Nonprofit Law Matters

Tag Archives: IRS

RERI Holdings I, LLC and the Importance of Form 8283

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

A recent Tax Court case, RERI Holdings I, LLC et al. v. Commissioner, 149 T.C. 1 (Jul. 3, 2017), should remind charities and their donors of the importance of full compliance with the substantiation rules and the potential costs of aggressive tax planning. Facts of RERI Holdings To over-simplify the complex facts in RERI Holdings:… Continue Reading

Congress Missed a Valuable Opportunity: Greg Colvin and Others Discuss Congress’ Refusal to Fund Regulations on Section 501(c)(4)

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

On February 8, Tax Analysts published an article titled Confusion Over Judging Political Activity Still Reigns at IRS.  In the article, Paul C. Barton describes the prohibition that appeared in the 2016 Consolidated Appropriations Act against using any fiscal year federal funds “to issue, revise, or finalize any regulation, revenue ruling, or other guidance …… 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

IRS Commissioner Hints at Timing for New Political Regulations, Summarizes Thousands of Public Comments

Posted in AG, IRS, FTB, & Property Tax Proceedings, Private Foundations, Public Charities, Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

We looked at IRS Commissioner John Koskinen’s written statement to the Senate Finance Committee, with attached documents, submitted with his testimony on Tuesday, October 27, at http://www.finance.senate.gov/imo/media/doc/27OCT2015Koskinen.pdf. Here’s what’s newsworthy: First, from the Commissioner’s oral testimony and from his prepared statement, the IRS and Treasury have not been intimidated by Republican calls to discontinue the… Continue Reading

Senate Judiciary Oversight Subcommittee Hearing on IRS and Political Tax Law

Posted in Private Foundations, Public Charities, Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

I had the honor of testifying in Washington, D.C., on July 29, 2015, before the Senate Judiciary Subcommittee on Oversight, Agency Action, Federal Rights and Federal Courts, chaired by Senator Ted Cruz, about the current IRS work on developing regulations to define political campaign activity for tax-exempts.  (The picture below shows us, the witnesses, being… Continue Reading

IRS FY 2014 Data Book Reveals Dramatic Increase in Exempt Organization Approvals

Posted in AG, IRS, FTB, & Property Tax Proceedings, Formation & Tax Exempt Status, Public Charities

Last week the Internal Revenue Service released its Fiscal Year 2014 Data Book, reporting on IRS operations, enforcement, revenue collection and related activities during the period of October 1, 2013, through September 30, 2014, (the IRS fiscal year).  The Data Book included a table on “Closures of Applications for Tax-Exempt Status, by Organization Type and… Continue Reading

New Political Rules for 501(c)s in March 2015?

Posted in Public Charities, Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

We daren’t get our hopes up, but… We heard through the grapevine that March 2015 is the release date for a second round of proposed rulemaking concerning Section 501(c) regulations relating to political campaign intervention.  Indeed, an online calendar at the Office of Information and Regulatory Affairs at the Office of Management and Budget now… Continue Reading

Taxation of Exempts Publishes “Comments on Proposed Regulations Show Exempt Organizations’ Concerns” by Martha Lackritz

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

Taxation of Exempts recently published Martha Lackritz’s article Comments on Proposed Regulations Show Exempt Organizations’ Concerns.  In her article, Martha surveys a sample of the over 170,000-plus comments eventually submitted by the public to the IRS in response to its proposed regulations on candidate-related political activities of social welfare organizations.  If you have yet to… Continue Reading

Do’s & Don’ts: Public Charities in an Election Year

Posted in Public Charities, Tax Treatment of Lobbying & Political Activities

You’re a public charity.  Maybe you’re brand new; or maybe you’ve existed for years but suddenly have an issue your constituents need to know about on the ballot this year.  Maybe one of your Board members is a candidate for elective office.  Maybe you’d like to host a debate.  Maybe you want to register your… Continue Reading

IRS Debuts Streamlined Form 1023-EZ Application for Recognition of Exemption Under Section 501(c)(3)

Posted in Formation & Tax Exempt Status, Public Charities

In hopes of reducing the long backlog of exemption applications and ostensibly freeing up resources for more robust enforcement, the Internal Revenue Service released on Tuesday a new short-form tax exemption application, Form 1023-EZ, for certain small charities.  The release also includes instructions for completing the form. To be eligible to use the new form,… Continue Reading

Revised Rules on 501(c)(4)s and Political Activity Expected in Early 2015

Posted in Public Charities, Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

Earlier this week, IRS Commissioner John Koskinen explained in an interview with the Center for Public Integrity that the IRS expects to complete revised proposed regulations defining political activity for 501(c)(4) (and possibly other types of 501(c)) organizations by early 2015.  The Center for Public Integrity reports that Koskinen elaborated on the nature of the… Continue Reading

IRS Postpones Summer Hearings on Political Rules, Will Do Second Draft

Posted in Unions, Associations, Clubs & Other Tax-Exempt Organizations

On May 22, 2014, the IRS announced that “it is likely that we will make some changes” to the heavily-criticized regulation proposed last November by Treasury and the Service to govern 501(c)(4) political activity.  The announcement continued:  “Given the diversity of views expressed and the volume of substantive input, we have concluded that it would be… Continue Reading

