Tax exempt organizations

Exemption from PFIC regime for indirect ownership expanded

The IRS clarifies that shares held through a variety of tax-exempt organizations, plans, and accounts are generally excluded. On April 14, Treasury and the IRS announced they will amend the regulations under Sec. 1291 to provide that a U.S. person who indirectly owns stock of a passive foreign investment company

Streamlined tax-exempt application process introduced

The IRS introduced on Tuesday a streamlined application process for small organizations that want tax-exempt status under Sec. 501(c)(3) (Rev. Proc. 2014-40). Final and temporary regulations were also issued on July 1 to allow the IRS to adopt this streamlined application process (T.D. 9674). To apply for tax-exempt status under

New procedures for reinstatement of tax-exempt status are introduced

Tax-exempt organizations that have had their tax-exempt status automatically revoked because they failed to file required annual returns for three consecutive years have new procedures for getting their exempt status reinstated, under guidance issued by the IRS on Thursday (Rev. Proc. 2014-11). Earlier guidance providing methods for reinstating exempt status

Recycling charitable dollars: IRS gives green light to more program-related investments

Private foundations lost more than 20% of their assets during the economic crisis, according to the Foundation Center (see Foundation Growth and Giving Estimates, available at tinyurl.com/2vhk93e). At the same time, the demand for charitable services—and foundation dollars to support those services—increased significantly. The combination of these dynamics prompted many

Interim IRS chief issues initial report on Sec. 501(c)(4) controversy

On Monday, acting IRS commissioner Daniel Werfel issued his report, Charting a Path Forward at the IRS: Initial Assessment and Plan of Action, on the plans to reform the IRS to avoid inappropriate targeting of taxpayers applying for Sec. 501(c)(4) social welfare organization status. In the first section of the

15 policies for sound not-for-profit governance

CPAs nodded their heads in sympathy as stories of governance mistakes were told during a session at the AICPA Not-for-Profit Industry Conference in Washington on Thursday. One organization accepted a gift of a cattle ranch that had nothing to do with its mission, creating huge administrative headaches. Another organization did

IRS controversy could cause tax-exempt processing slowdown

CPAs need to be prepared for a slowdown in certain work handled by the IRS Exempt Organizations Division in the wake of the recent controversy involving the processing of certain applications for tax exemption under Sec. 501(c)(4), the division’s former head said Thursday. “Probably the whole system is frozen in

Acting IRS commissioner out in tea party scandal

Speaking from the East Room of the White House on Wednesday evening, President Barack Obama announced the departure of Acting IRS Commissioner Steven Miller as a result of the ongoing scandal surrounding the IRS’s controversial methods for determining which organizations applying for Sec. 501(c)(4) status warranted further review. “We're going

Justice Department opens criminal probe of IRS treatment of tea party groups

At a press conference in Washington on Tuesday, Attorney General Eric Holder announced that the Justice Department has opened a criminal probe of the IRS and its reported scrutiny of tax-exemption requests by groups with the words “tea party” or “patriot” in their names. “The FBI is coordinating with the

Conservation easements are deductible despite reimbursement provision

The Tax Court upheld charitable donations of conservation easements in a bargain sale, despite a requirement that, in the event of a later disposal of the property and extinguishment of the easements, the donee organization use the proceeds to reimburse the government agencies that funded the purchase. The court determined

Documenting charitable contributions

At this time of year, many charities see an upsurge in donations, and the federal tax deduction for charitable contributions is a significant incentive. The Tax Court recently highlighted how an apparently slight oversight in documentation can upend the interdependent relationship between donee and donor. General Substantiation Requirements The substantiation

Ban on political activities: An election-year warning for charities

As the 2012 elections draw near, the IRS is once again increasing its oversight of the ban on political campaign activities by Sec. 501(c)(3) charitable organizations. An IRS work plan (Exempt Organizations 2011 Annual Report & 2012 Work Plan, available at tinyurl.com/bos7pb4) states that, in enforcing the ban this year,

Notice permits charitable contributions to single-member LLCs

In Notice 2012-52, the IRS explained that contributions to disregarded single-member limited liability companies (SMLLCs) wholly owned and controlled by a U.S. charity (as defined in Sec. 170(c)(2)) will be treated as if made directly to the U.S. charity. This rule applies for purposes of the substantiation requirements under Sec.

IRS looks into international activities

Many tax-exempt entities participate in the global economy by engaging in charitable or other exempt activities overseas and/or making foreign financial investments. These activities have drawn attention from the IRS and other federal agencies as they examine the flow of tax-exempt funds around the world. FOREIGN BANK ACCOUNTS The first

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How tax reform will impact individual taxpayers

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