Tax-Exempt Organizations in a Nutshell
Author:
Taylor, Scott A.
Edition:
1st
Copyright Date:
2011
16 chapters
have results for tax
Chapter X. Gaining and Maintaining Tax–Exempt Status 20 results (showing 5 best matches)
- For many state tax purposes, the tax-exempt status of an organization is relevant. In almost all cases, the state law defers to the federal determination of the organization’s tax-exempt status. If IRS determines that an organization is tax-exempt under § 501(c)(3), then the relevant state or states will also treat the organization as tax-exempt for a variety of purposes. In general, then, state corporate income tax will not apply unless unrelated business income is involved. Property tax exemption varies widely from state to state. Exemption from sales tax also may be available for some § 501(c)(3) organizations.
- Many tax-exempt organizations are employers. As a result, they must participate in the process of withholding and paying federal income, federal FICA taxes, and federal/state FUTA taxes associated with their employees. The many federal forms that may be involved can be found here:
- Almost all organizations that seek tax-exempt status under § 501(c) must file an application with IRS. See IRC § 508 (specific statutory notice requirements for § 501(c)(3) organizations) and Treas. Reg. § 1.501(a)–1(a)(3) (requiring application for organizations under § 501(c)). For a comprehensive table outlining the appropriate forms to use for application of tax-exempt status, see IRS Publication 557, Tax–Exempt Status for Your Organization (Rev. October 2010). The IRS Form 1023 is used for § 501(c)(3) organizations, unless the organization is exempt from filing. The IRS Form 1024 is used for most other organizations seeking tax-exempt status.
- Under section 508, most § 501(c)(3) organizations cannot acquire tax-exempt status until they have filed the required IRS Form 1023. The statute and the applicable regulation provide a special rule that applications filed within 15 months of the date of legal formation will relate back to the date of formation. See IRC § 508(a)(2) and Treas. Reg. § 1.508–1(a)(2)(i). The primary importance of this rule is that it allows supporters to make tax deductible donations to the organization under § 170 so long as the organization ultimately receives tax-exempt status from IRS under § 501(c)(3). In accepting donations, the organizers should make sure to inform the donors that they are planning on making a timely application and that the deduction under § 170 will not be allowed if the application is withdrawn, is late, or requires substantial modifications to enable the organization to qualify for tax-exempt status. The contributions are deductible only if the organization receives tax-exempt...
- If a tax-exempt organization required to file an annual return under § 6033(a) fails to file a return for three consecutive years, then the tax-exempt status of the organization automatically will be revoked. See IRC § 6033(j)(1). Once an organization loses its tax-exempt status, then it must reapply and file a new Form 1023 or Form 1024. See IRC § 6033(j)(2). An organization can request retroactive reinstatement by showing reasonable cause for failure to file an annual return. See IRC § 6033(j)(3). The IRS Form 990–T is required of all tax-exempt organizations described in § 501(a) with unrelated business income for the year in excess of $1,000. See Treas. Reg. § 1.6033–2(e)
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Chapter IX. Tax on Unrelated Business Income and on Income From Debt–Financed Property 25 results (showing 5 best matches)
- At the core of the federal income tax on a tax-exempt organization’s unrelated trade or business income and on income from debt-financed property is a concern for equal treatment. See Treas. Reg. § 1.513–1(b). The for-profit world was concerned about unfair competition from tax-exempt organizations. The fear was that a tax-exempt organization might run a restaurant, a steel mill, or a railroad and gain an unfair competitive advantage by avoiding the payment of the federal corporate income tax. To level the playing field, Congress enacted these two taxes so that a tax-exempt organization would have to pay the same amount of corporate income tax on income it derived from a business operation not related to the organization’s exempt function or activities. This example, in very simple form, illustrates how the tax on unrelated business income works:
- In the first year of operation, the commercial restaurant has unrelated business taxable income of $5 million. Under the federal tax on unrelated business income of tax-exempt organizations, this $5 million is subject to the federal corporate tax of about 35%. The enterprise, which is part of the law school, owes IRS about $1.75 million in unrelated business income tax (UBIT).
