On the face of it, the two enterprises seem like twins. Both are computerized services that forecast the effects of federal budget actions on state finances. Both are based in Washington, and both have been selling their information to states since the early 1980s. They are competitors for the same business.

But one has a bottom line and the other doesn't. Fiscal Planning Services is a private, tax-paying business; Federal Funds Information for States (FFIS) is a nonprofit entity exempted by law from taxation.

As distinctions between the business activities of tax-exempt institutions and taxpaying commercial businesses become increasingly fuzzy, a chorus of unfair competition complaints has come from business. Last August, the report of the White House Conference on Small Business listed competition from tax-exempts as the third-biggest problem facing small business.

In recent years, the competition between the taxable and the tax-exempt has cropped up among a wide range of interests, including universities, hospitals, athletic clubs, veterinarians, computer services, nurseries, research labs, laundries and travel agents.

This week the House Ways and Means Committee oversight subcommittee is scheduled to jump into the middle of this increasingly emotional debate with five days of hearings.

"I would like to know whether, if they {FFIS} did this by themselves and set up their company and rented the furniture and paid the taxes and paid the staff, they could do it without the subsidization they currently receive," fumes Stuart I. Rabinowitz, president of Fiscal Planning Services, the private company.

"As far as our dealings with the states are concerned, we are a state organization providing a service to the states," said Victor Miller, director of FFIS, which is affiliated with the National Governors' Association and the National Conference of State Legislatures.

The laws governing tax-exempt organizations and their business activities have been unchanged for nearly 20 years, and many on both sides agree they are confusing and inconsistent. Generally, such entities as charities, hospitals and universities are subject to tax on income from "unrelated" business activities, but determining what is related and what is not has been a subjective process.

The Internal Revenue Service ruled in one case, for example, that veterinary services offered by a tax-exempt humane society were taxable because they had no direct relationship to preventing cruelty to animals. Then it ruled that a similar operation elsewhere was not taxable, because the second humane society relied less on the veterinary services and did not promote them.

As the confusion grew over the years, so did the nonprofit sector. About 870,000 nonprofits are now registered with the IRS, more than double the number in 1963. And, according to a survey by the General Accounting Office, income-producing activities have grown as a share of revenue for nonprofit organizations, from 57 percent in 1946 to 75 percent in 1978.

Nonprofit hospitals, for example, have begun contracting out laundry services, purchasing ad agencies and operating real-estate developments. College bookstores sell blue jeans and computers, museums rent out their facilities for parties, alumni associations offer tour packages and trade associations sell computer software to their members.

A lobbying group was formed in 1983 to give voice to the complaints of such disparate industry groups as research laboratories and hearing-aid manufacturers. And individual businesses have challenged the tax-exempt status of their perceived competitors in court.

The business advocacy groups are concerned about competing against entities that pay no tax, but also say they have an unfair disadvantage against nonprofits that are taxed on their unrelated income.

A nonprofit's expenses often can be deducted from income, reducing tax. According to the IRS, more than half the 29 nonprofits reporting income of more than $2 million in unrelated business paid no tax. And there are other breaks, business groups say: lower postal costs, volunteer labor, property-tax exemptions and a good-guy image.

"Taxes are only the beginning of our concerns," said Joseph O'Neil, chairman of the Business Coalition for Fair Competition, the lobbying group. "It is, you might say, the host of advantages that are linked to tax exemption. There is an aura of public service, quality and concern that attaches to a nonprofit simply because it is associated in the public mind with a church, a charity or a university."

Nonprofit groups generally respond that they are happy to pay taxes on their "unrelated" income if so asked by the IRS; meanwhile, their new enterprises generate revenue that makes it possible to pursue charitable activities in an age of budget cuts and austerity.

By taking their pets to a humane society clinic, customers are "helping pay for the humane work on animals that are not being paid for," said Patricia Forkan, senior vice president of the Humane Society. "All the money goes into charitable work."

Robert A. Boisture, associate general counsel of the YMCA of the USA, says the fundamental question is "the role of nonprofit, voluntary organizations in society . . . We were doing this long before anybody thought about making a profit on it. When the fitness fad fades away and the health clubs fold, the YMCA will still be there."

Despite the hearings, Congress is considered unlikely to move to significantly restructure the laws governing tax-exempt activities.

But the hearings are likely to draw attention to the evolution in the nonprofit sector since the tax laws governing it were last examined nearly 20 years ago.

And they should provide good theater: The panels are structured so that each witness from a taxable business will appear side-by-side with his counterpart in the nonprofit sector.