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Senate Committee’s White Paper Proposes Vast Expansion of Federal Power Over Charities

Senate Committee’s White Paper Proposes Vast Expansion of Federal Power Over Charities

Senate Committee’s White Paper Proposes Vast Expansion of Federal Power Over Charities

Proposals extend beyond tax regulation to give IRS, Tax Court authority over traditional state law concepts of fiduciary duty

The Senate Finance Committee released a 19-page staff “white paper” prior to its June 22 hearing outlining a series of proposals that would significantly increase governmental regulation of charities.

Although Committee Chair Chuck Grassley (R-Iowa) said the discussion paper is intended only to start a “dialogue” on the issues, if significantly implemented, the proposals could extend federal regulation vastly beyond federal tax law and into areas of governance and fiduciary duty traditionally left to the states. It also includes recommendations for more state and federal cooperation in enforcement proceedings.

The paper, self-described as “a work in progress,” is divided into 9 sections, including proposals dealing with exempt status, expanding self-dealing rules, limiting administrative expenses, improving Form 990 reporting, federal governance rules.

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