State programs. The federal government is estimated to pay $204 billion in fiscal year 2008, or 57 percent of the program’s costs. The administration contends that states have expanded programs too far, and used funds for non-Medicaid purposes. Governors say problems have been corrected. Senate Republicans have taken actions to slow the bill's progress which is prompting Democrats to consider attaching the measure to the supplemental war spending legislation. CQ Today Print Edition, 4/28 and 4/29/08

Farm Bill Nears Passage
Senate and House conferees agreed on a Farm Bill (HR 2419) this week, which will include an increase for the Food Stamp program from $9.5 billion to $10.2 billion. Totalling about $570 billion over 10 years, the measure will also fund farm-related tax credits and a disaster aid program. Offsets to pay for the bill come from cuts to subsidies, the size of the disaster-aid fund, and from extending customs user fees. Republicans have requested a meeting with President Bush today to avoid a veto. The Administration has demanded strong subsidy cuts. CQ Today Print Edition 4/25/08, 4/29/08

IRA Charitable Rollover Alive Again - As Is the Offset Debate
Senate Finance Committee (SFC) leaders Senators Baucus (D-MT) and Grassley (R-IA) introduced a tax relief bill, S.2886, that would extend the IRA charitable rollover and other charitable giving incentives through 2009. The $100 billion measure also calls for a one-year patch on the alternative minimum tax. The issue of offsetting the tax breaks continues with 41 Republican Senators writing Senator Baucus to oppose offsets, while the House Democrats will strongly demand that PAYGO - paying for tax breaks through offsets in other areas - be enforced. CQ Today Print Edition, 4/29/08

Supreme Court Supports States in Requiring Voter Photo ID
On April 28, the Supreme Court ruled 6-3 to uphold state requirements for voters to show photo identification at the polls, upholding an earlier decision by the U.S. Court of Appeals for the 7th Circuit. Crawford v. Marion County Election Board involved an Indiana law enacted following the Help America Vote Act (PL 107-252) which set federal standards for voting but left states the discretion to enact stricter identification requirements. The state enacted the law even though there was no record of any in-person voter fraud ever happening there. CQ Today Online News 4/28/08

Support growing for increased mileage rate for charitable volunteers
HR 2020 was introduced last year to amend the Internal Revenue Code to increase the standard mileage rate for charitable purposes to the standard mileage rate established by the Secretary of the Treasury for business purposes. This would increase the Form1040 itemized deduction from 14 cents to 50.5 cents per mile. The bill now has 11 co-sponsors.

FTC Jurisdiction Over Nonprofits Proposed
The Federal Trade Commission (FTC) Reauthorization Act of 2008, S.2831, would repeal the current law exempting nonprofits from FTC laws. The FTC would be granted authority to regulate 501(c)(3) organizations for unfair or deceptive acts or practices under a bill introduced by Senator Byron Dorgan (D-ND) and co-sponsored by Senate Commerce Committee Chairman Daniel Inouye (D-HI). The FTC press release of April 8 states: “In some instances, the Commission's inability to reach conduct of various non-profit entities has prevented the Commission from taking action against potentially anticompetitive conduct of non-profits engaged in business. And although the FTC has been successful in asserting jurisdiction against "sham" nonprofits, the testimony explained, the proposed legislation would help avoid protracted factual inquiries and litigation battles to establish jurisdiction over such entities.”

GAO Supports States’ Challenge to Administration Invalidly Limiting SCHIP
The Government Accounting Office (GAO) states in a new report that the Administration acted invalidly in attempting to cut back the State Children’s Health Insurance Program (SCHIP), as the directive amounted to rule-making without the process of doing so. The report critiqued an August 2007 letter by the Centers for Medicare and Medicaid Services (CMS) in limiting enrollment of children under the Program. The letter imposed a standard for program expansion that many states said were impossible to meet at the time, although half have now been able to comply. Several states have sued the federal government to stop the implementation of the letter’s requirements.

States Failing to Implement Critical Voting Rights Laws
Witnesses testified at the House Committee on Administration's Subcommittee on Elections this month that many states are failing to provide voter registration at public assistance agencies as required by the National Voter Registration Act (NVRA). An NVRA provision was designed to enable low-income Americans to register to vote more readily.  OMB Watch 4/15/08

Negotiated Rulemaking Concludes on College Cost Reduction and Access Act
The college loan forgiveness provision for which NCNA advocated to include all 501(c)(3) nonprofits was a subject of the recently concluded Department of Education negotiated rulemaking. The advisory panel, representing colleges,students and the banking industry, reached consensus and NCNA is advised informally that all 501(c)(3)s are still covered, and that the definition of a “full time” job was lowered to 30 hours a week. The Department will now move towards a proposed draft of regulations, with a view to finalizing them before November.

IRS updates

• IRS Releases Draft Instructions To Form 990; Comments Due June 1. The draft instructions are now available for the redesigned Form 990 that larger nonprofits will be required to file annually beginning in 2009. They include new tools, such as a glossary of terms, a sequencing list suggesting the order in which to fill out the form and schedules, a table to help organizations determine where to report different types of compensation and benefits, and examples to illustrate definitions or new requirements. Comments are due by June 1, 2008 on all aspects of the draft instructions, including suggestions that might further reduce complexity or burden. Nonprofits with gross receipts greater than $25,000 but less than $1 million and assets under $2.5 million may file the Form 990-EZ for their 2008 fiscal year filing. See the IRS information release of December 20, 2007 for filing thresholds.
  
• Political Activities Compliance Initiative (PACI) in Effect Again. For the 2008 elections season, the IRS will put in effect its PACI program that educates nonprofits about federal laws on political campaign activity and conducts enforcement. The IRS is making extensive efforts to educate not only nonprofits but political parties and candidates. PACI’s enforcement procedures will remain in the hands of career IRS employees who are experts in the tax law in this area. 
  
• New FAQs on e-Postcard Filings. The IRS recently released “Frequently Asked Questions” on the 990-N filing required for small nonprofits with $25,000 or less in gross receipts. This is the first year all nonprofits must begin annual filings.

In April, state legislators introduced dozens of bills that impact all nonprofits in their respective states. Below is a partial list of these bills, listed alphabetically by state. Unless otherwise noted, the bills below have not become law.