The Internal Revenue Service has updated its guidelines that explain how charities must make public their Form 990-T filings, which list business activities not directly related to a charity’s mission.

As part of the Pension Protection Act of 2006, charities that file the Form 990-T must now make their filings available for public inspection.

New IRS reporting guidelines released this week clarify the rules behind this requirement. Most notably, the guidelines say nonprofits must make filings available for three years after their filing date. The requirement applies to all Form 990-T filings made after August 17, 2006.

The tax agency’s guidelines also state that charities do not have to provide supporting documents and attachments that do not relate to the imposition of unrelated business income tax.

As a result, nonprofit groups do not have to make public Form 5471 (Information...

Could nonprofit groups face steep fines if they skip lines or misreport information on informational tax forms?

Sen. Charles Grassley, the senior Republican on the powerful Finance Committee, says tougher penalties are possible if charities do not take steps to improve their reporting on the Form 990 informational tax return.

Mr. Grassley and his staff will be paying attention to what degree charities comply with upcoming changes to the Form 990. Many nonprofit groups will have to fill out an updated version of the form beginning in 2009.

Mr. Grassley said the new form — as well as the Pension Protection Act of 2006 — will make it easier for the public and the government to monitor the financial effectiveness of charities.

But, he said, more needs to be done.

“Time and again, problems at nonprofits come back to boards that aren’t independent or hands-on enough,” Mr. Grassley...

Sen. Charles Grassley has tapped a former Internal Revenue Service official to replace a well-known former aide who had aggressively pursued efforts to regulate nonprofit organizations.

Theresa Pattara, a project manager at the IRS Office of Exempt Organizations, will replace Dean Zerbe as Mr. Grassley’s senior tax counsel. Mr. Zerbe left the post in February to join the Washington office of the Alliant Group, a Houston tax-consulting company.

Mr. Zerbe had been a controversial figure in philanthropy, pushing efforts to tighten the rules that govern college endowments, nonprofit hospitals, donor-advised funds, supporting organizations, and evangelical ministries.

Ms. Patttara has a similar reputation. During her time with the IRS, she managed efforts to enforce the Pension Protection Act of 2006 and worked on the revision of the Form 990 informational tax return. The overhaul was...

If Congress permanently repeals the estate tax, many charities and foundations worry that they will see a significant, long-term decline in large gifts from wealthy donors.

Diana Aviv, president of Independent Sector in Washington, told the Senate’s Finance Committee at a hearing today that the tax is vital in encouraging the nation’s rich to give money to charity.

But her organization, which represents about 600 large charities and foundations, is also recommending Congress close some loopholes to make sure unscrupulous donors do not use charities as tax shelters.

“The estate tax provides a stream of funding that is essential for the services charitable organizations perform to enrich lives and strengthen communities across the nation and around the world,” Ms. Aviv said.

She added that eliminating the tax would also cost the government about $500-billion over the next 10...

A key figure in Congress’s recent efforts to curb abuse in the nonprofit world says foundations need to become much more aggressive in stopping tax fraud.

Otherwise, foundations could soon be in the cross hairs of federal lawmakers.

Dean A. Zerbe, a former top aide to Sen. Charles Grassley of Iowa, said in an online discussion with Chronicle readers that some members of Congress are concerned about family foundations that are paying family members for administrative or board positions.

Mr. Zerbe, who stepped down from his Senate job last month to work as national managing director for Alliant Group in Washington, also said he is concerned that private foundations are being used as a tax shelter by some wealthy donors.

“There needs to be better leadership from the foundation community in this area overall to address these problems,” Mr Zerbe said. “The private foundations should ...

Join The Chronicle on Tuesday, March 25, at noon for an online discussion with the prominent charity watchdog Dean A. Zerbe.

As a top aide to Sen. Charles Grassley, the senior Republican on the Senate Finance Committee, Mr. Zerbe has been a prime mover in Congressional efforts to stomp out charity abuses.

His wide-ranging criticisms of charities and foundations divided the nonprofit world, but everybody agrees that his influence on the operations of nonprofit groups will be felt for many years to come.

Mr. Zerbe started more than a dozen investigations of charitable activities that had previously drawn little attention on Capitol Hill, such as the tax breaks donors take for gifts of land and deals between charities and insurance companies.

He was a key figure in the effort to overhaul the Internal Revenue Service Form 990 and recently has been pushing for reform of nonprofit...

The Internal Revenue Service has posted a searchable database of organizations that have filed the new Form 990-N informational tax form.

The Form 990-N, also known as an “e-postcard,” is a new tax document required of groups with annual gross receipts of less than $25,000.

Previously only groups that earned $25,000 or more yearly had to file with the IRS, but the Pension Protection Act of 2006 requires all groups to file. The new filings should help the agency get an accurate count of how many nonprofit groups exist. (Churches and charities that file as part of a group do not have to fill out a 990-N.)

Organizations are required to file the form starting this calendar year for fiscal years ending on or after December 31, 2007. The form is due by the 15th day of the fifth month after the end of a fiscal year.

The Internal Revenue Service is not doing enough to help small nonprofit groups understand its rules, the national taxpayer advocate told Congress this week.

Nina E. Olson, the taxpayer advocate, said in her annual report to Congress said the IRS needs to develop a plan to step up its outreach to small charities.

By doing so, Ms. Olson said the agency would help more groups comply with an increasingly complex tax code.

“The IRS has increased enforcement actions against [tax-exempt organizations] and the resources dedicated thereto,” Ms. Olson said in the report. “However, resources devoted to EO [exempt organization] education and outreach, which were never adequate, have continued to decline.”

Ms. Olson, who operates independently of other IRS offices and reports to Congress, also called on the IRS to relax the reporting requirements for small organizations — particularly for ...

Four evangelical groups have yet to turn over financial information to Sen. Charles E. Grassley as part of the Iowa Republican’s informal investigation into the groups’ spending and compensation practices.

But Mr. Grassley said today that he is holding out hope that the four groups will reconsider their stance.

“It’s a new year and the ministries that have chosen not to cooperate have a chance to see the inquiry in a new light,” Senator Grassley said today in a written statement. “This has nothing to do with church doctrine. It’s only about tax-exempt policy. The ministries are no different from any other tax-exempt group in terms of an obligation to cooperate with a Congressional oversight inquiry exploring tax policy.”

It has been more than a month since Mr. Grassley’s original deadline for six evangelical organizations to provide financial records as part of the inquiry.

Two ...

NeighborWorks America, a Washington charity that works to strengthen neighborhoods and boost homeownership, has been awarded a $180-million federal grant to help nonprofit groups and government agencies provide counseling services to homeowners facing foreclosure.

The money, part of an appropriations bill the President signed into law last month, will be available to organizations approved by the U.S. Department of Housing and Urban Development to serve as “housing counseling intermediaries.”

Those organizations—which include Catholic Charities USA and the National Urban League—can then channel the money to local organizations and affiliates to help them expand or develop counseling programs designed to keep homeowners from losing their homes to foreclosure.

Such programs educate mortgage holders about their options when they fall behind in their payments and, in some instances...