The origins of the tax-exempt sector in the
United States predate the formation of the
republic. Absent an established Governmental
framework, the early settlers formed charitable and other “voluntary” associations, such as hospitals, fire departments, and orphanages, to confront a wide variety of issues and ills of the era.
Taxpayers filed 134.4 million returns for Tax Year 2005, of which 90.6 million (or 67.4 percent) were classified as taxable returns. A taxable return is a return that has total income tax greater than $0. This represents an increase of 1.7 percent in the number of taxable returns from 2004.
Since 1916, the Internal Revenue Service (IRS) has been publishing income and tax statistics based on information reported on Federal tax returns filed by U.S. individual taxpayers. These publicly available, annual Statistics of Income (SOI) reports were created shortly after enactment of the modern income tax in 1913.
To conclude our 90th anniversary celebrations, we will focus on the achievements of our seventh and eighth Directors, Dan Skelly and Tom Petska, who have made the Statistics of Income Division the world-class organization it is today.
The Split-Interest Trust Information Return (Form 5227) is filed by entities with both charitable and noncharitable beneficiaries. In Filing Year 2006, preparers filed 124,036 Forms 5227, about the same number as in 2005. Total distributions remained stable, with $8.4 billion reported in both 2005 and 2006.
The aggregate “unrelated business” income tax (UBIT) liability of nonprofit charitable and other types of tax-exempt organizations rose 66 percent between Tax Years 2003 and 2004. These organizations may engage in activities considered unrelated to their tax-exempt missions, but income produced from these activities is subject to Federal taxation.
