Type III Supporting Organizations - Attorney Comments

Attorney Ruth Madrigal of Caplan & Drysdale wrote an open letter to Treasury Tax Legislative Counsel Susan Brown. In it, she discusses how any forthcoming guidance regarding Type III Supporting Organizations that support governmental entities should take into consideration the special circumstances that affect such organizations' abilities to meet the new "functionally integrated" requirements imposed by the Pension Protection Act of 2006. Full Text

Service to Provide Technical Guidance on PPA for TEOs

Notice 2007-45 provides interim guidance on section 6104(d)(1)(A)(ii) of the Internal Revenue Code, added by the Pension Protection Act of 2006. Section 6104(d)(1)(A)(ii) imposes a new requirement on all organizations exempt under section 501(a) and described in section 501(c)(3) to make available for public inspection a copy of their Form 990-T filed with the IRS. It will be published in IRB 2007-22 dated May 29, 2007.

IRS Guidance on Public Inspection of Form 990-T

Notice 2007-45 gives interim IRS guidance on section 6104(d)(1)(A)(ii) of the Internal Revenue Code, added by the Pension Protection Act of 2006. The Act imposed new requirement on all organizations exempt under section 501(a) and described in section 501(c)(3) to make their Form 990-T available for public inspection. Full text.

IRS Guidance on Telephone Refund for Churches and Nonprofits

The annual May 15 filing deadline is here for many nonprofits, and the IRS urges any of these organizations that paid the three percent telephone tax to be sure to request this special refund. The telephone tax refund is also available to churches and small tax-exempt organizations that don’t normally file annual returns with the IRS. Get details and additional links in news release IR-2007-99.

Guidance on Conflicts of Interest

Council on Foundations Issues Conflicts Guidance. When a foundation shares board members with grantees, is this simply mutual benefit or does it create a conflict of interest? The Council on Foundations has asked its members to ponder this issue, and it shares some of their opinions in a recent article. No surprises here: There are two sides to every story. As long as appropriate precautions are in place, grantees and grantors can all benefit. But if there are any concerns about the perception of favoritism or personal benefits, boards might want to reconsider this practice. Click Here

Foreign Gifts

The U.S. Department of the Treasury has posted a helpful risk-management grid to guide nonprofit organizations involved in international activities. This tool focuses on grantmaking and is designed to help charities (including foundations) comply with U.S. sanctions that prohibit transactions with suspected terrorists. The grid not only helps identify potential illegal activity or abuse but also serves as an additional due diligence tool. See Guide

Exempt Status Not Affected by Expanding Purposes

The IRS ruled that the tax-exempt status of a scientific research organization that studies indoor air quality will not be adversely affected when the organization expands its purposes to transform the region where it is located into a leader of environmental research.
Ltr. Rul. 200714026

TY 2006 EO Returns - Significant Changes

The instructions to the 2006 Forms 990 and 990-EZ and Schedule A incorporate significant changes to address legislation enacted in 2006 and comments received from the public. The following are highlights of the significant changes.
IRS officials have highlighted these changes in two public forums; resources from those events may also be of interest

Telephone conferences conducted on March 21 and 22, 2007. The text of the presentation can be found here.

A Tax Talk Today program highlighting legislative changes to exempt organizations tax law

click here
For more information, click here or see the What’s New section of the form instructions.

New Electronic Filing Requirement for Small Tax-Exempt Organizations

Annual Electronic Notice — e-Postcard (Form 990-N)

Beginning in 2008, small tax-exempt organizations that previously were not required to file returns may be required to file an annual electronic notice, Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations not Required To File Form 990 or 990-EZ. This filing requirement applies to tax periods beginning after December 31, 2006.

For more information, click here
Frequently Asked Questions

Income From Trade Show Activities Not Unrelated Business Income

The IRS has ruled that income a tax-exempt trade group received from its activities with a for-profit trade show operator is not unrelated business income because the activities are substantially related to the trade group's exempt purpose.

"X is exempt from federal income tax as an organization described in section 501(c)(6) of the Code. X represents the a industry to government, media, business and consumers.

Y is a for-profit entity that owns and operates several trade shows for the a industry. The trade shows are held annually around the world, and promote and stimulate interest in the a Industry. The industry is promoted through exhibits and educational programming. The trade shows provide a gathering place for industry professionals to exchange ideas, know-how and exhibit their wares. The educational programming provides ideas for solutions to industry problems; offers trends and innovations; and, promotes awareness of the industry legislative objectives and legal compliance imperatives. The trade shows draw a wide variety of members of the industry, and also attract many consumers of industry products. They attract approximately u attendees and approximately v exhibitors and related staff.

X and Y entered into a b Agreement and subsequently executed a c Agreement that provide the terms and conditions by which X will sponsor two of the annual trade shows conducted by Y."

Under these conditions, the IRS determined that "Conference Net Profit Revenue and Sponsorship Revenue received by X is substantially related to the activities of the organization, and the income therefore is not unrelated business income."

Ltr. Rul. 200713024