The "Truth in Tax Exempt Giving Act of 1992"

• The "Truth in Tax Exempt Giving Act of 1992" was introduced recently in the United States Senate by Senator Warner. The bill, if enacted, would require charities to disclose to any donor (who contributes at least $25) the salaries of the 5 highest compensated employees. The bill would accomplish its goal by modifying IRS Form 990—the annual information return filed by most charitable organizations. Note that churches, and some other religious organizations, are exempt from the 990 filing requirement, and accordingly they would not be covered by this bill if it becomes law. The bill itself confirms that churches would be exempt from the disclosure requirements. In explaining the purpose for the legislation, Senator Warner observed:

I am pleased to come before the Senate today to introduce legislation, which, I believe, will strengthen public confidence in tax-exempt giving. In the wake of the startling financial disclosures regarding excessive compensation of high-level executives of certain tax-exempt organizations … the public has understandably become concerned about donating their hard-earned dollars to tax-exempt organizations. A more detailed knowledge of how the money is to be spent by a tax-exempt organization will help restore their confidence …. The American public—good-hearted, good-natured people, who want to help—is entitled to the basic information necessary for them to make an informed judgment respecting those organizations to which they want to donate their services and perhaps, more importantly, donate their money. It is for that purpose that I introduce this piece of legislation today ….

I do not say that the heads of these tax-exempt organizations are not entitled to a significant salary. I simply say that the public should be allowed to view the disclosure forms, albeit in a more readable, more understandable form, and then make their own decision. The public will then signal their approval or disapproval by writing or not writing their checks to the various charities and other tax-exempt organizations. I do believe, however, that if my legislation passes, the era of excessive salaries, first class airline flights, limousines, high-priced dinners, vacations and other perks may be over. A more efficient organization can net greater proceeds for the ultimate beneficiaries.

As noted before, the bill itself specifically exempts churches. However, some religious organizations are not exempt from filing 990 forms, and such organizations would be directly affected by this bill should it become law.

© Copyright 1992, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m52 c0592