- First example: A tax-exempt organization buys an apartment building for $2 million. To buy the building, the organization pays $200,000 in cash and borrows the remaining $1.8 million from a bank. The first year, the building produces $100,000 in rental income. Assuming that the tax basis in the building is its cost of $2 million and that the organization has $1.8 million of acquisition indebtedness, then 90% of the $100,000 in rental income and 90% of the deductions connected with the rental activity are treated as unrelated business income and deductions. See IRC § 514(a)(1). Before enacting the debt-financing rules in 1969, Congress believed that tax-exempt organizations had a tax advantage over taxable entities because a tax-exempt organization could pay off the balance of the loan with income that was not subject to income tax. Recall that rental income is excluded from unrelated business
- The purpose of the UBIT is to treat the commercial Manhattan Law School Snack Bar the same as McDonalds, Subway, or any other restaurant. And you can see, in simple form, how the UBIT accomplishes this. Manhattan Law School files an IRS Form 990–T (Exempt Organization Business Tax Return) and pays this tax. Presumably the UBIT creates a level playing field so that the law school’s commercial restaurant pays the same federal income tax as do other restaurants with similar amounts of taxable income.
- Address mailing lists and email lists are of substantial financial value to both commercial enterprises and to tax-exempt organizations. The exchange or rental of these lists, which can generate substantial amounts of revenue, are excluded from being treated as an unrelated trade or business so long as the sale or exchange is with other organizations exempt under § 501. IRS Publication 598, Tax on Unrelated Business Income of Exempt Organizations, p. 8 (Rev. March 2010).
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Chapter VI. Charitable Giving 48 results (showing 5 best matches)
- An important fuel for the tax-exempt sector is the special tax treatment for donations made to those organizations qualified to receive tax deductible donations. Most donors making tax deductible donations do so out of authentic generosity. Nonetheless, a reduction in taxes may actually amplify that positive charitable feeling that comes with doing a good deed.
- In our federal tax system, charitable contributions receive special positive treatment under the federal income tax, gift tax, and estate tax. This positive treatment no doubt amplifies the size of the tax-exempt sector in the United States. The statistics for 2009 and 2010 show that the size of the nonprofit world is absolutely enormous. These facts come from the National Philanthropic Trust and provide a useful snapshot:
- These statistics show that charitable giving and tax-exempt organizations are a substantial part of American life. The tax incentives for charitable giving no doubt contribute to the importance of the tax-exempt sector. Whenever Congress starts considering tax reform and the possibility of eliminating charitable deductions, the charitable sector gets nervous and fears loss of donations from the rich and not-so-rich.
- Most estate planners working for wealthy clients pretty much ignore the gift tax charitable deduction because it operates almost automatically. The estate tax charitable deduction is much more visible because most wealthy people leave some of their estate to relatives. As a result, the estate tax charitable deduction figures into the calculation of the federal estate tax. In addition, a decedent’s estate must file a federal estate tax return if the total estate, assuming no prior taxable gifts, is more than the $5 million exemption amount. See IRC § 6019 (requiring the filing of an IRS Form 706).
- As already explained, § 2522 provides a gift tax charitable deduction for the federal gift tax. The text of § 2522 insures that all contributions that qualify under § 170 will also qualify for gift tax purposes. As a result, cases seldom arise that implicate § 2522. An interesting aspect of the gift tax deduction is that it contains no percentage limitations. As a result, a contribution under § 170 that might be limited by the 20%, 30%, or 50% limitations would be fully deductible for gift tax purposes.
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Chapter IV. Tax–Exempt Organizations Under IRC § 501(c)(3) 66 results (showing 5 best matches)
- The Tax Court determined an excess benefit of about $5 million, less than what IRS asserted. The court did not determine the final tax liability, which is figured separately in a post-decision proceeding under Tax Court Rule 155. The enormous $245 million deficiency IRS asserted resulted from the impact of the 200% tax on multiple disqualified persons. Multiple disqualified persons involved in the same transaction can cause further multiplication of liability under § 4958. In the Caracci case I am assuming that the parties later avoided the 200% tax by correcting the excess benefit transaction by paying the excess benefit to the three tax-exempt organizations. See IRC § 4958(f)(7) (allowing correction at any time before the assessment of the tax). The 25% and 10% taxes would have been assessed once the Tax Court opinion became final, which would have been a date after the court issued its opinion because of the need for the parties to calculate the deficiency under Tax Court Rule 155.
