December 18, 2006
December 05, 2006
Notice 2006-110 provides guidance on how charitable contributions made by payroll deduction may meet the new recordkeeping requirements of section 170(f)(17), added by the Pension Protection Act of 2006. This new provision requires a taxpayer to maintain a bank record or written communication from the donee showing the name of the donee organization and date and amount of the contribution.
November 22, 2006
What is the telephone tax refund?
The telephone tax refund is a one-time payment available on your 2006 federal income tax return, designed to refund previously collected long-distance federal excise taxes. It is available to anyone who paid long-distance taxes on landline, cell phone or Voice over Internet Protocol (VoIP) service.
Why is the government refunding these taxes?
Several recent federal court decisions have held that the tax does not apply to long-distance service as it is billed today. The IRS is following these decisions and refunding the portion of the tax charged on long-distance calls. The IRS is also refunding taxes collected on telephone service under plans that do not differentiate between long distance and local calls.
The telephone tax continues to apply to local-only service, and the IRS is not refunding taxes charged on local-only service.
The IRS will refund to you the taxes on long-distance service billed to you for the period after Feb 28, 2003 and before Aug 1, 2006. Taxpayers should request this refund next year when they file their 2006 tax returns.
See the following for more information:
* Telephone Tax Refunds: Questions and Answers for Businesses and Tax-Exempt Organizations
* IR-2006-137, IRS Announces Standard Amounts for Telphone Tax Refunds
* Telephone Tax Refund: Questions and Answers for Individuals
* IR-2006-82, Government to Stop Collecting Long-Distance Telephone Tax
* Notice, Communications Excise Tax; Toll Telephone Service
November 07, 2006
Visit the State web sites below and find information on state registration requirements for charities, taxation, information for employers, and more. Click here
November 02, 2006
* 48.5 cents per mile for business miles driven;
* 20 cents per mile driven for medical or moving purposes; and
* 14 cents per mile driven in service to a charitable organization.
October 23, 2006
November 21, 2006 2:00 pm EDT, 11:00 am PDT
Records Have a Life Cycle - Generally records questions are posed as record retention or record destruction problems. However, it is helpful to view the issues from a broader perspective of the entire life cycle of a record. In this perspective, records are managed from the moment of their creation through their entire useful life to their final destruction.
Record Types - Records come in many types and descriptions, from the most casual doodling to formal documents to highly sensitive documents. Management of records will must take account of document type.
Records in an Age of Privacy - The age of privacy has made its mark on the way records are made and preserved. Concerns about privacy should impact record management, but they should not paralyze the organization.
Records in an Electronic Age - The electronic age has made more records available to more people in more places. Is privacy possible in an electronic age? How do organizations deal with data, metadata, the sheer volume and near indestructibility of records?
Documenting an Incident - In view of the forgoing, practical principles can be developed regarding documenting events. What should be written, how long should it be kept, who should have access to the records and who should be able to add to or remove documents from the record?
Developing a Policy - A well crafted records policy is indispensable in order to help an organization navigate the demands of an increasingly litigious society with its heightened concern for privacy and the increasing availability of electronic storage and retrieval of information.
November's webcast will review the range of legal issues affecting record retention, consider the entire range of records management concerns and discuss necessary elements of a Records Policy.
Programs will be held every third Tuesday, at 2:00 pm Eastern time, 11:00 am Pacific Time. Future programs will focus on corporate documents, tax issues, board responsibilities. Other planned webcasts include: strategic organizational development and software tools for nonprofits.
October 03, 2006
The U.S. Department of the Treasury today issued updated Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-based Charities (Guidelines), taking into consideration the comments and suggestions provided by the public to assist the charitable community in efforts to safeguard itself from the threat of abuse and exploitation by terrorist organizations.
The updated Guidelines issued today follow a public comment period that opened in December 2005. Additionally, Treasury also issued today a response to the comments submitted on the Guidelines to further detail the public comment and finalization process.
