The Internal Revenue Service has announced a change in leadership in the office of its top charity regulator.

Steven T. Miller, who has served as commissioner of the IRS’s Tax Exempt and Government Entities Division since 2004, will now become commissioner of the tax agency’s Large and Mid-Size Business Division.

Mr. Miller will be replaced by Sarah Hall Ingram, whose IRS experience includes service from 2004 to 2006 as deputy commissioner of the Tax Exempt and Government Entities Division.

The Tax Exempt and Government Entities Division oversees the administration of tax law for nonprofit organizations, retirement plans, and federal, state, and local governments.

The Internal Revenue Service’s annual list of the “dirty dozen” tax schemes that Americans must avoid includes the abuse of the charitable-tax deduction and of charities themselves.

The IRS said it “continues to investigate various schemes involving the donation of noncash assets, including easements on property, closely held corporate stock, and real property.”

Often, the tax agency said, “the donations are highly overvalued or the organization receiving the donation promises that the donor can purchase the item back at a later date at a price the donor sets.”

The IRS said it continues to see the misuse of tax-exempt organizations. “Abuse includes arrangements to improperly shield income or assets from taxation and attempts by donors to maintain control over donated assets or income from donated property,” the IRS said.

Only 40 percent of the nearly 13,200 charities that reported receiving business income not related to their missions wound up paying tax on those earnings for the 2005 tax year, according to new statistics released by the Internal Revenue Service.

These charities reported a collective gross income of more than $6-billion yet paid just $260-million in tax. (Both figures were the highest since the IRS began to keep track in the 1992 tax year.)

Under federal law, nonprofit organizations must pay tax on income generated from business activities that are not “substantially related” to their charitable mission.

Last year, a Chronicle study of the business practices of 91 of the nation’s largest charities found that many organizations take advantage of vague rules and specific exemptions built into statutes to legally avoid paying tax. Fifty-one percent of the charities in the study...

The Internal Revenue Service is asking charities to weigh in on the tax agency’s revised Form 990 informational tax return, the primary tax document that nonprofit organizations file each year.

The revamped form, which includes new schedules, is being used for the first time by tax-exempt groups for the 2008 tax year.

The IRS would like comments sent by e-mail to Form990Revision@irs.gov. “We will review these comments as we consider making future revisions to the Form 990, schedules, and instructions,” the tax agency said.

Meanwhile, the IRS is seeking ideas on a program it is developing to work with academic institutions that offer degrees on nonprofit management and related topics. The program’s goal: “to promote the education of exempt organization tax law.”

“The student populations of these academic institutions may one day be the leaders and managers of the exempt...

Sen. Max Baucus, the Montana Democrat who chairs the Senate Finance Committee, has introduced legislation that would make the estate tax permanent and at levels that are already in effect this year.

In 2001, Congress passed the current law that gradually phases out the estate tax through 2009 and repeals it for 2010. In 2011, however, the current law is set to expire and estate-tax levels that applied years earlier go back into effect unless Congress takes action.

The bill proposed by Mr. Baucus — the Tax Certainty and Relief Act of 2009, or S 722 — would permanently keep the estate tax at 2009 levels (and do away with the 2010 repeal). Heirs could exempt $3.5-million from taxes ($7-million for couples), with amounts above that taxed at 45 percent. The exemption threshold would be adjusted for inflation in the future.

“This bill would offer certainty on the estate tax,” Senator...

In a revised guide for taxpayers, the Internal Revenue Service explains the rules that tax-exempt organizations must follow when they raise money through business activities.

Charities and other nonprofit groups must pay unrelated-business income tax, known as UBIT, on retail sales, magazine publishing, and other commercial operations that are not directly related to their missions.

The tax agency’s updated Publication 598 explains which organizations are subject to the tax; what an unrelated trade or business is; and how groups should calculate their unrelated-business taxable income.

Sen. Mitch McConnell of Kentucky, the Senate Republican leader, has criticized the Obama administration’s proposal to limit federal tax breaks that wealthy people can get for their itemized deductions for donations to charity.

To help pay for a plan to reshape the country’s health-care system, President Obama wants to limit the federal tax breaks that wealthy people can get for their itemized deductions, including donations to charity, starting in 2011.

“With a challenged economy already causing endowments at colleges and universities, charities, museums, and other nonprofits to shrivel up, the last thing America’s nonprofit organizations expected was for the administration to introduce another disincentive to charitable giving,” Senator McConnell said on the Senate floor yesterday.

Mr. McConnell noted that a recent report showed that college and university endowments lost more...

The U.S. Government Accountability Office, the investigative arm of Congress, is looking into the “misreporting” of cash contributions to charity by individual taxpayers.

In a summary of the study’s parameters, the GAO said that data from the Internal Revenue Service show that “individual taxpayers frequently overstate deductions and make other errors when reporting cash contributions to charities.”

The agency is working to “identify pros and cons of potential options to improve compliance, including, if possible, their potential impact and costs and burdens on taxpayers, IRS, and third parties.”

The GAO was asked to review the matter by Sen. Max Baucus, the Montana Democrat who chairs the Senate Finance Committee, and Sen. Charles E. Grassley of Iowa, the senior Republican on the finance committee.

The GAO said it was asked to:

To carry out the study, the GAO said...

The U.S. Government Accountability Office has released a report that describes the ways federal funds are provided to tax-exempt organizations and attempts to quantify the amounts nonprofit organizations receive through various programs.

“Our analysis of data presently collected suggests that significant federal funds reached nonprofit organizations in 2006,” said the GAO, the investigative arm of Congress.

But the GAO cautioned: “Due to limitations and reliability concerns with tracking systems’ data, the data presently collected provide an incomplete, unreliable picture of the federal government’s funds reaching the nonprofit sector through various mechanisms.”

With that caution in mind, the GAO said the approximate federal dollars flowing to charities and other tax-exempt organizations in 2006 through reviewed federal programs were:

• $135-billion in fee-for-service payments...

A Wisconsin Congressman has introduced a bill aimed at helping people who use their vehicles as part of their volunteer work for charities.

Under federal law, volunteers who drive their cars for charitable purposes may be reimbursed by a charity at the rate of 14 cents a mile without the payment being subject to federal income tax.

Under the bill (HR 590) submitted by Republican Rep. Thomas E. Petri, volunteers could be reimbursed at the standard business mileage rate, which is now 55 cents per mile, without being subject to tax.

The current discrepancy between the charitable and business mileage rates “is discriminatory and unfair,” said Mr. Petri. “It discourages volunteer activity.”

A press release from the Congressman said the bill — called the Charitable Driving Tax Relief Act — would also drop a federal requirement that charities report their reimbursements to the Internal...