New Form 1023EZ Released

The Internal Revenue Service just released the new Form 1023-EZ application form to reduce processing delays and help small charities apply for 501(c)(3) tax-exempt status more easily.

The new Form 1023-EZ is available today on IRS.gov. The final version three pages long compared with the standard 26-page Form 1023. Most small organizations, defined as those with gross receipts of $50,000 or less and assets of $250,000 or less, will qualify to use the new streamlined form.

The IRS introduced the streamlined process to speed the approval process for smaller groups and free up resources to review applications from larger, more complex organizations while reducing the application backlog. Currently, the IRS has more than 60,000 501(c)(3) applications in its backlog, with many of them pending for more than nine months or more.

The IRS revised the 1023-EZ in response to widespread criticism from state regulators and those working with charitable groups. The revisions include reducing the filing threshold from $200,000 in gross receipts to $50,000 in gross receipts.

The IRS has stated that by reducing the the time required to process applications, they will be able to devote more resources to audits and examinations to ensure charities are actually doing the charitable work they were approved to do.

The new EZ form must be filed online. The instructions include an eligibility checklist that organizations must complete before filing the form.

The Form 1023-EZ must be filed using pay.gov, and a $400 user fee is due at the time the form is submitted. Further details on the new Form 1023-EZ application process can be found in Revenue Procedure 2014-40, posted today on IRS.gov.

Organizations eligible to use the Form 1023-EZ may still elect to use the traditional long-version Form 1023.  Eligible organizations that have already submitted the Form 1023 may submit the Form 1023-EZ to supersede the earlier application, but only if the Form 1023 has not already been assigned for review.  The IRS will treat such a Form 1023-EZ as a withdrawal of the earlier Form 1023, but there is no refund of the first user fee.  The filing date of the application will become the later Form 1023-EZ date, not the earlier Form 1023 date.  The 27-month rule is not extended for these purposes.  If the Form 1023 has already been assigned for review when a Form 1023-EZ arrives to supersede it, the IRS will reject the later application and refund the second user fee.

Applying for Exemption/Misc. Determination: Sample Questions

Applications for exemption and miscellaneous determination requests are assigned to Exempt Organizations specialists for review. If additional information is necessary to make a determination, a specialist will contact the organization for the information. See sample questions....

IRS Releases Revised Form 990 Instructions

The 2013 Forms 990 and 990-EZ, schedules and instructions have been revised to modify and clarify certain reporting requirements. A chart summarizing some of the more significant changes to the Form 990, Form 990-EZ, schedules and instructions for tax year 2013 may be accessed by clicking here.

Directors and Officers Insurance for Nonprofits

The following article is a summary of an NPCC workshop on the topic of whether or not an organization should carry Directors and Officers (D&O) insurance and what the NPCC plan offers. NPCC members can obtain a low-cost comprehensive policy through a program administered by Crystal Financial Services and underwritten by National Union Insurance. NPCC's past president, Peter Swords has been involved with the issue of D&O liability insurance, and led this session.... Read more....

Interactive Form 1023 Available for Review

In an effort to make applying for tax exemption easier, the IRS Exempt Organizations (EO) office is in the development stage of an alternate version of Form 1023, Application for Recognition of Exemption. The new application is available for preview until September 20, 2013.

The Interactive Form 1023 (i1023) features pop-up information boxes for most lines of the form. These boxes contain explanations and links to related information on IRS.gov andStayExempt.irs.gov, EO’s educational website. When final testing is completed later this year, you’ll print and mail the form and its attachments just like the standard Form 1023.

Although viewers are unable to print or submit this “review” version of i1023, EO encourages the public to click through its new features and promote the i1023 to colleagues and business associates. After reviewing the i1023, please send your comments to tege.eo.ceo@irs.gov.

Anticipated i1023 benefits:

• Applicants will be able to submit a more complete form
• IRS processing time is reduced
• Applicants receive a tax-exempt determination more quickly

The i1023 was developed from recommendations by the IRS’ Advisory Committee on Tax-Exempt and Government Entities (ACT).

