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New Regulations on Public Inspection of Letter Rulings

On February 28, the IRS issued final regulations amending sections 301.6104(a)-1(i) and 301.6110-1(a) to expressly allow public inspection of letter rulings denying or revoking an organization’s tax exempt status. The amendments are in response to Tax Analysts v. IRS, 350 F.2d 100 (D.C. Cir. 2003), in which the court held that including denials and revocations of tax exempt status “within the ambit of section 6104” and, thus, preventing disclosure, violated the plain language of section 6110. The final regulations are published in T.D. 9581, which can be read in full here.

Donor Advised Funds Scrutinized by the Treasury Department

February 21, 2012


At the request of Congress, the Department of Treasury recently issued a report on donor advised funds. Among other things, Congress had asked the Department of Treasury whether donations to a donor advised fund should be tax-deductible, whether such donations should be treated as donations to a public charity, and whether donor-advised funds should have a minimum distribution requirement. The Department of Treasury answered “yes” to the first two questions and “no” to the third, maintaining the status quo.

The full report can be read here: http://www.treasury.gov/resource-center/tax-policy/documents/supporting-organizations-and-donor-advised-funds-12-5-11.pdf.

IRS Exempt Organization Newsletter 2012-04

February 13, 2012


On February 8, the IRS released its Exempt Organization Newsletter, Issue Number 2012-04. Topics include the following:

  • Work Opportunity Tax Credit Now Available to Qualified Tax-Exempt Organizations that Hire Qualified Veterans
  • IRS Worker Classification Webinar Feb. 15th
  • StayExempt Redesign Improves User Experience
  • IRS Exempt Organization Newsletter 2012-03

    February 10, 2012


    On February 8, the IRS released its Exempt Organization Newsletter, Issue Number 2012-03. Topics include the following:

  • EO Releases FY 2011 Annual Report and FY 2012 Work Plan
  • Guidance on Requirements for Tax-Exempt 501(c)(29) Qualified Non-Profit Health Insurers
  • EO’s 2012 Graduate Student Summer Internship Applications Due March 2
  • EO Seeks Academic Hosts for Workshops for Small and Medium-Sized 501(c)(3) Organizations
  • LLCs and the Charitable Deduction

    LLCs and the Charitable Deduction

    February 7, 2012

    Authored by: Keith Kehrer

    Under the so-called “check the box regulations” a single member limited liability company (“SMLLC”) is disregarded for federal income tax purposes unless it elects to be taxed as a corporation.  Therefore, where a Section 501(c)(3) organization establishes a SMLLC that does not seek Section 501(c)(3) status or otherwise elect to be taxed as a corporation, the SMLLC is treated as a division of the 501(c)(3) organization for federal income tax purposes.   Strangely, the IRS has declined to rule whether a donation to a SMLLC qualifies as a deductible charitable contribution made to or for the use of a Section 501(c)(3) organization for purposes of Section 170.  The New York State Bar Association recently sent a report to the Treasury and the IRS in support of the position that contributions to such SMLLCs should be eligible for the charitable deduction.   I also believe that this is the appropriate treatment for federal income tax purposes and hope

    Cyber Assistant Delay to 2012

    January 24, 2012


    Cyber Assistant Delay to 2012

    January 24, 2012

    Authored by: Kim Civins

    As we pointed out in our Oct. 19, 2010 entry, it might have been worthwhile to delay filing a new Form 1023 until the IRS launched its “Cyber Assistant” online version which enabled online filing at a substantreduced fee. However, buried in Internal Revenue Bulletin 2011-1 is the following statement:

    “… the Service does not expect Cyber Assistant (a Web-based software program designed to assist organizations in preparing their application for recognition of exemption under § 501(c)(3) of the Internal Revenue Code (Form 1023)) to become available in 2011.”

    Therefore, if you were waiting to file a Form 1023 until this service was available, you might consider proceeding with the paper version, even at the higher fee. Generally, an organization has 27 months from the date of formation to file the Form 1023, and if the tax exempt

    IRS Exempt Organization Newsletter 2012-02

    January 23, 2012


    On January 20, the IRS released its Exempt Organization Newsletter, Issue Number 2012-02. Topics include the following:

  • IRS Launches New Online Search Tool
  • IRS to Co-sponsor Conference on Nonprofit Governance
  • Academic Institution Initiative
  • Top 10 Helpful Features on the IRS Website
  • IRS Exempt Organization Newsletter 2012-01

    January 18, 2012


    On January 12, the IRS released its Exempt Organization Newsletter, Issue Number 2012-1. Topics include the following:

  • Updated Procedures for Issuance of Rulings and Determinations
  • 2012 User Fees for Exempt Organizations Matters
  • More Guidance on Reporting Employer Health Care Coverage on Forms W-2
  • Renew Your Preparer Identification Number
  • Workshops for Small and Medium-Sized Exempt Organizations
  • SSA/IRS Reporter Features Informative EO Articles
  • Revised Form 2848, Power of Attorney and Declaration of Representative
  • Fact Sheet 2012-5, Choosing a Tax Preparer
  • Another Election Year – 501(c)s be Cautious

    January 9, 2012


    In the weeks before the 2010 election, every other tv commercial seemed to be a political ad sponsored by a concerned citizens group regarding a particular candidate.    Most of these groups are organized as tax-exempt Section 501(c)(4) social welfare organizations or Section 501(c)(6) trade associations.  Although a Section 501(c)(4) or Section 501(c)(6) organization may engage in political campaign activities in furtherance of its exempt purposes (subject to applicable  state and federal campaign finance laws), such activities must not constitute the organization’s primary activities. See e.g., Rev. Rul. 81-95, 1981-1 C.B. 332; Kindell & Reilly, “Election Year Issues,” 2002 IRS EO CPE Text.  

    Watchdog groups have been calling on the IRS to investigate many of the high profile organizations behind the ads, questioning whether these organizations should maintain their status as a Section 501(c) organization in light of what they would argue is substantial political activity.  As things heat up for the 2012 election year, I anticipate even more

    IRS Guidance for Gifts of Conservation Easements

    January 2, 2012


    The IRS recently issued an Audit Technique Guide to provide guidance to IRS agents for the examination of charitable contributions of conservation easements.  The Guide incliudes a discussion of the general requirements for charitable contributions and additional requirements for contributions of conservation easements.  The Guide provides a good overview for advisors and donors exploring a possible contribution of a conversation easement.