Testimony of Professor Roger Colinvaux Before the House Committee on Ways & Means, Subcommittee on Oversight Hearing on Tax Exempt Organizations

Abstract:     
Recent legislation has established new legislative precedents that run counter to the traditional regulatory approach of 501(c)(3) organizations: precedents for distinct exemption standards based on the type of organization, a weakening of the basis for distinguishing among charities as “public” or “private,” and a related preference for brighter enforcement lines and frustration with the status quo. These trends make for growing complexity, but are in large part a reasonable response to the historic legacy of defining a sector based on broadly conceived purposes and the inherent difficulties of oversight that follow. Going forward, it is critical to assess the federal role in support of the section 501(c)(3) sector, and at a minimum, take steps to further the integrity of the sector by minimizing opportunities for abuse. More broadly, if the federal approach is to be reconceived, the tax policy focus should shift to greater promotion of activities rather than purposes, and require more from the sector than avoiding bad outcomes.

Number of Pages in PDF File: 9

Keywords: 501(c)(3), charity, reform, private foundation, public charity, enforcement

JEL Classification: H2, H4, H5, I00, L3, L30, L31, L39

Accepted Paper Series