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Taxing Non-profits........Follow

#1 Aug 13 2013 at 8:46 AM Rating: Good
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In searching out new and unique ways to spread around the piddly bit of wealth that us masses and our cities and states have to get by on, a few states are tossing around the idea of taxing or rendering 'service fees' to non-profit organizations.

mpbn wrote:
.....the issue is gaining national attention, with Rhode Island lawmakers recently passing legislation allowing the city of Smithfield to negotiate a fee with Bryant College.

HERE is the article from my local news. I'll leave you one more quote from a spokes-person of the Maine Association of Non-profits.
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"We need to remember that non-profits were granted tax exemption for a reason. They are different than for-profits, they are different from individuals, they too are providing a public benefit just as municipalities are. And, so and they also reduce the burden of governments in a lot of different ways."


Whaddaya think?

I don't think it will accomplish much. It's simply taking money from one pot and putting it in another. It's not really creating any additional funding for running a municipal or state government.
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#2 Aug 13 2013 at 8:53 AM Rating: Excellent
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Looks like a lot of congress critter busy work to give the illusion of work that will in the end go nowhere.
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#3 Aug 13 2013 at 9:13 AM Rating: Decent
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The only not-for-profit organizations I think should be taxed that aren't are those clearly "for profit" churches and similar organizations who use 501c3 status as tax loophole and pocket the difference.

Exhibit A
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#4 Aug 13 2013 at 9:20 AM Rating: Good
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BrownDuck wrote:
The only not-for-profit organizations I think should be taxed that aren't are those clearly "for profit" churches and similar organizations who use 501c3 status as tax loophole and pocket the difference.

Exhibit A

Yeah. Ideally they'd just close up the loopholes.
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#5 Aug 13 2013 at 9:29 AM Rating: Excellent
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Yeah, I'm not sure taxing non-profits is the answer, but tightening up the definition (or at least the policing) of "non-profit" to expel some of the more egregious trouble makers seems like a good idea on paper at least.
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#6 Aug 13 2013 at 6:52 PM Rating: Default
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BrownDuck wrote:
The only not-for-profit organizations I think should be taxed that aren't are those clearly "for profit" churches and similar organizations who use 501c3 status as tax loophole and pocket the difference.

Exhibit A


The issue goes well beyond religious organizations though, so maybe we shouldn't just paint the issue with one bristle of the brush. Tons of union organizations, pension organizations, and political organizations use non-profit status, and the potential for abuse is just as real there.


I absolutely agree that we should be looking for and punishing clear instances of fraud, but that's somewhat separate from simply deciding to tax them anyway. I have some reservations about the methods they were looking at in this case, because they're basically trying to go after assets of the non-profit, which smells suspiciously like a "wealth tax" (which is a horrifically bad idea if you stop and think about it). At the risk of invoking a Slippery Slope(tm), I don't think it's unreasonable to assume that if we start taxing assets and held wealth of non-profits, someone at some point will ask why we're punishing non-profits in this way, but letting for-profit folks avoid that tax. And once we do that, it's good-bye free market.

You also have to realize that while the non-profit itself isn't taxed, the income its employees earn is taxed, and some of their economic activities may be taxed as well (if they buy a car, for example, the normal taxes on the car is paid. Not sure about things like property taxes though). Doing this on a state or local level would seem to be a really dumb idea. You'll just drive out the non-profits in your area (they'll just move their offices somewhere else), and you'll lose the other economic benefits that said non-profit may bring.

Lots of reasons not to do this, and very few for doing it.
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#8 Aug 14 2013 at 7:31 AM Rating: Good
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gbaji wrote:
You also have to realize that while the non-profit itself isn't taxed, the income its employees earn is taxed, and some of their economic activities may be taxed as well (if they buy a car, for example, the normal taxes on the car is paid. Not sure about things like property taxes though)
Nonprofits are exempt from sales and property taxes in relation to the business they are running.
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#9 Aug 14 2013 at 9:30 AM Rating: Excellent
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gbaji wrote:
You also have to realize that while the non-profit itself isn't taxed, the income its employees earn is taxed
What we really need here is some kind of loophole. Because it's good for the economy, or something... Smiley: um

But yes were the same as normal people, other than the fact we pay more taxes than our employer, and the super powers of course.
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#10 Aug 14 2013 at 12:07 PM Rating: Good
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lolgaxe wrote:
gbaji wrote:
You also have to realize that while the non-profit itself isn't taxed, the income its employees earn is taxed, and some of their economic activities may be taxed as well (if they buy a car, for example, the normal taxes on the car is paid. Not sure about things like property taxes though)
Nonprofits are exempt from sales and property taxes in relation to the business they are running.


