The IRS released the long-awaited final Regulations for Type III supporting organizations.  The final Regulations may be viewed by clicking here.

December is traditionally a month for giving generously to charities, friends and family. But it’s also a time that can have a major impact on the tax return you’ll file in the New Year.  In its Special Edition Tax Tips, a copy of which may be obtained by clicking here, the IRS offers tips regarding charity donations before year end.

On November 23, the IRS released its Exempt Organization Newsletter, Issue Number 2012-19. Topics include the following:

• IRS gives extra time to small, automatically-revoked organizations hit by Hurricane Sandy
• Retirement plans can make loans, hardship distributions to Sandy victims
• IRS warns consumers of possible scams relating to Hurricane Sandy relief
• Employers hiring veterans by year’s end may get expanded tax credit
• Priority Guidance Plan released
• Register for upcoming workshops for small and medium-sized charities in Virginia and Arkansas
• EO Update editorial content is not copyrighted; all articles may be reused in your organization publications

On October 15, the IRS released its Exempt Organization Newsletter, Issue Number 2012-18. Topics include the following:

• IRS announces disaster relief for victims of Hurricane Sandy
• Annual Western Conference on Tax- Exempt Organizations this month
• Hearing set on additional requirements for charitable hospitals
• IRS issues guidance on inflation adjustments for 2013
• Register for upcoming workshops for small and medium-sized charities in Virginia and Arkansas
• IRS announces 2013 pension plan limitations; Taxpayers may contribute up to $17,500 to their 401(k) plans in 2013
• IRS Exempt Organizations releases survey to small tax-exempt organizations
• PTIN renewal period underway for all tax professionals; Registered tax return preparer candidates urged to schedule tests

The IRS released a notice that it has randomly selected more than 2,000 “parent” entities holding a group exemption ruling to answer additional questions regarding the relationships between the parent organization and its subordinate organizations.   According to the IRS website, the IRS would like to better understand the relationship between central or parent organizations of group rulings and their subordinates, and learn how they satisfy their exemption and filing requirements.  I estimate that there are fewer than 5,000 entities with a group ruling letter. Therefore, it is important that all parent organizations with a group ruling letter proactively confirm that their relationships are firmly within the IRS established precedents.   Similar to other areas where the IRS has engaged in compliance fact gathering, including compensation procedures and compliance with the community benefit standard, I also believe there is going to be additional audit and IRS activity in this area.  Click here

We understand that an IRS official today confirmed that the IRS  has identified 3,377 tax-exempt hospitals whose community benefit activities will be reviewed to determine if they are meeting the community benefit standard necessary for tax exemption.  We understand that these reviews began as early as April 2011 following enactment of the Affordable Care Act and that the reviews will be conducted in several waves, with each hospital being looked at in one of three annual phases.  The hospitals will not be notified by the IRS that they are being reviewed, and will not know when the reviews begin or end.

On October 15, the IRS released its Exempt Organization Newsletter, Issue Number 2012-17. Topics include the following:

• Shulman to Finish His Term as IRS Commissioner on Nov. 9
• EO launches Group Rulings Questionnaire
• Heads Up! Keeping Current on Exempt Organizations
• Register for Upcoming Workshops for Small and Medium-Sized Charities in Virginia
• SOI Tax Stats: Domestic Private Foundations and Charitable Trust Statistics
• IRS Seeks Applicants for Advisory Committee on Tax Exempt and Government Entities
• Renew your PTIN
• Authorizations: When to use the CheckBox, Form 8821 or Form 2848

When a private foundation makes a grant to a foreign organization, special rules apply.   For example, grants for charitable purposes to foreign organizations generally may be treated as a qualifying distribution and not a taxable expenditure if the private foundation makes a good faith determination that the foreign organization is the equivalent of a public charity.  Currently,  a determination is considered as made in good faith if it is based on an affidavit of the foreign organization or an opinion of counsel.  The proposed regulations modify this rule to identify a broader class of tax practitioners upon whose written advice a private foundation may base a good faith determination to include a “qualified tax practitioner”; defined as an attorney, a certified public accountant (“CPA”), or an enrolled agent.

Congress and the IRS have made it clear that 501(c)(3) organizations may not participate or intervene in “any political campaign on behalf of (or in opposition to) any candidate for public office.” IRC 501(c)(3). (Note that the rule does not prohibit all support or opposition to legislation; that is permitted as long as it is insubstantial. This rules prohibits all support or opposition to a candidate.)  This prohibition includes churches exempt under Section 501(c)(3). Yet, just about every election there are accusations that this or that church has violated the rule by preaching support for a candidate from the pulpit.

A recent news story reports that several churches, rather than covertly violating this rule, are planning to openly do so.  According to the story, the position of the churches is that the IRS rule violates their First Amendment right to free speech. Their plan is to record and send

On September 17, the IRS released its Exempt Organization Newsletter, Issue Number 2012-16. Topics include the following:

• Register now for September 20 webinar: Starting and Operating Charities for Disaster Relief
• Fast Track Settlement for TE/GE taxpayers
• Register for upcoming workshops for small and medium-sized charities in IL, NC, ID, OR, and NM