New Law Revises EO Tax Rules

On August 17, the President signed the Pension Protection Act of 2006. The new law contains numerous changes to the tax law provisions affecting tax-exempt organizations. Key provisions include the following:

* 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.

990 Online

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.

New Grantmaking requirements. Executive Order 13224

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 17, 2006 New Law Revises EO Tax Rules On August 17, the President signed the Pension Protection Act of 2006. The new law contains numerous changes to the tax law provisions affecting tax-exempt organizations. Key provisions include the following: * 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. July 29, 2006 Group Ruling Letter for the United States Catholic Conference of Bishops The annual Group Tax Exemption Letter for Catholic Organizations has been issued and is available on the USCCB website at http://www.usccb.org/ogc/groupruling.pdf July 28, 2006 Alienation Limit for 2006 For the year 2006, the amount which requires approval of the Congregation for Institutes of Consecrated Life and Societies of Apostolic life in cases of alienation of stable patrimony or business transactions which could have an adverse effect on the patrimonial condition of an institute or society is raised to $5,341,000 [the amount in 2005 was $5,165,000]. This amount applies only to alienation or business transaction within the United States. Alienation and business transactions in other counties must follow the amount set for institutes and societies in each particular country. [See canons 638.3 and 1292] July 28, 2006 Exemption Application User Fees Updated 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 Tax Talk Today - Political Intervention Do's & Don't's 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. July 21, 2006 990 Online 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 New Grantmaking requirements. Executive Order 13224 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. Monday July 17, 2006 - 10:19am (CDT) June 29, 2006 Upcoming Seminars on the Web The Legal Audit - A series of webcasts designed to assist religious orders and other nonprofits review their legal documents and ensure that they are complying with applicable law. Workshops will include: Overview 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 Thursday June 29, 2006 - 08:30pm (CDT) June 14, 2006 IRS Reminds Charities to Avoid Campaign Activities This Election Season Article 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 Wednesday June 14, 2006 - 03:32pm (CDT) Edit | Delete | Permanent Link | 0 Comments Womens Global Connection Conference San Antonio, TX May 18-20, 2006 KETRA Web Seminar Important New Tax Savings for Religious 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.geocities.com/a.hereford Amy Hereford, CSJ, MS, JD CSJ Ministries 6400 Minnesota Ave. St. Louis, MO 63111-2807 Phone/Fax: 314-678-0389 a.hereford@yahoo.com www.ahereford.org