Nonprofit Seminar - Sept 7

Establishing and Running a Non-Profit: Part I

This popular seminar provides an overview of the legal basics for establishing and running a non-profit organization. Presented by Amy Hereford, an attorney and entrepreneur who speaks from her experience in working with non-profit start-ups. It includes practical tips, useful resources including the Non-profit, Tax-exempt Corporation Workbook (2012), an e-book (PDF) that presents the process of establishing a non- profit in a step-by-step format with ample space for notes, charts for gathering necessary information and tables for developing time-lines and assigning responsibilities. An excellent tool for assisting in non-profit formation, orienting new board members and non-profit directors.

NPAD:703 | $25

680 # 10am-12pm Saturday Sept 7, 2013

Meramec-Bus. Admin., Rm TBA (Meramec - 802 Couch Ave. Meramec Campus )

Establishing and Running a Non-Profit: Part II

This seminar builds on the previous session and provides more information. It will explore the legal requirements of operating a non- profit business organization, board responsibilities, business law for non- profits and legal compliance. It will also explore newer business models for non-profits, including fiscal sponsorship, nonprofit alliances, non- profit/for profit joint ventures and other collaborative structures.

NPAD:703 | $25

681 # 1pm-3pm Saturday Sept 7, 2013

Meramec-Bus. Admin., Rm TBA (Meramec - 802 Couch Ave. Meramec Campus )

Additional Information

Call: (314) 984-7777

Visit: www.stlcc.edu/Continuing_Education
See: Brochure

A faith-based nonprofit class is being presented in North St. Louis on Sept 14, 2013. Email for information: amyhereford@gmail.com.

Charity & Nonprofit Audit / Type III orgs

This web page will explain the IRS audit process for charities and other nonprofit organizations. IRS Exempt Organizations is continuously exploring how to improve our service to charities and other nonprofit organizations, and hopes you will find the information on this page useful.

Recent changes affecting Type III Supporting Organizations

On February 4, 2012, the Director of Exempt Organizations, Ruling and Agreements, issued a memorandum instructing EO Determinations specialists to cease issuing determinations based on the 2009 proposed regulations.
Effective immediately, EO Determinations may issue determination letters classifying organizations as either functionally integrated or non-functionally integrated Type III supporting organizations if they satisfy the criteria set forth in the final and temporary regulations.

Seminars on Establishing and Running a Nonprofit

Establishing and Running a Non-Profit: Part I

This popular seminar provides an overview of the legal basics for establishing and running a non-profit organization. Presented by Amy Hereford, an attorney and entrepreneur who speaks from her experience in working with non-profit start-ups. It includes practical tips, useful resources including the Non-profit, Tax-exempt Corporation Workbook (2012), an e-book (PDF) that presents the process of establishing a non- profit in a step-by-step format with ample space for notes, charts for gathering necessary information and tables for developing time-lines and assigning responsibilities. An excellent tool for assisting in non-profit formation, orienting new board members and non-profit directors.

NPAD:703 | $25

680 # 10am-12pm Saturday April 6, 2013

Meramec-Bus. Admin., Rm TBA (Meramec - 802 Couch Ave. Meramec Campus )

Establishing and Running a Non-Profit: Part II

This seminar builds on the previous session and provides more information. It will explore the legal requirements of operating a non- profit business organization, board responsibilities, business law for non- profits and legal compliance. It will also explore newer business models for non-profits, including fiscal sponsorship, nonprofit alliances, non- profit/for profit joint ventures and other collaborative structures.

NPAD:703 | $25

681 # 1pm-3pm Saturday April 6, 2013

Meramec-Bus. Admin., Rm TBA (Meramec - 802 Couch Ave. Meramec Campus )

Additional Information

Call: (314) 984-7777

Visit: www.stlcc.edu/Continuing_Education

New Mileage Rates

The Internal Revenue Service today issued the 2013 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
• 56.5 cents per mile for business miles driven
• 24 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable
organizations
The rate for business miles driven during 2013 increases 1 cent from the 2012 rate. The medical and moving rate is also up 1 cent per mile from the 2012 rate.