"Throughout the comment period, we welcomed ideas and suggestions by the charitable sector, and took steps to strengthen areas of concern and fortify areas of support," said Pat O'Brien, Assistant Secretary for the Treasury's Office of Terrorist Financing and Financial Crime.
The Treasury, in November 2002, issued an original set of Guidelines to aid the charitable sector in protecting against potential abuse and exploitation by terrorist groups and their support networks. This guidance was based on the ongoing threat to well-intentioned charitable works globally. The Treasury has maintained an open and robust dialogue with the charitable community, notably the Arab-American and Islamic-American community, on how to best safeguard charitable giving from misuse by terrorists and increase awareness of the very real threat terrorist groups pose to the sector.
"The Guidelines reinforce the need to keep the communication channels between the government and the sector open and ongoing and demonstrate the need for continued outreach between the two. Given the importance of charitable work to people in need and the multiple ways terrorist groups exploit such work, outreach and dialogue are truly crucial components to our overall counter-terrorist financing strategy," O'Brien continued.
These Guidelines take into account areas of major concern, clarifying that the Guidelines are voluntary, not mandatory, and they do not amend or supersede existing statutes and regulations governing charities. The Guidelines provide recommended best practices, which are intended to help charities develop, reevaluate, and build upon pre-existing internal controls and protective measures.
The Guidelines urge charities to take a proactive risk-based approach to protecting against illicit abuse and are intended to be applied by those charities vulnerable to such abuse in a matter that is commensurate with the risks they face and the resources with which they work. As requested by the charitable sector, the Guidelines contain extensive anti-terrorist financing guidance, as well as guidance on sound governance and financial practices that helps to prevent exploitation of charities.
"The abuse of charities by terrorist organizations is a serious and urgent matter, and the Guidelines reinforce the need for both the U.S. Government and the charitable sector alike to keep this challenge at the forefront of our complementary efforts. The Treasury Department is committed to protecting and enabling legitimate and vital charity worldwide, and will continue to work with the sector to advance our mutual goals," said O'Brien.Link to Guidelines
September 28, 2006
September 19, 2006
Mr. Michael Desmond
Tax Legislative Counsel
U.S. Department of Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
Dear Mr. Desmond,
United Way of America is seeking immediate guidance from Treasury on new record keeping requirements for monetary gifts to charity under the Pension Protection Act of 2006. Depending upon how these new requirements are interpreted, they may prove problematic for United Way workplace giving campaigns across the nation, which are already under way.
Section 1217 of the new law requires taxpayers claiming a charitable deduction to maintain records of all monetary contributions as follows:
"(17) RECORDKEEPING. -- No deduction shall be allowed under subsection (a) for any contribution of a cash, check, or other monetary gift unless the donor maintains as a record of such contribution a bank record or a written communication from the donee showing the name of the donee organization, the date of the contribution, and the amount of the contribution."
Under current Treasury Department regulations (Section 1.170A-13(f)(11)), for contributions of $250 or more, taxpayers must provide substantiation through pay stubs, W-2 forms, or other written documents, combined with a pledge card prepared by the recipient charity.
We are seeking clarification of Section 1217 -- specifically to determine if existing regulatory requirements will be continued, but applied to all gifts made through workplace campaigns, or if new procedures must be adopted to comply with the new law.
Thank you for your prompt attention to this matter. Please call if I can provide further information or assistance.
September 18, 2006
Charitable Contribution Deductions Denied for Failure to Provide Proof 09/18/06
The Tax Court, in a summary opinion, has sustained the IRS's denial of an individual's claimed charitable contribution deductions because the individual failed to provide reliable evidence of the contributions that he claimed he made to a church.
Deductions for Contributions to Church Disallowed 09/18/06
The Tax Court, in a summary opinion, has sustained the IRS's deficiencies against an individual stemming from deductions claimed for charitable contributions to a church, finding that he could not produce cancelled checks, receipts, or any other reliable evidence documenting those contributions.