Yeah, I work for a nonprofit and anything we buy is tax-exempt. Tax-exempt status covers anything we purchase for the business, including sales and property taxes. But all of our employees pay normal income taxes.

Honestly, this is a non-issue. The loopholes should obviously be closed, and I'm 100% fine with re-reviews of nonprofit organizations to ensure they remain within the limits of a nonprofit. But taxing them isn't going to to create a meaningful source of revenue.

It's also defeating the purpose of a nonprofit.
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#11 Aug 14 2013 at 3:43 PM Rating: Decent
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idiggory, King of Bards wrote:
Yeah, I work for a nonprofit and anything we buy is tax-exempt. Tax-exempt status covers anything we purchase for the business, including sales and property taxes. But all of our employees pay normal income taxes.

Honestly, this is a non-issue. The loopholes should obviously be closed, and I'm 100% fine with re-reviews of nonprofit organizations to ensure they remain within the limits of a nonprofit. But taxing them isn't going to to create a meaningful source of revenue.


I agree. The problem with closing the loopholes, is while it's easy to say, it's a lot harder to execute. Those loopholes are generally part of the whole "don't pay taxes" bit, and it can be very difficult to know when it's being abused. More correctly, it's usually quite easy to look at an individual case and conclude that the guy running a non-profit that just happens to provide him with a tax free mansion to live in is abusing the status. But try putting that into legal code and it gets difficult.
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#12 Aug 14 2013 at 3:52 PM Rating: Excellent
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gbaji wrote:
idiggory, King of Bards wrote:
Stuff


I agree.

Smiley: jawdrop

Well I'll be damned.

I'm mean agreeing with Joph is one thing, but agreeing with diglett? Never though I'd see that. This day is getting marked on the calendar with a super special 'X' or something. Where's one of those Gelly Roll pens when you need one?
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#13 Aug 14 2013 at 3:56 PM Rating: Good
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It has nothing to do with the "don't pay taxes" and everything to do with the 'Set a definition for "nonprofit."'

It's not really all that hard. The reality is that most nonprofits that are abusing that status get away with it because they are too rarely (or never) re-reviewed for the status. Nearly all of them start out as firmly within the legitimate criteria for a nonprofit, and it grows out of that.

For the remaining cases, relatively minor revisions to the definition, or singular addendum to add specific exceptions, would be significant.

The reality is that this is not something that's politically worthwhile for either party. Particularly since the party that most cares (the Right), have the most to lose (Evangelicals), though that's very particular by state. There's no chance in hell of a Republican ever seriously fighting to tax churches. You'll only see the right go after non-religious institutions, which I have a serious problem with.

For the record, super-blue Philadelphia is conducting a review of the tax-exempt status of UPenn (IIRC), because they want to update the current status of tax exempt status for their property holdings, to hold them responsible for any buildings not put to an appropriate use for the status (meaning, not fundamental to, and/or in keeping with, their nonprofit mission).

This may well be because I haven't heard of it, but when was the last time the Right called for a review of <insert insanely rich evangelical preacher> regarding whether or not his mansion was covered under the management and mission of a nonprofit?

[EDIT]

That's because he didn't agree. He recognizes loopholes are an issue, but thinks the better solution is to consider nonprofits themselves as the issue, because it's easier to legislate for.

Edited, Aug 14th 2013 5:58pm by idiggory
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#14 Aug 14 2013 at 4:02 PM Rating: Excellent
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idiggory, King of Bards wrote:
That's because he didn't agree. He recognizes loopholes are an issue, but thinks the better solution is to consider nonprofits themselves as the issue, because it's easier to legislate for.
Well in that case let's just pretend he did, I already marked the calendar and I'm out of white-out.
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#15 Aug 14 2013 at 4:48 PM Rating: Decent
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idiggory, King of Bards wrote:
It has nothing to do with the "don't pay taxes" and everything to do with the 'Set a definition for "nonprofit."'


