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Senator Turns Focus to Churches

January 9, 2011

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Senator Turns Focus to Churches

January 9, 2011

Authored by: Keith Kehrer

Senator Charles Grassley (R-IA) has been a driving force behind recent efforts to improve transparency in the charitable sector, including the revisions to the Form 990, Annual Information Return and focus on governance policies.  Senator Grassley recently turned his focus to churches and other religious organizations.  At his request, the Evangelical Council for Financial Accountability (” ECFA”), a national accreditation organization for churches and other religious organizations, will lead an independent, national effort to review and provide input on major accountability and policy issues affecting churches .   According to ECFA’s website, the newly formed “Commission on Accountability and Policy for Religious Organizations” will address some of the most challenging tax and policy issues involving religious organizations, including whether churches should file the same highly-detailed annual information return that other nonprofits must file (Form 990); whether legislation is needed to curb abuses of the clergy housing allowance exclusion; whether the current prohibition

Use it or Lose it

December 7, 2010

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Use it or Lose it

December 7, 2010

Authored by: Keith Kehrer

When I was a kid, my mother would always tell me to “move it or lose it” – although I am not 100% certain, I think she was telling me to please move out of her way.  As tax revenues have declined, we have seen local tax assessors more frequently telling charity owners of real property to “use it [property] or lose it [property tax exemption].” 

Non-Sweet Allegations Against Hershey Trust

November 20, 2010

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Thumbnail for version as of 16:07, 15 October 2009   Milton S. Hershey, confectioner, philanthropist, and founder of The Hershey Chocolate Company.

A self-proclaimed watchdog group, Protect The Hersheys’ Children, Inc., recently sent two letters to Congress and the Pennsylvania Attorney General’s office alleging board compensation abuse and misuse of funds at the Milton Hershey School Trust (the “Trust”) and the Milton Hershey School, both Section 501(c)(3) organizations.  The alleged compensation abuses relate to the purported payment of excessive compensation to the Directors of the Hershey Trust Company, a wholly-owned for profit subsidiary of the Trust, reported to total $1,118,146 for the part time work of ten directors.  Among the allegations regarding the misuse of funds include the Trust’s purchase of an insolvent luxury golf course. 

The Trust is now forced to defend its decisions in the “court of public opinion.” 

IRS Webinar for New Charities

November 14, 2010

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IRS Webinar for New Charities

November 14, 2010

Authored by: Keith Kehrer

The IRS has announced a free webinar that will provide a fast-paced overview by two experienced IRS agents on what new tax-exempts need to do (and what they will want to avoid) to follow IRS rules and keep their tax status in good standing in years to come. This 45-minute session will be held November 18 at 2 p.m. EST.  If you are a newly formed 501(c)(3) organization or an organization that wants a refresher, you can register and start off right by clicking here.

IRS Revises Key Publication

November 6, 2010

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IRS Revises Key Publication

November 6, 2010

Authored by: Keith Kehrer

The IRS recently announced that it has revised IRS Publication 557, Tax-Exempt Status for Your Organization.  Publication 557 provides guidance regarding organizational issues, on-going filing obligations, and other tax rules impacting exempt organizations.  The Publication is an important resource for any tax-exempt organization and it is advisable that management review the Publication to help analyze whether the organization is complying with the tax law.

A Commitment to Charitable Giving and the Giving Pledge.

October 13, 2010

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Have you heard about the Giving Pledge? Forty U.S. billionaires have committed to give at least 50% of their wealth to charity. Here is the website to check it out as well as the billionaires’ personal pledge letters: givingpledge.org. The likely suspects are there: Buffett, Gates, Ellison, Turner. I’m seeing the same idea in my practice, just on a smaller scale.

I’m continually amazed at so many of our estate planning clients’ commitment to philanthropy, and these individuals aren’t necessarily the childless. Many have children, grandchildren, and actually have very strong relationships with them, not necessarily the dysfunction you might suspect when you find out a client wants to give substantially all of his or her wealth to charity, although there are occasionally those who are “disinheriting” the kids for various reasons.

A “Church” without Boundaries

September 17, 2010

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A “Church” without Boundaries

September 17, 2010

Authored by: Nathan Boyce

 

Recently, the Federal Circuit Court of Appeals upheld the revocation of church status for the Foundation for Human Understanding (106 AFTR 2d 2010-5862) because it did not satisfy the so-called associational test.  The associational test is a test used by courts to determine whether an organization constitutes a church for 501(c)(3) purposes and consists of asking whether the organization “includes a body of believers who assemble regularly for communal worship.”  The IRS and the courts generally avoid getting into the substance of the worship services of the various churches–as long as the believers associate with each other (and, in some churches, with venomous snakes).   

IRS Releases Form to Help Tax-Exempts Claim New Health Care Tax Credit

September 8, 2010

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The IRS today released a draft version of the form that tax-exempt organizations will use to calculate the small business health care tax credit when they file income tax returns next year. The IRS also announced how eligible tax-exempt organizations –– which do not generally file income tax returns –– will claim the credit during the 2011 filing season.   Tax-exempt organizations will claim the small business health care tax credit on a revised Form 990-T. The Form 990-T is currently used to report and pay the tax on unrelated business income. Form 990-T will be revised for the 2011 filing season to enable eligible tax-exempt organizations –– even those that owe no tax on unrelated business income –– also to claim the small business health care tax credit.  For more information, please click here.

Change Your Activities? Don’t Forget to Tell the IRS

August 27, 2010

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When a charity significantly expands or changes its activities, it must inform the IRS by disclosing the activities on its next filed Form 990.  The Form 990 includes questions regarding whether the filing charity has undertaken any significant activities not listed on a prior Form 990, whether the charity ceased conducting, or made significant changes in how it conducts any activities, and requires the charity to describe the changes in an attached schedule. The Form 990 also asks whether the charity made any significant changes to its articles or bylaws, and requires such documents be included with the Form 990.  Although disclosing the changes on the next Form 990 satisfies a charity’s obligation to update the IRS, it does not provide any comfort that the new activities do not jeopardize the charity’s exempt status because there is no guaranty any IRS agent will review (or approve) such changes.  

In addition to Form

IRS Offers Informational Workshops

IRS Offers Informational Workshops

August 15, 2010

Authored by: Nathan Boyce

The IRS Exempt Organizations Division is offering one-day workshops for small and mid-size section 501(c)(3) exempt organizations. Each workshop will explain what 501(c)(3) organizations must do to keep their tax-exempt status and comply with tax obligations. An introductory workshop is designed for administrators or volunteers who are responsible for an organization’s tax compliance. For additional information regarding these free IRS workshops, click here.  Similar virtual workshops are also available (click here). These are great opportunities for officers and directors of 501(c)(3) organizations.