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Expedited Processing for 501(c)(4)s

July 7, 2013


There has been a lot of press concerning social welfare organizations lately, including allegations that many such organizations should not be classified as tax-exempt under Section 501(c)(4) based on their political campaign activities.  In response to criticism regarding substantial delay in processing Form 1024 Applications, as well as allegations that conservative organizations were subject to additional IRS scrutiny, the IRS has instituted an optional expedited process for organizations whose Form 1024 Applications have been pending more than 120 days.  

Under the optional expedited process, the IRS will approve the Form 1024 Application, thus recognizing Section 501(c)(4) status, if the organization can represent (1) that it has spent and anticipates that it will spend 60% or more of both its total expenditures and total time (employee and volunteer hours) on activities that promote social welfare and (2) that it has spent and anticipates that it will spend less than 40% of both of its  total expenditures

IRS Exempt Organization Newsletter 2013-11

June 27, 2013


On June 24, the IRS released its Exempt Organization Newsletter, Issue Number 2013-11

 Report outlines changes at IRS to ensure accountability, chart a path forward

The IRS today issued Deputy Commissioner Danny Werfel’s report entitled Charting the Path Forward at the IRS: An Initial Assessment and Plan of Action.  The report outlines new actions and next steps planned to fix problems uncovered with the IRS’ review of applications for tax exempt status and improve wider processes and operations in place at the IRS

Fact Sheet 2013-13. June 13,2013, IRS Offers New Streamlinesd Option for Certain 501(c)(4) Groups Caught in Application Backlog

*Special Issue* IRS Exempt Organization Newsletter 2013-10

June 20, 2013


On June 18, the IRS released a special issue of its Exempt Organization Newsletter, Issue Number 2013-10.

Check out this summer’s IRS phone forums

These phone forums have been approved by the IRS Return Preparer Office for continuing education credits. 

“What you need to know about the 403(b) Pre-Approved Plan Program” – June 25

Sign up for this phone forum to learn about the upcoming 403(b) Pre-Approved Plan Program. Join IRS tax law specialists as they discuss this new program for 403(b) retirement plans, which is outlined in Revenue Procedure 2013-22 and set to open June 28.

“Charities and their Volunteers” – July 17

Many charities use all-volunteer labor to accomplish their work. Even those fortunate enough to have paid staff often rely heavily on volunteers to enhance their efforts.

This phone forum will help charity leaders and tax practitioners understand the tax rules that can come into

Fiscal Sponsorship

June 11, 2013


Fiscal Sponsorship

June 11, 2013

Authored by: Keith Kehrer

We are often asked questions about fiscal sponsorship, where an existing Section 501(c)(3) organization agrees to sponsor an organization or project that itself may lack 501(c)(3) status.  Fiscal sponsorship may be attractive to organizations or projects (i) that are limited in scope and desire to avoid the time and expense of formation, filing the Form 1023 exemption application, and maintaining tax-exempt status, or (ii) where the application for recognition of exemption is pending with the IRS and a current donor requests that his or her contribution be made to an organization that has already received a favorable determination letter regarding exempt status.

There are few publicly available resources regarding fiscal sponsorships.  However, our friends at the St. Louis Volunteer Lawyers and Accountants for the Arts recently released a Guide to Fiscal Sponsorship  This Guide may be obtained for free by clicking here. Although the Guide is written for arts organizations and artists, the principles regarding fiscal sponsorship generally apply to all organizations.  The Guide also includes

IRS Exempt Organization Newsletter 2013-9

June 5, 2013


On June 5, the IRS released its Exempt Organization Newsletter, Issue Number 2013-9. Topics include the following:

  • Tax relief for victims of severe storms and tornadoes in Oklahoma
  • Prepare for hurricanes, natural disasters by safeguarding tax records
  • Do you have clients filing FBARs?
  • Refunds for cancelled RTRP test appointments
  • Questions and Answers on 501(c) Organizations
  • Renew Early? Pay Later?

    May 30, 2013


    Renew Early? Pay Later?

    May 30, 2013

    Authored by: Chris Rylands

    From BenefitsBryanCave.com

    While we have not heard it first-hand, we have heard through the grapevine that some insurance carriers are out there offering to their clients the ability to “renew early.”  Part of the strategy is, apparently, to delay the application of health care reform provisions.  The following discussion addresses some risks associated with reliance on such a strategy as a means of complying with the employer mandate and the insurance mandates.

    EMPLOYER MANDATE:  At the outset, let’s be clear about one fact: this does not get an employer out of play or pay.  The employer mandate rules specifically say that a plan year can only be changed for a valid business purpose and that, in this case, avoiding the shared responsibility tax is not a valid business purpose.  Renewing early is (assuming other legal niceties are satisfied) a change in plan year.  Without a business purpose,

    Interest Rates Indicate a Great Time for Charitable Lead Trusts

    May 21, 2013


    Previously, I blogged about the low interest rate environment and how that results in a great opportunity for a donor with charitable objectives who also wishes to pass assets to the next generation free of federal estate or generation-skipping transfer tax. To read that posting about Charitable Lead Trusts, click here. Well, rates have continued to stay at historic lows.  The IRS just announced the rates available for June of 1.2%.  These low rates mean that it’s easier then ever for these trusts to be productive to pass even more cash to lower generations free of transfer tax. So, if you think that the trust’s investment strategy could beat the IRS-decreed rate of 1.2%, while also benefiting charity, June is the time.

    For an overview regarding the basics of lifetime CLTs, see A Primer on Lifetime Charitable Lead Trusts.

    Generating Income Beyond Donations? Beware Lurking Tax Consequences

    May 15, 2013


    Tax-exempt organizations have not been immune from the impact of the economic downturn that began in 2008. In response to flat or declining donation income, many organizations have sought to generate revenue through activities that could be considered commercial in nature. While engaging in commercial-type activities may be a viable alternative in many situations, tax-exempt organizations should recognize that such activities may give rise to unrelated business taxable income, or UBTI and may even call into question their tax-exempt status. Moreover, the lines between related and unrelated activities are not always clear.  The attached article summarizes these issues.

    Law Week Colorado

    Churches in Politics

    May 1, 2013


    Churches in Politics

    May 1, 2013

    Authored by: Nathan Boyce

    Legal Background

    Organizations that are exempt under Section 501(c)(3) of the Internal Revenue Code 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).[1]  This rule applies to all 501(c)(3) organizations—including 501(c)(3) churches.  Yet, just about every election there are accusations that this or that church has violated the rule by its minister preaching support for a candidate from the pulpit.

    Too Much? Too Little? Nonprofit Compensation

    The IRS is clear that nonprofit executive compensation is one of the top compliance issues. Please see the free CLE below regarding compensation best practices. There is also a rooftop reception afterwards where you can mingle with your colleagues and the panel (which I can personally guaranty is worth the price of admission).

    Too Much? Too Little? Nonprofit Compensation



    May 14, 2013 Regional Arts Commission 6128 Delmar

    If you serve on a nonprofit board of directors, advise nonprofits, or have been following this issue in the news, this seminar is for you. Our expert panel: Keith Kehrer, Bryan Cave LLP; Judy Murphy, RubinBrown LLP; and Kent M. Rapp, Grant Cooper & Associates, will discuss best practices in determining reasonable