- Section 501(c)(3) is at the epicenter of the law of tax-exempt organizations because it describes the category of organizations that dominate this area of law. Tax-exempt status under § 501(c)(3) is the BIG DEAL because donations to these organizations are deductible for federal income, estate, and gift tax purposes. Section 501(c)(3) contains in its relatively compact language most of the legal requirements that must be satisfied in order to obtain tax-exempt status. The IRS, by way of regulations, and the courts, through their decisions, have grafted on to the statute refinements and additional requirements. To achieve tax-exempt status, an organization must:
- that these purposes should receive a federal tax subsidy through deductibility of contributions under § 170 and exemption from the federal income tax under § 501(a). A federal tax subsidy is actually an indirect expenditure of public funds, and so we would expect these qualifying purposes to be construed narrowly. Nonetheless, the ensuing discussion shows just how broad these purposes can be because many different activities can be used to accomplish one or more qualifying purposes.
- The Tax Court adopted an alternative approach by not addressing the “religious purpose” requirement. Instead, the court focused on the requirement that the alleged church, as an aspiring § 501(c)(3) organization, should be organized and operated to further public rather than private interests. The court, after reviewing the facts, found that the setup was designed primarily to further the private interest of the person who purchased the kit to become a mail-order church. See, e.g., Church of Ethereal Joy v. Commissioner, 83 T.C. 20 (1984). Once IRS and the Tax Court established that a mail-order church was just a sham masquerading as an authentic church, IRS began asserting tax penalties that the Tax Court sustained. See Tweeddale v. Commissioner, 92 T.C. 501 (1989) and Rev. Rul. 89–74, 1989–1 C.B. 311.
- Notwithstanding any other provision of these articles, this corporation shall not carry on any other activities not permitted to be carried on 1) by a corporation exempt from federal income tax under § 501(c)(3) of the Internal Revenue Code, or the corresponding section of any future federal tax code, or 2) by a corporation, contributions to which are deductible under § 170(c)(2) of the Internal Revenue Code, or the corresponding section of any future federal tax code.
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Chapter V. Private Foundations—A Subspecies of the § 501(c)(3) Organization 78 results (showing 5 best matches)
- This particular tax is not part of the two-tier tax regime in which those taxes serve the purpose of regulating the conduct of private foundations. The tax on net investment income is essentially a user fee imposed to pay for the extra governmental regulation on private foundations. The tax is imposed annually at a rate of 2% on the annual net investment income of a private foundation. See IRC § 4940(a). Exempt operating foundations are not subject to this tax. See IRC § 4940(b). A lower 1% tax applies if a private foundation meets certain requirements as a reward for distributing more of its income based on a five-year average. See IRC § 4940(e).
- As you will see with each tax, the goal is to strongly discourage certain conduct that Congress viewed as abusive in light of a federal income tax system that allowed donors under § 170 to deduct contributions and that provided foundations with exemption from the income tax. The initial tax is relatively low, but the second tier tax is usually quite high and serves as a punishment if the private foundation and the responsible person fail to correct the particular conduct or transaction. These are the taxes:
- The increase in the value of the stock over time is never subject to the federal income tax if the owner never sells it. While alive, the wealthy person can deduct contributions of stock to charities or to his very own foundation. The amount of the deduction is equal to the fair market value of the stock on the date of the donation. So if Bill Gates donates $100,000 of stock to his foundation, he can deduct $100,000 from his gross income and save some federal income tax. For Bill Gates, the federal income tax savings is about $35,000. When he dies, he can leave the rest of his Microsoft stock to his foundation and avoid all federal estate tax. Although the federal estate tax is in a state of flux as I write this Nutshell in the spring of 2011, I predict that we will retain a federal estate tax going forward and that the estate tax charitable deduction will remain a feature of this tax. So, if Bill Gates dies and leaves $40 billion worth of Microsoft stock to his foundation, his...
- The second tier-tax on the private foundation is 25%. See IRC § 4944(b)(1). The second-tier tax on the foundation manager is 5%. See IRC § 4944(b)(2). A liable foundation manager enjoys a cap of $5,000 on the initial tax and a cap of $10,000 on the second-tier tax. See IRC § 4944(d)(2). To avoid the second-tier tax on the private foundation and the foundation manager, the private foundation can sell the jeopardizing investment during the correction period and refrain from investing the proceeds in another jeopardizing investment. See IRC § 4944(e)(2).