I agree with that as well. I wasn't sure which direction you were going with the loopholes (since that doesn't really apply). I went in the direction of abusing the status, but qualifying for it works as well. In either case, we're really talking about the same thing, just from different directions. Someone is either using the funds in a manner consistent with the intent of the non-profit status, or they are not. But as I said, it's sometimes difficult to determine this, because it often comes down to degrees. Obviously, the folks working for the non-profit should draw a salary for their work. But how much is ok, and how much is too much? Who gets to decide this? And many non-profits require travel. How expensive of a plane is too much? Is it really an excess or a savings in the long run? How about cars? Buildings? Other assets? And yeah, this gets tricky when dealing with things like homes as well, and this is something we often associate with religious non-profits (cause nuns and priests often live in the rectory or other buildings, so where do you draw the line?).

As I said, it's something we can usually look at and subjectively say "that's excessive". But it's harder to codify. And in the absence of firm guidelines you run the risk of those things being applied capriciously and selectively.

Quote:
The reality is that this is not something that's politically worthwhile for either party. Particularly since the party that most cares (the Right), have the most to lose (Evangelicals), though that's very particular by state. There's no chance in hell of a Republican ever seriously fighting to tax churches. You'll only see the right go after non-religious institutions, which I have a serious problem with.

For the record, super-blue Philadelphia is conducting a review of the tax-exempt status of UPenn (IIRC), because they want to update the current status of tax exempt status for their property holdings, to hold them responsible for any buildings not put to an appropriate use for the status (meaning, not fundamental to, and/or in keeping with, their nonprofit mission).

This may well be because I haven't heard of it, but when was the last time the Right called for a review of <insert insanely rich evangelical preacher> regarding whether or not his mansion was covered under the management and mission of a nonprofit?


You should read the links in BD's "exhibit A" then. Nearly all of the links were to christian sites talking about the problem. The investigation of 6 super rich evangelists for potential fraud was initiated by Charles Grassley, a Republican.


It's a problem that can present within any organization, regardless of political orientation. And there are people who don't like it, also regardless of political orientation. Oh. And let me add something as well. I think you are grossly misunderstanding just how many left leaning non-profits there are out there. I don't know which "side" has more, but I don't agree with your assessment that the Right "most cares" about this. And that's doubly true if we're talking about the political angle. A lot of the religious non-profits are apolitical, with followers of all political persuasions. It's when we get into advocacy groups, social services groups, unions, pensions, universities, etc that we hit the really really big number of non-profits, and I suspect that most of those lean left, not right.

Quote:
That's because he didn't agree. He recognizes loopholes are an issue, but thinks the better solution is to consider nonprofits themselves as the issue, because it's easier to legislate for.


No (unless I'm misunderstanding what you mean by "consider nonprofits themselves as the issue"). I just think it's harder to legislatively close loopholes than it appears. I agree with the whole "let's audit these organizations more frequently" approach. However, I want such decisions to audit and the criteria used to be consistent. I think we can both agree that while there are fair and honest people on both sides who do want to simply curb ridiculous abuses of our non-profit status, there are also people on both sides who would use whatever legal means are at their disposal to attack the other sides organizations. The recent IRS vs Tea Party stuff on this very question of tax status would seem to be relevant here.

Edited, Aug 14th 2013 3:51pm by gbaji

Edited, Aug 14th 2013 3:57pm by gbaji
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#16 Aug 14 2013 at 6:37 PM Rating: Good
Typical Gbaji response to any problem. If you can't fix the whole thing, don't change anything.
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#17 Aug 14 2013 at 7:13 PM Rating: Excellent
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Typical Gbaji response to any problem. If you can't fix the whole thing, don't change anything.
That's alma more than Gbaji. Gbaji would be fine with partial solutions as long as the GOP talking points* point in that direction.




*which he never listens to
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#18 Aug 14 2013 at 7:42 PM Rating: Decent
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Weird, one would think that not collecting taxes would have led to explosive economic growth that benefited everyone. Isn't that how that's supposed to work?

Anyway, down south here in the workers paradise, large land owning non profits routinely make payments in lieu of taxes to municipalities. Harvard pays a few million a year to Boston and Cambridge, ditto BU, Tufts, etc. No idea how widespread that practice is nationally.
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#19 Aug 15 2013 at 8:40 AM Rating: Good
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Smasharoo wrote:
Isn't that how that's supposed to work?
What could have possibly gone wrong?
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#20 Aug 15 2013 at 9:27 AM Rating: Excellent
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Smasharoo wrote:
Anyway, down south here in the workers paradise, large land owning non profits routinely make payments in lieu of taxes to municipalities. Harvard pays a few million a year to Boston and Cambridge, ditto BU, Tufts, etc. No idea how widespread that practice is nationally.
We buy up waterfront real estate and then convince the city to help us build a ski lift connecting it to main hospital. It's for the good of everyone, of course.
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#21 Aug 15 2013 at 11:24 AM Rating: Default
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Technogeek wrote:
Typical Gbaji response to any problem. If you can't fix the whole thing, don't change anything.


