These reports are likely to initiate further inquiry and could lead to new legislation with regard to the federal oversight of not just of religious and church entities, but of all 501(c)(3) tax-exempt organization. The staff summary memo raises several issues in regard to reporting and accountability of churches, as well as the standards applicable to all charitable organizations.
In particular, Appendix C of the staff summary memorandum (pdf) raises the following issues:
- Whether there should be a federal advisory committee for churches and religious organizations.
- Whether the parsonage allowance under IRC 107 should be limited to a single residence or a specific dollar amount, or whether it should be limited to a more select group of individuals.
- Whether churches should be required to make some kind of informational return filing requirement.
- And whether the "church tax inquiry" protections of IRC 7611 should be removed in regard to excess benefit transactions.
- Whether all 501(c)(3) organizations must include specific language in their organizational documents prohibiting engaging in acts of self-dealing (currently only private foundations are required to do so)
- Whether a penalty tax should be imposed on charitable entities where there has been an excess benefit transaction.
- Whether the rebuttable presumption of reasonableness for transactions should be replaced with minimum standards of due diligence.
- Whether guidelines should be developed for compensation studies used to set reasonable compensation under the rebuttable presumption standards.
- And whether the practices of "love offerings"should be excluded from gross income of a recipient when a charitable organization has facilitated the offering. (A practice mainly seen in religious organizations)
The individual reports of the 6 media-based ministries suggest that at least some are taking advantage of their religious and a tax-exempt status in order to provide personal benefits to the individuals who are running them. As part of the process and in order to initiate further action, Senator Grassley has formally asked the ECFA to consider the issues raised by his staff and spearhead a discussion about how to address those issues. ECFA has begun to establish an independent commission to review and provide input on major accountability and policy issues affecting church and religious organizations.
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