- The tax on self-dealing targets private inurement and private benefit transactions where a disqualified person profits in a transaction with the private foundation. The acts of self-dealing are extensive and include sales, leases, rentals, employment compensation, and services. See IRC § 4941(d)(1). The amount of the self-dealing against which the tax is applied is the excessive consideration. See IRC § 4941(e)(2). For example, if the private foundation purchased land from a disqualified person for $200,000 when it was worth only $50,000, then the amount subject to tax would be $150,000. The initial tax on the disqualified person is 5% of the amount involved. A tax is also imposed on a participating ...of the amount involved if the manager’s participation is willful, not due to reasonable cause, and understood by the manager to be an act of self-dealing. See IRC § 4941(a)(2) and Treas. Reg. § 53.4941–1(b)(1). This first-tier tax on the foundation manager is capped at $10,000. See...
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Chapter III. Types of Non–Profit Entities 16 results (showing 5 best matches)
- Government instrumentalities, such as public schools, state-run colleges and universities, and governmental entities performing governmental functions, although tax-exempt under § 115, are not properly tax-exempt organizations for purposes of this Nutshell because they are under § 501(a). Because they can receive tax deductible donations, however, they are often confused with § 501(c)(3) organizations. These state entities enjoy income tax-exemption because the United States Supreme Court has said that state and federal governmental entities enjoy immunity from each other’s power to tax. See McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819) (state tax on federally chartered bank was constitutionally invalid). In addition, Congress has specifically provided by statute that the income of state governmental entities is exempt from the federal income tax. IRC § 115. IRS has also ruled that federally recognized Indian tribes enjoy immunity from the federal income tax. Rev. Rul. 94–16,...
- A common misconception among those who establish a legal entity under state law is that the nonprofit corporation or the charitable trust is automatically tax-exempt under federal law once the state law requirements have been met. In most cases, tax-exemption for federal and state tax purposes requires an affirmative application with and determination by IRS. Aspiring tax-exempt organizations should assume that they must apply for
- In IRS Publication 78, Cumulative List of Organizations, IRS maintains a list of organizations eligible to receive tax deductible contributions. A quick look at this publication shows that most of the organizations use the non-profit corporation as the preferred legal entity. This publication does not list other types of tax-exempt organizations (those not entitled to receive tax deductible donations). But the nonprofit corporation is even more preferred among the non-§ 501(c)(3) group of tax-exempt organizations.
- IRS has now taken the position that an LLC can qualify as a tax-exempt organization under §§ 501(c)(3) and 501(c)(4). See Richard A. McCray and Ward L. Thomas, Limited Liability Companies as Exempt Organizations—Update, IRS Continuing Professional Education Technical Instruction Program 27–33 (2001). However, the LLC is unlikely to become a workable type of legal entity for most tax-exempt organizations. An LLC, under state law, must have one or more members, and under IRS guidelines the only type of member permitted is another § 501(c)(3) organization or a governmental unit of a state or local government. Because the permissible members of a tax-exempt LLC are already tax-exempt, one must ask why they would form another tax-exempt entity as an LLC unless they had a special non-tax reason.
- Much of the law that governs tax-exempt organizations is federal. An organization, however, cannot qualify for tax-exempt status unless it is a legal entity. An individual, no matter how selfless and charitably minded, cannot declare herself to be a charity or foundation and then seek tax-exempt status from the Internal Revenue Service. Likewise, a group of individuals cannot declare themselves to be an organization unless they undertake to satisfy the legal formalities that enable them to become a legal entity.
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Chapter VIII. Tax–Exempt Organizations Under Provisions Other Than § 501 32 results (showing 5 best matches)
- In chapter IV, we looked at the various types of tax-exempt organizations that come within § 501(c)(3). In chapter V, you learned that all tax-exempt organizations that fall within § 501(c)(3) are classified as private foundations unless they come within at least one of the classifications contained in § 509(a). These organizations are by far the most numerous in the tax-exempt universe. The organizations we look at in this chapter are nonetheless important. Some of them, the ones we look at first, can receive tax deductible donations. The others, however, are not eligible to receive tax deductible donations. Congress has classified them as tax-exempt organizations for a variety of reasons.
- Governmental entities enjoy immunity from the federal income tax under the general doctrine of intergovernmental tax immunity. In many cases, determining what is a governmental entity is difficult. In general, the entity must have governmental powers and governmental purpose.
- Veterans’ organizations occupy a preferred position in relation to other § 501(c)(3) tax-exempt organizations. Veterans’ organizations are eligible for most of the federal tax benefits available to tax-exempt organizations without many of the restrictions, including eligibility to receive tax deductible donations under § 170. See IRC § 170(c)(3). Veterans’ organizations can and do engage in substantial political activity. In contrast, § 501(c)(3) charitable organizations are prohibited from engaging in almost all political activities, except limited amounts of lobbying. See IRC § 501(h). The special position veterans’ organizations occupy is certainly due to Congress’s general desire to reward the men and women who have served their country by being past and current members in the American military.
