Congress, IRS examine nonprofit commercial income

Posted on: July 26, 2012

Wednesday (7/25) in The Chronicle of Philanthropy, Molly Peterson writes, “Four years after the Internal Revenue Service started requiring nonprofits to submit more information about their charitable and commercial activities, the agency still struggles to determine which income earned by colleges, hospitals, and other big institutions is taxable, an IRS official said today. Steven T. Miller, deputy IRS commissioner, made the comment at a Congressional  hearing devoted to an issue that has vexed lawmakers and regulators—how to ensure that charities pay taxes on income they generate through businesslike activities such as magazine publishing and retail sales. … A 2008 Chronicle investigation found that more than half of 91 large charities with unrelated business activities reported overall losses or no taxable income. Many were taking advantage of vague language or exemptions built into the law to avoid paying taxes, it found. … Lawmakers and agency officials should consider taxing all commercial income earned by charities, regardless of whether it relates to the groups’ missions, said John Colombo, a law professor at the University of Illinois who specializes in tax-exempt organizations.”

Posted July 26, 2012