Top 25 Comments on IRS Proposed Political Activity Rules: #1 — American Bar Association Section of Taxation

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

“Promulgating regulations with clear rules regarding political intervention or candidate-related political activity could help the government to avoid constitutional attacks on the grounds of vagueness. . . . Such regulations are not unconstitutional.  Quite the contrary, they help remove doubts as to the constitutionality of Service guidance in this important area.” Our countdown closes with… Continue Reading

Top 25 Comments on IRS Proposed Political Activity Rules: #2 — Bright Lines Project

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

“We don’t want a bad political definition for 501(c)(4) organizations, rather we want a good definition for everybody.” So, we admit to a bias on this one.  Greg Colvin is chair of the Bright Lines Project (“BLP”) Drafting Committee, whose nine members include Rosemary Fei, also a principal in our firm.  Having said that, here… Continue Reading

Top 25 Comments on IRS Proposed Political Activity Rules: #3 — Center for Responsive Politics (OpenSecrets.org)

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

“Over the last four election cycles, the amount of spending by 501(c)(4) social welfare organizations in particular has grown dramatically.  In 2006, just $1.3 million in political spending was reported to the Federal Election Commission (FEC) by 501(c)(4) organizations, while by the 2010 cycle, that total had risen to $92 million.  In 2012, the number more than… Continue Reading

Top 25 Comments on IRS Proposed Political Activity Rules: #4 — NAACP and NAACP-National Voter Fund

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

“ . . . much of the work that the NAACP did in the early years to combat racial discrimination in the administration of our nation’s voting laws would be illegal under the proposed regulations.” The concise and eloquent comments by the NAACP and its 501(c)(3) affiliate, the NAACP-National Voter Fund, are among the most… Continue Reading

Top 25 Comments on IRS Proposed Political Activity Rules: #5 — American Institute of Certified Public Accountants (AICPA)

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

“The confidence of exempt organizations, tax preparers, and the public, in the enforcement of tax laws, is diminished when the application of these laws [is] unclear or difficult to understand.” The AICPA is the world’s largest member association representing the accounting profession, with more than 394,000 members in 128 countries and a 125-year history.  Their brief… Continue Reading

Top 25 Comments on IRS Proposed Political Activity Rules: #6 — Independent Sector

Posted in Public Charities, Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

“We encourage the IRS to engage tax-exempt organizations in a meaningful dialogue to address the many concerns expressed during this comment process, and provide the public an opportunity to provide input on a revised proposed rule that better defines permissible political activity while preserving the important advocacy role and vital voice of tax-exempt organizations in… Continue Reading

Top 25 Comments on IRS Proposed Political Activity Rules: #7 — American Civil Liberties Union

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

 “ . . . we urge the Service to abandon both the approach in the proposed rule and the existing ‘facts and circumstances’ test.  We respectfully submit that the Service needs to offer a clear and easily interpreted rule on what constitutes express advocacy and a firm answer on how much such activity will result… Continue Reading

Top 25 Comments on IRS Proposed Political Activity Rules: #8 — Alliance for Justice

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

“AFJ strongly believes that the proposal in the NPRM to redefine the meaning of ‘social welfare’ activity so as to exclude certain nonpartisan election-related activity goes beyond the statutory authority provided by Congress and will deter a wide-array of legitimate activity which has long-been recognized as promoting the general welfare of the community.” Alliance for… Continue Reading

Top 25 Comments on IRS Proposed Political Activity Rules: #9 — Bipartisan NPRM Comments

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

“The proposed rules treat as political a host of activities that are now and should continue to be defined as non-political, rather than discarding years of IRS rulings, guidance and precedent . . . .” The variety of organizations that signed on to these brief comments attests to the widespread dissatisfaction with the proposed rules.  The comments were developed… Continue Reading

Top 25 Comments on IRS Proposed Political Activity Rules: #10 — Ottinger Foundation, The Leonard and Sophie Davis Fund, and The Woodbury Fund

Posted in Private Foundations, Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

 “[T]he proper course for the IRS is ‘to mend it, not end it.’” The comments submitted by these three family foundations (Ottinger Foundation, The Leonard and Sophie Davis Fund, and The Woodbury Fund) elegantly reflect the concerns of grantmakers that fund nonpartisan voter education, as well as charities seeking to “curb the corrupting influence of… Continue Reading

Top 25 Comments on IRS Proposed Political Activity Rules: #11 — The Trade Association Perspective

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

“Given that any rule adopted for 501(c)(4) entities pertaining to political activity could be applied by the IRS and tax law practitioners by analogy (if not directly) to other tax-exempt organizations, the adoption of the proposed rules would severely restrict the advocacy and civic activities of 501(c)(6) trade associations … undermining their core purpose.” —… Continue Reading

Top 25 Comments on IRS Proposed Political Activity Rules: #12 – Tax-Exempt Organization Attorneys

Posted in Tax Treatment of Lobbying & Political Activities, Unions, Associations, Clubs & Other Tax-Exempt Organizations

“Each of us in our respective practices representing 501(c) organizations is all too familiar with the problems related to existing law and guidance on exempt-organization political activity. ….  Because the law itself is not clear, we often find ourselves unable to give our clients the clear answers they seek and should reasonably expect.” 21 prominent… Continue Reading