- Initial classification as a § 501(c)(4) also serves a rather quirky function because aspiring § 501(c)(3) organizations that do not apply for exempt status within the required period of time measured from the date of formation (15 months with a 12–month extension) can elect to be treated as an interim § 501(c)(4) organization from the date of formation until the date of the application for tax-exempt status. See IRS Form 1023, Schedule E. Classification first under § 501(c)(4) and then under § 501(c)(3) works because the tax-exempt status under (c)(4) is effective from the date of formation whereas the tax-exempt status under (c)(3) is effective only from the date of application. See IRC § 508(a)(2). From the date of application forward the organization can be treated as tax-exempt under § 501(c)(3).
- A labor organization is subject to the private inurement prohibition. See Treas. Reg. § 1.501(c)(5)–1(a)(1). In addition, the organization can not have as its primary activity the holding, management, and investment of member funds. See Treas. Reg. § 1.501(c)(5)–1(b)(1). Nonetheless, a labor organization can hold and invest member funds to be used later in connection with the organization’s tax-exempt activities. See, e.g., Rev. Rul. 75–288, 1975–2 C.B. 212 (finding that dues held and used for a legal defense fund for an organization comprised of police officers furthered tax-exempt purposes) and Rev. Rul. 67–7, 1967–1 C.B. 137 (finding a separate organization controlled by a labor organization tax-exempt under § 501(c)(5) was also tax-exempt where its purpose was to maintain a strike and lockout fund).
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Chapter II. Tax–Exempt Landscape 41 results (showing 5 best matches)
- The landscape of the tax-exempt sector paints a picture of many well-known organizations that control vast pools of capital, exercise influence, and engage in substantial political activity. The primary regulation of this sector comes under the federal tax law and the regulatory efforts of the IRS. This Nutshell concentrates primarily on the federal tax law and regulations that govern most of the organizations that are exempt from the federal income tax under §§ 501 and 527. If you plan on practicing in this area of law or if you are a non-profit professional trying to learn more about the federal tax law as it applies to tax-exempt organizations, then you need to read and study the statutes and regulations that apply to your situation. The purpose of this discussion is to provide you with an outline of the important statutes.
- IRC § 501. This section is the heart of the tax-exempt statutory universe because it describes most of the organizations that we think of as making up the broad category of tax-exempt organizations. Our primary focus will be on § 501(c)(3), but we will also consider some of the other important tax-exempt organizations. Extensive regulations provide important guidance in applying this section.
- The tax-exempt landscape, defined primarily by the federal tax law, includes organizations of great variety. This chapter describes those well-known organizations to help provide you with memorable signposts and focuses on the organizations described in § 501(c)(3). You will learn later in Chapter V that under the federal income tax law “private foundation” has a special meaning designed to impose extra regulations on an organization controlled by a small number of individuals. At this stage, however, I want to draw your attention to foundations whose primary function is to hold vast amounts of wealth that produces income used to make grants to individuals and other tax-exempt organizations.
- Many of you who are reading this Nutshell are currently attending law school and need to learn something about the law of tax-exempt organizations. If you are going to a state or public law school, then your law school is most likely part of a state university system, such as the University of Michigan. These universities and their constituent law schools are governmental entities that enjoy tax-exempt status under the federal income tax, not
- IRC § 502. This section describes feeder organizations, which are usually for-profit subsidiaries of a tax-exempt organization. Section 502 makes clear that such an organization cannot qualify for tax-exempt status merely because its net income is destined to a § 501(c)(3) organization that owns it.
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- Now in the United States most of the regulation of the philanthropic sector falls on the shoulders of the Internal Revenue Service (IRS) with various state offices concerned with regulating fundraising activities. In general, philanthropic organizations enjoy exemption from the federal income tax. In most cases, these organizations must apply to IRS in order to confirm their tax-exempt status. See IRC § 508(a). For a philanthropic organization to be exempt from the federal income tax, it must be organized and operated for one or more charitable purposes. See IRC § 501(c)(3). Most tax-exempt organizations must file annual information returns with the IRS. See IRC § 6033(a). This system within IRS—application for exempt status and filing of annual information returns—provides the rationale for saddling IRS with most of the responsibility for regulating the philanthropic sector within our country.
