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Category Archives: IRS, FTB & Attorney General Controversies

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CalNonprofits Seeking Input on California Raffle Laws by June 30

Posted in AG, IRS, FTB, & Property Tax Proceedings, IRS, FTB & Attorney General Controversies, Nonprofit Governance & Ethics, Public Charities, Revenue Generating Activities

CalNonprofits recently announced that new raffle regulations are being proposed and discussed this year in California.  CalNonprofits is asking nonprofits to weigh in on this discussion through a short survey, as explained in their announcement (reprinted in part below): In California, only nonprofits can conduct raffles. And raffle laws are under discussion for changes. To help… Continue Reading

New IRS Notification Requirement for Section 501(c)(4) Social Welfare Organizations

Posted in Formation & Tax Exempt Status, IRS, IRS, FTB & Attorney General Controversies, Unions, Associations, Clubs & Other Tax-Exempt Organizations

UPDATE: In Notice 2016-09, the IRS indicated that the notification requirement will not go into effect until “at least 60 days from the date” it issues regulations implementing Section 506, and no penalties will be assessed against any Section 501(c)(4) organization that submits the required notice by the due date provided in those regulations.  … Continue Reading

New Year, New Ventures: Keeping Up With Charitable Sales Promotions

Posted in IRS, FTB & Attorney General Controversies, Public Charities, Revenue Generating Activities

Readers may remember our blog post from 2012, Are You in a Commercial Co-Venture?, in which we described common scenarios that trigger state requirements for charities and companies engaged in commercial co-ventures (also known as charitable sales promotions, or cause marketing).  Over the years, we have seen the popularity of such ventures continue to rise,… Continue Reading

New Law Eases Dissolution of Inactive California Nonprofit Corporations.

Posted in AG, IRS, FTB, & Property Tax Proceedings, Formation & Tax Exempt Status, IRS, FTB & Attorney General Controversies, Nonprofit Governance & Ethics

California’s nonprofit sector is vibrant and lively.  Nonprofit entrepreneurs form new entities in California every day, with great hopes for garnering support and tackling society’s pressing problems or serving constituencies with specialized needs. Nonetheless, despite good ideas and best intentions, sometimes things just don’t work out as planned.  When that happens, nonprofit founders are stuck… Continue Reading

New York College Cannot Change Its Name in Return for a Proposed Donation

Posted in Charitable Gift Planning, IRS, FTB & Attorney General Controversies, Public Charities

Paul Smith’s College, “the College of the Adirondacks,” was established in 1937 and remains the only baccalaureate-degree-granting institution in Adirondack Park, New York.  Paul’s son, Phelps Smith, bequeathed the bulk of his estate to create a college in his father’s name, and his bequest required that the college “be forever known” as Paul Smith’s College of… Continue Reading

Hundreds of Thousands of Nonprofits Affected by Security Breach Related to Electronic Filings

Posted in Formation & Tax Exempt Status, IRS, FTB & Attorney General Controversies, Public Charities

The Urban Institute’s National Center for Charitable Statistics (“NCCS”) reported this week that hackers tapped into its online filing system for Forms 990, 990-EZ, 990-N, and 8868 (Application for Extension), as well as state filings for Hawaii, Michigan, and New York.  According to the report, information including e-mail addresses, usernames, passwords, individual names, and IP… Continue Reading

Waiting on the IRS? The Shutdown Isn’t Helping

Posted in AG, IRS, FTB, & Property Tax Proceedings, Formation & Tax Exempt Status, IRS, FTB & Attorney General Controversies

Like most parts of the federal government, the IRS is currently operating on a limited basis.  As of October 1, all live telephone lines have been closed, and any open or pending audits have been put on hold.  According to the IRS website, “people with appointments related to examinations (audits), collection, Appeals or Taxpayer Advocate… Continue Reading

Two New California Laws Benefiting Nonprofits

Posted in Formation & Tax Exempt Status, IRS, FTB & Attorney General Controversies, Nonprofit Governance & Ethics

Over 800 new California laws went into effect this January.  Two of them — SB 1341 and AB 2641 — directly affect nonprofit organizations, and are intended primarily to aid organizations in maintaining compliance with state regulations. SB 1341 provides an opportunity for nonprofit organizations that have neglected to file required reports with the Attorney General… Continue Reading

Embezzlement from a Charity: What to Do?

Posted in IRS, FTB & Attorney General Controversies, Nonprofit Governance & Ethics, Private Foundations, Public Charities

Theft from a charity is, fortunately, rare.  But it happens, perhaps more in tougher economic times.  From the charity’s perspective, the question is what to do when the theft is discovered.  As fiduciaries of the charity, its Board must take these situations very seriously, and carefully consider how best to protect the charity’s interests.  Every… Continue Reading

IRS Examinations—The Seven Stages of Grief

Posted in IRS, FTB & Attorney General Controversies, Private Foundations, Public Charities

Your 501(c)(3) organization received an IRS Form Letter 3611 in the mail.  It reads, “Dear Sir or Madam:  We plan to conduct an examination for the above periods on the date, time, and location indicated above.”  Attached to the form letter is an Information Document Request, or “IDR,” on IRS Form 4564.  It lists 10 to… Continue Reading

Are You in a Commercial Co-Venture?

Posted in IRS, FTB & Attorney General Controversies, Public Charities, Revenue Generating Activities

You are a charity. You are interested in raising money.  You have lots of ideas: you could hire a fundraiser; you could hire fundraising counsel; you could partner with a company that agrees to donate a portion of its profits; you could set up a donation box at the local grocery store….  Each of these… Continue Reading

Automatic Excess Benefit Transactions

Posted in IRS, FTB & Attorney General Controversies, Nonprofit Governance & Ethics, Public Charities

Did you know that if a 501(c)(3) public charity or a 501(c)(4) social welfare organization fails to properly substantiate payments that it makes to its insiders as either compensation or reimbursement, those payments may be subject to significant excise taxes?  Under Internal Revenue Code Section 4958, the IRS may impose intermediate sanctions on any “excess… Continue Reading

Doing Right by the Projects: Fiscal Sponsorship after IHC

Posted in IRS, FTB & Attorney General Controversies, Nonprofit Governance & Ethics, Public Charities

Recent news in the nonprofit press about the reported collapse of International Humanities Center (IHC), a fiscal sponsor organization based in California, has raised real concerns in the philanthropic world.  Projects sponsored by IHC received correspondence from IHC indicating that it was unable to make disbursements in response to their check requests for money to… Continue Reading

Extension of 990 Filing Deadline for Certain Exempt Organizations

Posted in IRS, FTB & Attorney General Controversies, Private Foundations, Public Charities

Most exempt organizations whose tax years end on August 31 or September 30, and which would ordinarily have January or February filing deadlines for Forms 990, 990-EZ, 990-PF, and 1120-POL, have received an unexpected reprieve from the IRS.  Due to system maintenance, these organizations will have until March 30, 2012, to complete their filings electronically,… Continue Reading