The Omnibus Budget Reconciliation Bill of 1987

Provisions of interest to churches and clergy

On October 29, 1987, the House of Representatives passed the Omnibus Budget Reconciliation Bill of 1987 (H.R. 3545).

Provisions of interest to churches and clergy include the following:

(1) repeal of the motor fuels and tires excise tax exemptions for buses owned and operated by churches and other nonprofit organizations;

(2) the IRS will begin charging fees for some of its services, including $320 for each exempt organization ruling and $200 for each exempt organization determination;

(3) delays until 1988 the provision in the Tax Reform Act of 1986 requiring taxpayers (including many clergy) who use the estimated tax procedure to pay at least 90% of their current year's taxes in their quarterly estimated tax payments;

(4) employers (including churches) must give effect to replacement withholding allowance certificates (W-4 or W-4A) no later than the start of the first payroll period ending on or after the 30th day after the day on which the employee furnishes the certificate to the employer;

(5) a tax-exempt organization that filed an application for exemption (Form 1023) with the IRS must make available for inspection a copy of the application (including all supporting documentation) at its principal office to any individual during regular office hours; further, if the exempt organization maintains one or more regional or district offices having three or more employees, the required material similarly must be made available for public inspection at each such regional or district office;

(6) the House Ways and Means Committee urged the IRS to monitor the extent to which taxpayers are being properly advised by charitable organizations that their contributions are deductible only to the extent that they exceed the fair market value of any benefits or premiums received in exchange (e.g., if a religious radio program promises to send donors a book in exchange for a suggested donation, the donation is deductible only to the extent that it exceeds the fair market value of the book);

(7) charitable organizations must make available for public inspection during regular business hours their three most recent annual information returns (Form 990); a copy of the annual information return must also be kept at any regional or district office employing three or more persons; however, if a national religious denomination files annual information returns, copies of the return are not required to be made available at local churches since churches would not constitute offices of the national denomination;

(8) various changes have been made in the application for tax exemption (Form 1023), which pertain to information regarding predecessor and affiliated organizations;

(9) a provision in the bill clarifies that tax-exempt organizations will lose their exempt status by participating or intervening in any political campaign in opposition to as well as in support of any candidate for public office;

(10) tax-exempt organizations' distributive share of income from any publicly traded limited partnership is treated as unrelated business taxable income;

(11) benefits payable under certain church self-insured death benefit plans would be excludable from income;

(12) the restrictive rules that now apply to "eligible deferred compensation plans" of tax-exempt organizations (under revised Code section 457) would not extend to "nonelective" deferred compensation plans.

Source: CLTR January/February 1988

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold 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. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

ajax-loader-largecaret-downcloseHamburger Menuicon_amazonApple PodcastsBio Iconicon_cards_grid_caretChild Abuse Reporting Laws by State IconChurchSalary Iconicon_facebookGoogle Podcastsicon_instagramLegal Library IconLegal Library Iconicon_linkedinLock IconMegaphone IconOnline Learning IconPodcast IconRecent Legal Developments IconRecommended Reading IconRSS IconSubmiticon_select-arrowSpotify IconAlaska State MapAlabama State MapArkansas State MapArizona State MapCalifornia State MapColorado State MapConnecticut State MapWashington DC State MapDelaware State MapFederal MapFlorida State MapGeorgia State MapHawaii State MapIowa State MapIdaho State MapIllinois State MapIndiana State MapKansas State MapKentucky State MapLouisiana State MapMassachusetts State MapMaryland State MapMaine State MapMichigan State MapMinnesota State MapMissouri State MapMississippi State MapMontana State MapMulti State MapNorth Carolina State MapNorth Dakota State MapNebraska State MapNew Hampshire State MapNew Jersey State MapNew Mexico IconNevada State MapNew York State MapOhio State MapOklahoma State MapOregon State MapPennsylvania State MapRhode Island State MapSouth Carolina State MapSouth Dakota State MapTennessee State MapTexas State MapUtah State MapVirginia State MapVermont State MapWashington State MapWisconsin State MapWest Virginia State MapWyoming State IconShopping Cart IconTax Calendar Iconicon_twitteryoutubepauseplay