The Power of A

As the Senate Finance Committee today continues to wade through hundreds of amendments to the health care reform bill drafted by committee Chairman Max Baucus (D-MT), ASAE has taken issue with two specific proposals that have generated concern in the nonprofit community.

The two amendments in question, filed by Senate Finance Ranking Member Charles Grassley (R-IA) in advance of the committee’s markup this week, would give the IRS statutory authority to require governance reporting from tax-exempt organizations, and expand the Service’s authority to challenge nonprofit executive compensation practices.

In a letter delivered to Senate Finance Committee offices yesterday, ASAE asks that both amendments not be accepted as part of the health care reform package currently in committee markup.

The IRS recently revised the Form 990 return filed by most tax-exempt organizations and added a new section on governance. The Grassley amendment, however, would protect the IRS from “wasteful legal challenges” by specifically mandating that the Service require governance information be reported in nonprofit filings. ASAE has voiced concern about the IRS creating uniform, narrow standards for good governance in light of the extraordinary diversity of the nonprofit sector. ASAE also believes the proposal could be interpreted to remove any legal recourse for exempt organizations whose governance practices are questioned by the IRS.

The second amendment would grant the IRS authority to subjectively determine whether an organization relied on appropriate comparable data in setting compensation for top executives. This extension of IRS authority seems “excessive and dangerous, and unfairly shifts the burden of proof to filing organizations to prove that the compensation is reasonable instead of the government,” ASAE stated.

What are your thoughts on these amendments?