- The role of IRS within the non-profit world explains the title of this book: The Law of Tax–Exempt Organizations in a Nutshell. Most of the law that concerns us will be federal, although state and tribal law will have an appropriate place. This federal law dealing with tax-exempt organizations exists within the broader federal tax law and comes in the form of statutes, regulations, rulings, cases, and various types of administrative materials (IRS publications, forms, instructions, and memoranda). Much of the federal law regulates tax-exempt organizations to insure that they are organized and operated in furtherance of their exempt purposes and to limit the negative effects of greed and the lust for power.
- Historically, charities became relevant as a matter of federal law when Congress passed a corporate income tax law in 1909 and expressly provided exemption for “corporations or associations organized and operated exclusively for religious, charitable, or educational purposes, no part of the income of which inures to the private benefit of any private stockholder or individual.” Act of August 5, 1909, ch. 6, 36 Stat. 11, 113. Congress enacted an individual income tax in 1913, but the federal tax-exempt status of philanthropic organizations became especially relevant when Congress enacted the Revenue
- ...and ultimately the Crown, was able to raise armies and revenue through this system. When vassals died and left land to religious organizations, the loss of military service and revenue was a serious concern to feudal lords. Feudal lords and the Crown saw their medieval tax base eroding through land ownership by the Church. To protect the feudal lords, early English statutes forfeited the lands that the religious bodies owned and enabled the feudal lord to retake possession. See Stat. 9 Hen. III, c. 36 (1225). The charitable trust then developed to avoid these forfeiture rules by allowing one human being to transfer land to another human being for the use of a religious corporation. This human-to-human transfer avoided the application of the forfeiture statute, which only applied to ownership by religious bodies as separate legal entities. The English Parliament, however, tried to close this loophole in 1391 when it extended forfeiture to land held in charitable trusts for the use...
- Like England, America has had its share of philanthropic scandals. Sadly, some non-profit organizations in America also played a critical role in promoting scientific racism. For example, the American Economic Association, a learned society formed in 1885, published and promoted Frederick L. Hoffman’s book “Race Traits and Tendencies of the American Negro” (1896), viewed as one of the most influential works on scientific racism in America. Sectors of the American charitable community, especially some private schools, have played a disturbing role as the United States has gone about the challenge of fighting racism and promoting racial equality. See Bob Jones University v. United States, 461 U.S. 574 (1983) (revoking the federal tax-exempt status of a private university under § 501(c)(3) because of racial discrimination in treatment of students).
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Chapter VII. Regulation of Charitable Fundraising 7 results (showing 5 best matches)
- Regulation of fundraising in the United States falls primarily to the individual states. Apart from fundraising questions that might affect the deductibility of a charitable contribution under § 170 or the continuing tax-exempt status of an organization under § 501(a), the federal tax laws deal very little with the regulation of fundraising. But because IRS has such a strong presence in the regulation of tax-exempt organizations through the application process and the filing of annual information returns, states have left most of the regulatory function of the charitable sector in the hands of IRS.
- See Model Act § 2(b). If the registration is the first such registration, then the charitable organization must also include its organizational documents (e.g., articles of incorporation and bylaws). See Model Act § 2(c)(1). In addition, the charitable organization must provide “a statement setting forth the place where and the date when the organization was legally established, the form of its organization and its tax-exempt status attaching copies of federal or state tax-exemption determination letters.” Model Act § 2(c)(2). If the federal determination letter of tax-exempt status is issued after the registration, then the charitable organization must file a copy with the state regulator within 30 days of receiving the letter. See Model Act § 2(d). A registering charitable organization must also submit a financial statement that must be an audited financial statement if the gross revenue exceeds a specified amount. See Model Act § 3. Finally, the charitable organization must pay...
- This change in 2008 provides great assistance to states because the Schedule G for each of these organizations will now be available to the states interested in using the information in connection with their efforts to deter fraud and abuse in charitable fundraising. IRS is authorized to share federal tax information with states under § 6103(d) and has tax information sharing agreements with all 50 states. In addition, the state charity offices have online access to most filed IRS Forms 990 and 990–EZ. Many states require § 501(c)(3) organizations to file their annual IRS Forms 990 with the appropriate regulatory body. Finally, these state offices have the ability to conduct online searches of IRS Form 990 databases based on zip code. These forms are online because Congress has required most tax-exempt organizations to open their IRS Forms 990 to the public. See IRC § 6104.
