HOUSE BILL REPORT

SSB 5717

BYSenate Committee on Governmental Operations (originally sponsored by Senators Cantu and Rasmussen)

Requiring disclosure by nonprofit corporations of their financial activities.

House Committe on Ways & Means/Revenue

Majority Report:  Do pass.  (7)

      Signed by Representatives Appelwick, Chair; Basich, Holland, Rust, Taylor, Valle and Winsley.

House Staff:Rick Wickman (786-7150)

AS PASSED HOUSE APRIL 13, 1987

BACKGROUND:

A nonprofit corporation conducting affairs in Washington must register with the Secretary of State and file an annual report specifying:  (1) the name of the corporation, and the state or country under the laws of which it is organized; (2) the addresses of the registered office of the corporation, the registered agent, and its principal office outside of Washington; (3) a statement of the character of the affairs the corporation is conducting; and (4) the names and addresses of the directors and officers of the corporation.

It has been suggested that some nonprofit corporations compete with private businesses, and have an unfair advantage because they may be exempt from taxation. Additional information is sought on the activities of these nonprofit corporations.

Tax exempt status with the federal Internal Revenue Service requires that financial information be reported in a yearly form 990 filing. These tax returns are available to the public.

SUMMARY:

A study is to be conducted to correlate nonprofit corporations and charities on file with the Secretary of State's office with those Washington entities that file Internal Revenue Service form 990, for organizations exempt from income tax. The study will assist the legislature in determining whether to amend annual reporting requirements. 

The Secretary of State may contract with the Internal Revenue Service for necessary services.  The secretary will report results of the study to the legislature by December 31, 1987.

Appropriation:    $24,000 to the Secretary of State.

Fiscal Note:      Attached.

Effective Date:June 1, 1987.

House Committee ‑ Testified For:    Laura Eckert, Assistant to the Secretary of State.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    The Secretary of State needs funding to study non-profit organizations operating in the state using IRS data to revise their reporting requirements.

House Committee - Testimony Against:      None Presented.