Deductions for Charitable Contributions Disallowed; Penalties Imposed 09/18/06
The Tax Court, in a summary opinion, has held that the IRS properly disallowed an in
dividual's claimed deductions for charitable contributions to a church because he failed to substantiate the contributions and has found him liable for accuracy-related penalties.
Documents Lacking Date, Amount Fail Charitable Contribution Requirements 09/18/06
The Tax Court, in a summary opinion, has disallowed an individual's charitable contribution deductions, finding that his proffered records failed to meet the substantiation requirements because they didn't show the dates or the amounts of his individual contributions, and has imposed an accuracy-related penalty.
Tax Court Denies Charitable Deductions and Imposes Penalty 09/18/06
The Tax Court, in a summary opinion, has sustained the IRS's deficiency determinations against two individuals, finding they are not entitled to charitable contribution deductions because they could not provide reliable evidence supporting the deductions, and it has imposed an accuracy-related penalty.
September 12, 2006
The Pension Protection Act of 2006 ccontains numerous changes to the tax law provisions affecting tax-exempt organizations, including a provision requiring exempt organizations not otherwise required to file the 990 information return to file an annual notice with the IRS. Organizations covered by the new law that are not currently required to file the form 990 information return include exempt organizations with gross receipts under $25,000.
The provision requires these organizations to furnish the following information to the Secretary annually, in electronic form:
1. the legal name of the organization,
2. any name under which the organization operates or does business,
3. the organization’s mailing address and Internet web site address (if any),
4. the organization’s taxpayer identification number,
5. the name and address of a principal officer, and
6. evidence of the organization’s continuing basis for its exemption from the generally applicable information return filing requirements.
Upon such organization’s termination of existence, the organization is required to furnish notice of such termination.
If an organization fails to provide the required notice for three consecutive years, the organization’s tax-exempt status is revoked. In addition, if an organization that is required to file an annual information return under section 6033(a) (Form 990) fails to file such an information return for three consecutive years, the organization’s taxexempt status is revoked.
The IRS will be providing further information on this requirement on its website at http://www.irs.gov/charities/article/0,,id=161145,00.html
September 07, 2006
October 11 – 14, 2006
Amy Hereford will be exhibiting at the NATRI National Conference - Booth 100. Be sure to stop by for information about her new law practice, and for information about upcoming Web Casts.
September 06, 2006
From the IRS regarding Status of 1023 Applications:
The Process: Upon receipt, exemption applications accompanied by the required user fee are initially separated into three groups: (1) those that can be processed immediately based on information submitted, (2) those that need minor additional information to be resolved, and (3) those that require additional development.
If your application falls in the first or second group, you will receive either your determination letter or a request for additional information, via phone, fax, or letter, within approximately 60 days of the date the application was submitted. If your application falls within the third group, you will be contacted once your application has been assigned to an EO specialist.
Current Status of Applications Requiring Additional Development: Cases received as of December 2005* are currently being assigned.
What You Can Do:
If you submitted your application or determination letter request:
- in or after the month indicated above, continue to check this web page for updates and wait for us to contact you. There is no need to call.
- before the month indicated above and you have not been contacted by the IRS about your application, you may want to contact TE/GE Customer Account Services.
You will need the following information before you contact the IRS to verify the status of an application or determination letter request:
- The name of the organization on whose behalf the request was submitted;
- The organization's employer identification number (EIN);
- The document locator number assigned to the request (if you have received one); and
- A proper power of attorney submitted with the exemption application unless you are legally authorized to represent the organization, such as an officer or director.
August 28, 2006
* Controlling organziations must report income from and loans to controlled organizations as well as transfers between controlled and controlling organizations. This provision is effective for returns due (without regard to extensions) after the date of enactment.