- The Model Act requires annual registration and reporting for all covered charitable organizations, fund raising counsel, and paid solicitors. See Model Act §§ 2, 3, 5, & 6. A “charitable organization” means an organization that is tax-exempt under .... The term also includes various types of organizations having charitable purposes that are not necessarily tax-exempt under § 501(c)(3). See Model Act § 1(a)(2). The term “fund raising counsel” means the person who is compensated to plan and coordinate fundraising efforts but does not include paid or volunteer inhouse staff of the charitable organization or lawyers who advise clients about making contributions. See Model Act § 1(f). The term “paid solicitor” means a person (usually a corporation or LLC) that receives compensation from a charitable organization for soliciting contributions. See § Model Act § 1(g). And “solicitation” has a broad and inclusive meaning extending to most forms of fundraising activities. See Model Act § 1(c)...
- 1. disclosure requirements by certain organizations that cannot receive tax-deductible contributions under § 170 [see IRC § 6113 and Notice 88–120, 1988–2 C.B. 454];
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Preface 3 results
- At the beginning of the second decade of the 21st century, the non-profit sector in the United States included more than 1.6 million tax-exempt organizations. More than one million of these organizations are public charities exempt from the federal income tax under § 501(c)(3) of the Internal Revenue Code (IRC) and eligible to receive tax deductible donations under IRC § 170. More than 100,000 private foundations, also exempt under IRC § 501(c)(3), comprise an important part of the sector and have an extremely complicated set of legal rules that apply to them. Roughly another half million tax-exempt organizations round out the sector and represent such diverse organizations as chambers of commerce, the American Medical Association, non-profit cemeteries, and labor unions. The annual revenues of public charities make up about 10% of the gross domestic product of the United States, and 9% of all wages come from nonprofit organizations.
- Because tax-exempt organizations are such an important part of our economy and a critical element of our social fabric, law schools and business schools around the country are expanding their curricula to include this important area of the law. This Nutshell provides a valuable introduction and foundation for those students taking classes that cover tax-exempt organizations. Because of its focus on the law, this Nutshell also will be a valuable introduction to nonprofit professionals needing a concise overview of the legal problems that tax-exempt organizations routinely face. Finally, lawyers and other professional serving on nonprofit boards will find this book helpful in identifying where legal problems may arise.
- The primary law in this area is federal, but state and tribal laws also play an important role. Accordingly, I have identified those places where state and tribal laws are relevant. In terms of the federal law, I must apologize on behalf of Congress. The federal laws that Congress has passed over the years in this area of law are some of the most complicated statutes ever written. To make things worse, the relevant provisions are scattered throughout the vast Internal Revenue Code. I also apologize on behalf of the Internal Revenue Service (IRS) for its voluminous and dense Treasury Regulations that attempt to explain the statutory material that Congress has passed. To be fair, let me point out that IRS has produced many excellent publications that attempt to explain the many legal complexities that tax-exempt organizations face.
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Table of Cases 19 results (showing 5 best matches)
- American Campaign Academy v. Commissioner, 92 T.C. No. 66, 92 T.C. 1053 (U.S.Tax Ct.1989), 102
- Ann Arbor Dog Training Club, Inc. v. Commissioner, 74 T.C. 207 (U.S.Tax Ct.1980), 136
- Caracci v. Commissioner, 118 T.C. No. 25, 118 T.C. 379 (U.S.Tax Ct.2002), 116
- Cavalaris v. Commissioner, T.C. Memo. 1996-308 (U.S.Tax Ct.1996), 205
- Church of Eternal Life and Liberty, Inc. v. Commissioner, 86 T.C. No. 54, 86 T.C. 916 (U.S.Tax Ct.1986), 129
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Outline 25 results (showing 5 best matches)
Halftitle Page 1 result
Index 23 results (showing 5 best matches)
- Publication Date: August 12th, 2011
- ISBN: 9780314262349
- Subject: Taxation
- Series: Nutshells
- Type: Overviews
- Description: Taylor’s Tax-Exempt Organizations in a Nutshell provides a valuable introduction and foundation for those students taking classes that deal with the law of nonprofit organizations and the tax treatment of them. Special treatment is provided on charitable giving, fundraising, unrelated business income, and private foundations. Because of its focus on the law, this is a valuable introduction for nonprofit professionals who need a concise overview of the legal problems that nonprofit organizations routinely face.