More "Stop and think about whether your solution creates more problems than it solves before doing anything". Crazy concept, I know!
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#22 Aug 16 2013 at 7:17 AM Rating: Good
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Or to have someone else tell you what to think. Not all that crazy, considering how often you do it.
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#23 Aug 16 2013 at 7:22 AM Rating: Excellent
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someproteinguy wrote:
Yeah, I'm not sure taxing non-profits is the answer, but tightening up the definition (or at least the policing) of "non-profit" to expel some of the more egregious trouble makers seems like a good idea on paper at least.

Given the manufactured outrage over the investigation and oversight of political non-profits, you can expect less policing of organizations in the future (and consequently more fraud), not more.
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#24 Aug 16 2013 at 4:31 PM Rating: Default
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Jophiel wrote:
someproteinguy wrote:
Yeah, I'm not sure taxing non-profits is the answer, but tightening up the definition (or at least the policing) of "non-profit" to expel some of the more egregious trouble makers seems like a good idea on paper at least.

Given the manufactured outrage over the investigation and oversight of political non-profits, you can expect less policing of organizations in the future (and consequently more fraud), not more.


Ah yes. Manufactured outrage. Cause there can't possibly be a legitimate reason for people to be upset that the IRS basically put them on hold for upwards of 2 years when requesting tax exempt status.
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#25 Aug 16 2013 at 4:36 PM Rating: Excellent
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Yup. Manufactured outrage. Congratulations on both reading and learning how to re-type what you've just read.
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#26 Aug 16 2013 at 5:01 PM Rating: Default
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Jophiel wrote:
Yup. Manufactured outrage. Congratulations on both reading and learning how to re-type what you've just read.


The word manufactured implies that there's no legitimate reason to be outraged by this. You honestly believe no one should be upset that organizations filing for tax exempt status had their requests delayed long past the time frame the IRS is supposed to provide a "yes/no" answer and that it appears that conservative political organizations were the primary targets of this mistreatment?

That's not manufactured Joph.

Manufactured outraged is injecting race into a shooting where race played no part and then using that to get a whole bunch of people angry. But in this case, the IRS did delay giving any sort of response to those requests for tax status long past the time limit and it did do this overwhelmingly to conservative political organizations. There's nothing manufactured about that.

Edited, Aug 16th 2013 4:03pm by gbaji
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#27 Aug 16 2013 at 5:22 PM Rating: Excellent
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gbaji wrote:
The word manufactured implies that there's no legitimate reason to be outraged by this.

Very good.

When you have a farcical "investigation" where you tell the inspector you only want him to look at select cases so you can then use those cases as an example of how mistreated you were (despite the inspector being explicitly told not to look for other examples outside your little "mistreated" group) you have manufactured a false scandal for the purpose of making people outraged.

No, there's no legitimate reason to be outraged by that unless your reason is "I'm easily led".
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#28 Aug 16 2013 at 8:39 PM Rating: Good
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That's not manufactured Joph.

Manufactured Joph sounds like it'd be tough and stringy.

I'll stick with organic Joph.

Edited, Aug 16th 2013 8:47pm by Bijou
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#29 Aug 16 2013 at 8:56 PM Rating: Good
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Friar Bijou wrote:
gbaji wrote:
That's not manufactured Joph.

Manufactured Joph sounds like it'd be tough and stringy.

I'll stick with organic Joph.

Edited, Aug 16th 2013 8:47pm by Bijou
Damn hippie... Smiley: oyvey
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#30 Aug 16 2013 at 8:59 PM Rating: Excellent
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That's why you go with the machine separated Joph.
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#31 Aug 16 2013 at 9:15 PM Rating: Good
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I want my Joph lab grown and high tech.
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#32 Aug 17 2013 at 4:39 AM Rating: Good
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#33 Aug 17 2013 at 6:36 AM Rating: Excellent
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#34 Aug 17 2013 at 12:29 PM Rating: Excellent
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#35 Aug 18 2013 at 8:06 AM Rating: Good
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I still like the Jophiel, mink coat vendor avatar.
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#37 Aug 19 2013 at 7:21 AM Rating: Good
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More like fruit flies. AMIRITE!?
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