Below is the text of Senate Bill 673:
S 673 IS
111th CONGRESS
1st Session
S. 673
To allow certain newspapers to be treated as described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code.
IN THE SENATE OF THE UNITED STATES
March 24, 2009
Mr. CARDIN (for himself and Ms. MIKULSKI) introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To allow certain newspapers to be treated as described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. TREATMENT OF CERTAIN NEWSPAPERS AS EXEMPT FROM TAX UNDER SECTION 501.
(a) In General- Paragraph (3) of section 501(c) of the Internal Revenue Code of 1986 is amended by inserting ‘(including a qualified newspaper corporation)’ after ‘educational purposes’.
(b) Qualified Newspaper Corporation- Section 501 of the Internal Revenue Code of 1986 is amended--
(1) by redesignating subsection (r) as subsection (s), and
(2) by inserting after subsection (q) the following new subsection:
‘(r) Qualified Newspaper Corporation- For purposes of this title, a corporation or organization shall be treated as a qualified newspaper corporation if--
‘(1) the trade or business of such corporation or organization consists of publishing on a regular basis a newspaper for general circulation,
‘(2) the newspaper published by such corporation or organization contains local, national, and international news stories of interest to the general public and the distribution of such newspaper is necessary or valuable in achieving an educational purpose, and
‘(3) the preparation of the material contained in such newspaper follows methods generally accepted as educational in character.’.
(c) Unrelated Business Income of a Qualified Newspaper Corporation- Section 513 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
‘(k) Advertising Income of Qualified Newspaper Corporations- The term ‘unrelated trade or business’ does not include the sale by a qualified newspaper corporation (as defined in section 501(r)) of any space for commercial advertisement to be published in a newspaper, to the extent that the space allotted to all such advertisements in such newspaper does not exceed the space allotted to fulfilling the educational purpose of such qualified newspaper corporation.’.
(d) Deduction for Charitable Contributions- Subparagraph (B) of section 170(c) of the Internal Revenue Code of 1986 is amended by inserting ‘(including a qualified newspaper corporation as defined in section 501(r))’ after ‘educational purposes’.
(e) Effective Date- The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
My favorite local talk radio host spoke of the irony in which Obama ran on the promise of "Hope and Change," but providing these numerous financial bail-outs are not changing anything. While this is a valid point, need I say lost on Obama supporters, I see another aspect in this newspaper aid.
Placing tax-exempt status on newspapers, in this bill, would happen when newspapers fall into line which meet the government's guidelines. The government would be in the position to deem if a certain newspaper meets "educational" minimums and maximum advertisement in proportion to its content - which would also have to meet certain amounts of local, regional and national stories. Worst of all, the government would determine the term 'Qualified Newspaper Corporation.'
Not only does this particular bill likely fly in the face of the First Amendment, it uses an often disputed designation of 501(c)(3) to label newspapers. In the past, political contributors and interests have lost their tax-exempt status to quiet their voices. You can view the 29 page IRS application here. Wikipedia lists the application cost either $350 or $750 based on gross income (costs rising in 2010).
As the bill specifies, it would "allow certain newspapers" to be eligible. Does this signify the end to papers such as the Wall Street Journal? How about neighborhood weeklies? Senator Cardin chose to write newspapers are expected to carry "stories of interest to the general public." Economic and political coverage in the Wall Street Journal should be "of interest to everyone," but could easily be construed as a trade journal. Likewise, small and limited publications which serve localized areas don't normally print reprints of stories from the New York Times or LA Times, and probably could not afford to. While stronger, papers viewed to be conservative and/or critical of the current Administration, not obtaining a 501(c)(3) tax savings, may not be a death-blow, but to the minimum circulation papers which cover local events - like city council events which impact local politics - may not survive. Not only could respected, responsible journalism be fading from the game on a national level, but front-line reporting of local importance disappear.
For a President who has proclaimed his love of competition when defending healthcare reform, nothing he supports in supplying financial assistance lends to competition. The strongest papers will survive; the strongest will be those who earn tax-exempt status. The strongest papers will be the ones to conform to government constraints and not be so controversial as to protect their 501(c)(3) protection.
So long to a free and independent press!