* Section 501(c)(3) organizations must now disclose unrelated business income tax returns (Forms 990-T) and make them available for public inspection. This provision is effective for returns filed after the date of enactment.
* Private foundation and excess benefit penalty excise taxes are doubled.
* Donor advised funds, supporting organizations, and credit counseling organizations are subject to new requirements.
* Charitable contribution deductions for food, book, and certain conservation property are increased.
* Charitable contribution deductions for monetary donations, certain easements, taxidermy property, clothing and household goods, and certain other items are limited.
* Beginning in 2008, exempt organizations with gross receipts under $25,000 must file an annual notice.
* In the case of a charitable contribution of money, regardless of the amount, the donor must maintain a cancelled check, bank record or receipt from the donee organization showing the name of the donee organization, and the date and amount of the contribution.
- July 21, 2006
- The Urban Institute 2100 M Street NW Washington, DC 20037 (866) 518-3874
990 Online is a Web-based system available to nonprofit organizations for the preparation of Forms 990, 990-EZ and 8868 (filing extension). The application provides user-friendly screens with comprehensive error-checking, and easy creation of schedules and attachments. Users can create Acrobat PDF copies of their forms and attachments for printing, posting on the Web, or emailing. The application supports current versions of Internet Explorer (Ver. 6 or higher), Netscape Navigator, Mozilla & Firefox (Windows, MacIntosh, or Linux). In 2005, state registration and renewal capabilities will be added. Electronic receipts and acknowledgements are provided, and best of all...the service is free!
These products have been developed by the nonprofit National Center for Charitable Statistics at the Urban Institute to help nonprofit organizations complete accurate and timely tax filings and to strengthen the information resources available on the nonprofit sector. For more information or to get started on your organization's tax return or extension request, please visit us on the Web at http://efile.form990.org.
- July 17, 2006
- The September 11, 2001 terrorist attacks on the United States resulted in new laws under which U.S. grant making nonprofits risk criminal prosecution, civil penalties and the freezing of their assets if they are found to have made grants to foreign or domestic individuals or organizations that engage in or support terrorism.
August 26, 2006
July 29, 2006
July 28, 2006
User fees for exemption applications postmarked on or after July 1, 2006, require the following payment:
$300 for an application for exemption under Internal Revenue Code section 501 filed by an organization that has had annual gross receipts averaging not more than $10,000 during its preceding four years, or by a new organization that anticipates gross receipts averaging not more than $10,000 during its first four years.
$750 for an application for exemption under section 501 filed by an organization that has had annual gross receipts averaging more than $10,000 during its preceding four years, or by a new organization that anticipates gross receipts averaging more than $10,000 during its first four years.
A table showing these changes is available. For a more information about user fees and a complete user fee schedule, see New User Fee Schedule for 2006. Form 8718, used for applications other than those submitted on Form 1023, has been updated and is currently available. An update to Form 1023, which incorporates user fee payment information, is also available.
July 21, 2006
View Political Intervention: Do's and Don'ts for 501(c)(3) Organizations on Tax Talk Today. This one hour video shows IRS subject matter experts explaining the political campaign intervention rules that apply to 501(c)(3) organizations, including charities and churches. The speakers provide examples to highlight acceptable activity, discuss the Service's Political Activity Compliance Initiative for the election year, and introduce new educational materials. Program materials are available on the Resources page of theTax Talk Today Web site.
June 28, 2006
- Governance and Corporate Documents
- Related corporations, foundations and trusts
- Federal Tax issues
- Liability, Insurance and Risk Management
- Record Management
- Property: Asset Management and Asset Structure
- Member Legal Audit
June 01, 2006
IR-2006-87, June 1, 2006
WASHINGTON This election season the Internal Revenue Service reminds charities to avoid becoming involved in political campaign activities.
In the 2004 elections, the IRS noticed an upturn in politicking on the part of 501(c)(3) organizations. The agency responded by increasing its educational efforts and launching an enforcement program, the Political Activity Compliance Initiative (PACI), to investigate specific, credible allegations of wrongdoing.
