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Happy New Year – Its Time for Resolutions

January 1, 2011


Happy New Year from the Tax-Exempt and Charitable Planning Team!   For many of us, with the New Year often comes resolutions (I know for me, I renew my annual resolution to get in shape).   The IRS is not immune to this process and recently released its 2011 “resolutions” in the form of its annual Priority Guidance Plan.  The 2011 Plan includes the following priorities:

Small Business Health Care Tax Credit FAQs

October 28, 2010


The IRS has posted additional FAQs on how eligible small business and exempt organizations can claim the Small Business Health Care Tax Credit.  The new health reform law gives a tax credit to certain small employers that provide health care coverage to their employees, effective with tax years beginning in 2010.  A tax-exempt employer described in Code section 501(c) that is exempt from tax under Code section 501(a) claims the refundable credit by filing a Form 990-T with an attached Form 8941 showing the calculation of the claimed credit.  For more information, click here.

Employee Benefits Provisions of the Small Business Jobs Act of 2010

October 4, 2010


Last week, the Small Business Jobs Act of 2010 was signed into law. While the Act mainly focuses on providing tax and other assistance to small businesses, it also includes provisions aimed at promoting retirement preparation that are not limited to small businesses. These include allowing governmental 457(b) plans to permit Roth contributions and permitting amounts deferred under section 401(k), 403(b) and 457(b) plans to be converted to designated Roth contribution accounts.  Many charities may find these provisions relevant.  Click here for a summary of these provisions.

New Medicare Enrollment Requirements Will Burden Providers and Suppliers

On September 22, 2010, the Centers for Medicare and Medicaid Services (“CMS”) issued proposed rules that will dramatically change the enrollment process for Medicare providers and suppliers, including new enrollment following a change of ownership.  The proposed rules are intended to carry out various provisions of the Patient Protection and Affordable Care Act (“PPACA”), particularly section 6401, which requires that HHS develop procedures to screen Medicare providers for risk of fraud and abuse. The rules represent a shift in CMS’ anti-fraud strategy from one that pays first and asks questions later to one designed to prevent fraud before it starts.  These rules will impact many tax-exempt organizations, especially health care organizations.  For more information regarding these proposed rules, please click here.

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

September 8, 2010


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.

Delaware Revised Statutes – Part II

Delaware Revised Statutes – Part II

September 6, 2010

Authored by: Nathan Boyce

I don’t like members. Not as individuals, but as a non-profit corporate law term of art, mostly because it so often leads to confusion.  I plan to rant more about this in a future blog. But for purposes of analyzing the changes to the Delaware General Corporation Law (“DGCL“) though, I will simply note that in many jurisdictions, a “member” is someone (other than a director or delegate) entitled to vote for directors; members also generally get to vote for important corporate actions, like mergers and dissolutions. And, in all jurisdictions I know of, a non-profit corporation may, but is not required to, have members. If it doesn’t, its directors themselves may vote for the next slate of directors and approve all corporate actions. As I noted in my August 19 post, unlike most jurisdictions, Delaware does not have a nonprofit corporation act; rather corporations that want to

Charities and Life Insurance – A Growing Trend?

Life insurance has always been an important part of charitable giving.  Although there are legitimate uses, over the years the IRS has identified certain abuses regarding the use of life insurance in charitable planning.  In our practice, we have seen a recent surge in charitable planning techniques involving life insurance.  Before your charity accepts a gift of life insurance, you should consider several issues, including the following:  (1) the application of Section 170(f)(10), the so-called “charitable split-dollar rules” (which, if applicable, impose an excise tax on the charity equal to 100% of the premium payments), (2) applicable state insurable interest laws, (3) private inurement, private benefit, and excess benefit rules, (4) unrelated business income rules (and debt-financed income rules, to the extent the life insurance was acquired with borrowed funds), (5) the partial interest rules (impacting both the income and gift tax deduction of the donor), (6) I.R.C. § 4944, the jeopardizing investment rules, and I.R.C. §

Delaware Revised Statutes – Part I

Delaware Revised Statutes – Part I

August 19, 2010

Authored by: Nathan Boyce

About two years after buying our latest family car, we had the manufacturer repair the video of the car’s DVD player.  (We once drove cross-country without this working and it was a tryyyyyyying experience; I’m not sure how my parents did it.  Of course, lots of things were different back then: not only did we not wear our seatbelts in the van, the seatbelts were stuffed down in the seat so as to not be in our way.  We often travelled with more passengers than there were seatbelts anyway, so perhaps by removing any chance at safety for all of us, my parents were tipping their hat at the principle of fairness.  Or perhaps they knew that until someone put TVs in cars, their only chance for driving sanity lay in us distracting ourselves with games, like Twister and hide-and-go-seek.  After the DVD player’s video was repaired, I couldn’t get the audio to work.  I

501(c)(3) Hospitals – It is Time to Prepare for § 501(r)

IRC § 501(r) was enacted during 2010 to tighten the requirements that hospitals must satisfy to maintain IRC § 501(c)(3) status.  IRC § 501(r) also complements steps taken by the IRS in the last couple of years to increase hospital transparency and supplement the”community benefit” standard set out in IRS Rev. Rul. 69-545, including more detailed requirements for reporting charity care and community benefits in the redesigned annual federal information return form (Form 990, particularly Schedule H).  Under IRC § 501(r) a hospital organization that wants to retain its IRC § 501(c)(3) status must: (1) at least every three years conduct a community health needs analysis and develop a plan to meet these needs; (2) adopt, implement, and widely publicize written financial assistance and emergency care policies that must cover specified topics; (3) limit charges to persons qualifying for financial assistance to amounts charged to persons with