The Honorable Charles E. Grassley The Honorable Max Baucus

proposals issued by the Senate Finance Committee staff for the hearing on June 22, 2004 relating to tax-exempt organizations, and to participate in the July 22 roundtable. While all of the staff’s proposals deserve serious consideration, the attached submission focuses on those proposals to increase the role of the Internal Revenue Service and the U.S. Tax Court in the enforcement of fiduciary duties of directors and officers of exempt organizations. As described in my statement, the Committee’s valuable undertaking coincides with several important legal reform projects to clarify and improve State laws relating to charity governance. I do not favor importing additional substantive fiduciary law into the Internal Revenue Code, or granting private parties standing to enforce tax-exemption requirements. Rather, I support those proposals in the discussion draft that would improve charity operations in three ways: (1) by freeing the Service to share information with State regulators; (2) by expanding the information relating to good governance practices to be reported on the Form 990, both to educate the charity and to inform the public; and (3) by increasing funding to the Service for increased enforcement of and education about existing Federal tax laws, and by providing revenue to the States for enforcement and education