8 Nonprofit Tasks before Year's End

1. Make sure you've had your Annual Meeting.

2. File Annual Report with state if required.

3. Ensure you're on target to file federal Form 990 and any similar state filings.

4. Confirm that charitable solicitation registrations are up to date (if required).

5. Review grant agreements to ensure terms and restrictions are being honored.

6. Review insurance policies for adequate coverage and conformity to current operation.

7. Private Foundation must make grants to public charities sufficient to avoid excise tax penalties.

8. Thank Your Donors with Proper Gift Receipts.

From Daily Dose of Nonprofit Law

Nonprofit Law Seminar

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Establishing and Running a Non-Profit: Part I

This popular seminar provides an overview of the legal basics for establishing and running a non-profit organization. Presented by Amy Hereford, an attorney and entrepreneur who speaks from her experience in working with non-profit start-ups. It includes practical tips, useful resources including the Non-profit, Tax-exempt Corporation Workbook (2012), an e-book (PDF) that presents the process of establishing a non- profit in a step-by-step format with ample space for notes, charts for gathering necessary information and tables for developing time-lines and assigning responsibilities. An excellent tool for assisting in non-profit formation, orienting new board members and non-profit directors.

NPAD:703 | $25

680 # 10am-12pm Saturday Sept. 29, 2012

Meramec-Bus. Admin., 205 (Meramec - 802 Couch Ave. Meramec Campus )

Establishing and Running a Non-Profit: Part II

This seminar builds on the previous session and provides more information. It will explore the legal requirements of operating a non- profit business organization, board responsibilities, business law for non- profits and legal compliance. It will also explore newer business models for non-profits, including fiscal sponsorship, nonprofit alliances, non- profit/for profit joint ventures and other collaborative structures.

NPAD:703 | $25

681 # 1pm-3pm Saturday Sept. 29, 2012

Meramec-Bus. Admin., 205 (Meramec - 802 Couch Ave. Meramec Campus )

Additional Information

Call: (314) 984-7777

Visit: www.stlcc.edu/Continuing_Education

New from the IRS

New Publication on Tax on Unrelated Business Income of Exempt Organizations

The IRS has released Publication 598, Tax on Unrelated Business Income of Exempt Organizations, in which it describes which organizations are subject to the tax, return filing requirements, what an unrelated trade or business is, and how to calculate unrelated business taxable income. - read more

Online Tool to Check Charitable Organizations

The Internal Revenue Service has launched a new online search tool, Exempt Organizations Select Check, to help users more easily find key information about tax-exempt organizations, such as federal tax status and filings.   - read more

Directors personally liable for negligence of a nonprofit board

Directors and officers must exercise reasonable inquiry, skill and diligence in performing their duties and must have a reasonable basis for their reliance on any information provided them. If it is determined that officers or directors of a nonprofit corporation have not fulfilled their fiduciary duties with respect to the management of the organization, creditors may be able to hold the directors personally liable for the nonprofit’s debts. Read more....

IRS on Supporting Organizations and Donor Advised Funds

The IRS issued a report regarding supporting organizations (SO) and donor advised funds (DAF), including whether contributions to SOs or DAFs should be deductible and/or whether SOs and DAFs should be subject to minimum distribution requirements.   This long-awaited report was released by Treasury on December 5 and can be found by clicking here.   Based on a quick review of this 100+ page report, there are no recommendations that would seem to require additional regulation beyond those amendments made by the Pension Protection Act of 2006 – the report concludes contributions are generally deductible, and no minimum distribution requirement is necessary.

Social Media Resources

For a recent presentation, I prepared a series of links regarding the use of Social Media by Religious and Nonprofit organizations. Click here.... I will also be doing the presentation as a webcast next August. You can find more information or register on my website: Click here....