An effort by Pennsylvania lawmakers to regain control over defining tax-exempt nonprofits has prompted heated debate over what kind of entities should be tax-exempt.
To defuse that situation a bit, state Sen. Mario Scavello, R-Monroe, has suggested creating a committee to consider how exactly to tax — or not tax — organizations defined as charities.
The issue is front and center right now because of a proposed change to the state constitution that would put lawmakers in charge of defining charities.
Scavello and his colleagues have been taking some heat over the amendment, especially from local government groups worried they’ll lose out on more tax revenue.
“People are thinking the Legislature is going to — you know what the truth is, that people don’t trust the Legislature. And it’s, unfortunately, that’s what it is,” he said.
But the panel could clear up fuzzy rules for nonprofits — including churches, hospitals, and universities – that local governments say are unfairly escaping their tax burden.
“This has to be really put down — there can be no gray area — and really spelled out exactly what is and what isn’t,” Scavello said. “And that’s what I’m proposing to do by putting this commission together.”
The special committee would not hamper the progress of the proposed constitutional amendment, Scavello said, and could make its recommendations with six months.
Currently, a court ruling establishes rules defining tax-exempt charities.