Public Law 118 – 146 – VSO Equal Tax Treatment Act
Enacted: December 29, 2024
Summary:
The VSO Equal Tax Treatment Act (VETT Act) amends the Internal Revenue Code to equalize the tax treatment of Veterans Service Organizations (VSOs) with that of other charitable organizations. VSOs are nonprofit organizations that provide services to veterans and their families.
Key Provisions:
- Clarifies the Definition of “Qualifying Veterans Organization”: Expands the definition to include organizations that provide a broader range of services to veterans, such as job training, housing assistance, and mental health counseling.
- Eliminates the “Substantially All” Requirement: Repeals the requirement that VSOs must spend “substantially all” of their funds on veterans’ services to qualify for tax-exempt status.
- Extends the Statute of Limitations: Extends the statute of limitations for the Internal Revenue Service (IRS) to audit VSOs from three years to six years. This allows the IRS more time to ensure compliance with the new tax rules.
- Provides for Retroactive Relief: Allows VSOs to retroactively amend their tax filings to claim tax benefits that they were previously ineligible for under the old rules.
Background:
Prior to the VETT Act, VSOs faced several tax disadvantages compared to other charitable organizations. The “substantially all” requirement limited their ability to use their funds for a wider range of services. The short statute of limitations made it difficult for the IRS to hold VSOs accountable for any potential misuse of funds.
Impact:
The VETT Act is a major victory for VSOs. It removes the barriers that prevented them from providing a full range of services to veterans. It also ensures that VSOs are treated fairly under the tax code.
Additional Information:
- The VETT Act was introduced by Senator Jon Tester (D-MT) and Representative Brian Fitzpatrick (R-PA).
- It passed the Senate by unanimous consent on December 19, 2024.
- It passed the House of Representatives by a vote of 430-0 on December 20, 2024.
- The VETT Act was signed into law by President Joe Biden on December 29, 2024.
Public Law 118 – 146 – VSO Equal Tax Treatment Act” or as the “VETT Act
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