SENATE 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.

Senate Committee on Governmental Operations

Senate Hearing Date(s):February 25, 1987; March 4, 1987

Majority Report:  That Substitute Senate Bill No. 5717 be substituted therefor, and the substitute bill do pass.

      Signed by Senators Halsan, Chairman; Garrett, Vice Chairman; DeJarnatt, Talmadge, Zimmerman.

Senate Staff:Sam Thompson (786-7754); Walt Corneille (786-7452)

                  March 12, 1987

AS PASSED SENATE, MARCH 11, 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:      none requested

Effective Date:June 1, 1987

Senate Committee - Testified: Phil Prettyman, United Way of King County; Duke Schaub, Associated General Contractors; Laura Eckert, Secretary of State's office