While the vast majority of charities and churches do not engage in politicking, an increasing number did take part in prohibited activities in the 2004 election cycle, IRS Commissioner Mark W. Everson said. The rule against political campaign intervention by charities and churches is long established. We are stepping up our efforts to enforce it.
The IRS has put procedures into place for the 2006 election season to more quickly address instances of potential prohibited activity on the part of charities, churches and other tax-exempt organizations. The procedures are meant to ensure that public referrals as well as activities the IRS itself uncovers are reviewed expeditiously and treated in a consistent, fair and nonpartisan manner.
As a rule, charities, religious organizations such as churches, educational organizations and other groups that are tax-exempt under section 501(c)(3) of the tax code may not participate or intervene in any political campaign on behalf of or in opposition to any candidate for public office.
This prohibition means 501(c)(3) organizations may not endorse candidates, distribute statements for or against candidates, raise funds for or donate to candidates or become involved in any activity that would be either supportive or opposed to any candidate.
Whether an organization is engaging in prohibited political campaign activity depends upon all the facts and circumstances in each case. For example, organizations may sponsor debates or forums to educate voters. But if the debate or forum shows a preference for or against a certain candidate, it becomes a prohibited activity.
Federal courts have ruled that it is not unconstitutional for the tax law to impose conditions, such as the political campaign prohibition, upon exemption from federal income tax. This position was most recently upheld in Branch Ministries v. Rossotti, 211 F.3d 137 (D.C. Cir. 2000).
Several Web-based resources are available that discuss in more detail the issues outlined above. For more information, see:
- IRS Fact Sheet 2006-17, Election Year Activities and the Prohibition on Political Campaign Intervention for Section 501(c)(3) Organizations http://www.irs.gov/newsroom/article/0,,id=154712,00.html
- IRS Reports on Political Activity Compliance Initiative http://www.irs.gov/charities/article/0,,id=154622,00.html
- Procedures for the 2006 Election Season http://www.irs.gov/pub/irs-tege/paci_procedures-feb_22_2006. pdf.pdf
- IRS Publication 1828, Tax Guide for Churches and Religious Organizations http://www.irs.gov/pub/irs-pdf/p1828.pdf
- IRS Publication 1828 Spanish, Guia Tributaria Para Iglesias y Organizaciones Religiosas http://www.irs.gov/pub/irs-pdf/p1828sp.pdf
May 18, 2006
February 02, 2006
Amy Hereford will present a special one-hour web conference on February 14, 2006 discussing a new tax law and how to take advantage of the tax savings it provides. The program will be archived for later viewing by those unable to attend the web conference. Registered participants in the live web conference will be able to see and hear the presenter and see slides and documents by logging into the conference web site. Participants can pose questions during the presentation or during a Q&A session at the end of the conference. Katrina Emergency Tax Relief Act of 2005 (KETRA) has special provisions allowing thousands of dollars in tax savings for members of religious orders with taxable income. A single religious with $35,000 in taxable income could save approximately $2,000; that could mean as much as $5,000,000 in tax savings across the country for religious with taxable income in 2005. All religious with taxable income and charitable contributions to their order will be able to take advantage of the Hurricane Katrina Tax Relief package. Contributions to a religious order are qualified contributions for this tax relief package, even if contributions were not directed to Hurricane Katrina relief. Amy Hereford is a Sister of St. Joseph of Carondelet from St. Louis and an attorney licensed to practice before the US Tax Court. She worked at the Legal Resource Center for Religious as Associate Director and a staff attorney and edited that office’s Taxes Notebook and counseled religious orders on taxation of their members. For more information or to register, see www.ahereford.com Amy Hereford, CSJ, MS, JD CSJ Ministries; 6400 Minnesota Ave. St. Louis, MO 63111-2807 Phone/Fax: 314-678-0389