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HOUSE OF REPRESENTATIVES |
H.R. NO. |
134 |
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TWENTY-SEVENTH LEGISLATURE, 2013 |
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STATE OF HAWAII |
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HOUSE RESOLUTION
urging the department of taxation, the department of human services, AND THE UNITED STATES internal revenue service to enforce executive salary compensation regulations for nonprofit organizations that provide services to homeless individuals, pursuant to section 501(c)(3) OF the internal revenue code.
WHEREAS, the private inurement prohibition precludes individuals who have close relationships with and the ability to exercise control over a public charity that is exempt from taxation under section 501(c)(3) of the Internal Revenue Code from benefiting unfairly or unreasonably from that charity's income or assets; and
WHEREAS, the most common type of private inurement is excessive compensation paid to insiders of an organization, which can result in the revocation of a charity's tax-exempt status and the imposition of financial penalties known as "intermediate sanctions"; and
WHEREAS, courts and the United States Internal Revenue Service have consistently ruled that any unreasonable benefit or inurement, however small, is impermissible; and
WHEREAS, section 501(c)(3) of the Internal Revenue Code requires that total compensation paid to executives and members of the boards of directors of tax-exempt charitable organizations be fair and reasonable; and
WHEREAS, in previous years, the Legislature has appropriated approximately $63,000,000 for homeless services, but the State has not experienced a reduction in the number of homeless persons in the State; and
WHEREAS, a significant portion of these appropriated funds was spent on salaries for executives, salaried personnel, and administrative costs for nonprofit organizations; and
WHEREAS, the State has an interest in ensuring that the funds appropriated to tax exempt, charitable organizations are expended for their intended purposes and not to unreasonably compensate the executives of these organizations; now, therefore,
BE IT RESOLVED by the House of Representatives of the Twenty-seventh Legislature of the State of Hawaii, Regular Session of 2013, that the Department of Taxation, the Department of Human Services, and the United States Internal Revenue Service are urged to enforce the requirements of section 501(c)(3) of the Internal Revenue Code regarding excessive inurement to the benefit of executives of tax-exempt charitable organizations that provide services to homeless individuals in the State; and
BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Commissioner of the Internal Revenue Service, the Director of Taxation, and the Director of Human Services.
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OFFERED BY: |
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Nonprofit Organizations; Enforcement of Executive Salaries