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.

Reinstatement of Exempt Status

In the past 5 years, many organizations had their tax exempt status revoked for non-filing of their annual information returns. 

The IRS recently issued Revenue Procedure 2014-11, 2014-3 I.R.B. 411 (the “Revenue Procedure”) providing procedures for reinstating the tax-exempt status of organizations that have had their tax-exempt status automatically revoked under section 6033(j) of the Internal Revenue Code for failure to file required annual returns or notices for three consecutive years. The Revenue Procedure modifies and supersedes Notice 2011-44, 2011-25 I.R.B. 883 (the “Notice”).

In general, the Notice permitted certain organizations to request reinstatement of its tax-exempt status effective from the date of the organization’s automatic revocation (“retroactive reinstatement”) if the organization filed its application for reinstatement of tax-exempt status within 15 months of the revocation and proved reasonable cause for failing to file the required annual return or notice in each of the three consecutive years and over the entire consecutive three-year period. The Revenue Procedure liberalizes the criteria for requesting retroactive reinstatement for an organization that (i) was eligible to file Form 990-EZ or Form 990-N for each of the three consecutive years it failed to file, (ii) has not previously had its tax-exempt status automatically revoked pursuant to section 6033(j), and (iii) files its application for reinstatement within 15 months of the revocation and pays the applicable user fee. Under the Revenue Procedure, such organizations will be deemed to have reasonable cause for its failures to file Form 990-EZ or Form 990-N, as applicable, for each of the three consecutive years and will be retroactively reinstated upon the IRS’s approval of such organization’s application for reinstatement.

The Revenue Procedure can be read in full here.

Form 1023: Application for Tax Exemption

IRS interactive application for tax exemption has been updated. Click here....

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.

Investment Funds Maintained by Charitable Organizations

Section 3(c)(10)(A)(ii) of the Investment Company Act of 1940 generally exempts a private investment fund from registering as an investment company if it is maintained by a charitable organization and is organized and operated exclusively for religious, education, benevolent, fraternal, chartable or reformatory purposes (“Permitted Purposes”) for the collective investment and reinvestment of certain assets.  Recently, the SEC provided new guidance to alleviate concerns related to the use of this exemption.... Read more.

Reinstatement of Exempt Status

New IRS released new procedures: Applying for Reinstatement of Tax-Exempt Status … Rev Proc 2014-11

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).

Entity Selection for Nonprofits

Once the decision is made to start a nonprofit organization, the initial consideration is the type of charitable entity to be formed. The following are the four types of entities that can generally qualify for tax-exempt status:

Read more: http://charitylawyerblog.com/2013/07/25/entity-selection-for-nonprofits/#ixzz2audPzrUd

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.

Exempt Organization Application Slowdown

Social sector organizations should be aware that there will be ongoing delays for work handled by the IRS Exempt Organizations Division. In light of the recent controversy around the processing of applications for 501(c)(4) status, the entire system is experiencing delays. The article also discusses Marcus Owens' comments at a recent industry conference regarding the Division. Owens was the head of the IRS EO Division for ten years beginning in 1990 and is now a member at the law firm Caplin & Drysdale. Read more.

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.

Revised IRS Publication on Charitable Contributions

The IRS has released revised Publication 526, which explains how to claim a charitable contributions deduction, discusses the types of organizations to which you can make deductible charitable contributions, and the types of contributions you can deduct. It also discusses how much you can deduct, what records you must keep, and how to report charitable contributions. See Publication

Search Charities Online: Select Check

Learn how to search for charities and other nonprofits using the IRS online tool called Select Check in this new YouTube video.
Watch this and other videos on the IRS YouTube Channel.

IRS Group Rulings Questionnaire

To help them better understand the relationship between central or parent organizations of group rulings and their subordinates, and learn how they satisfy their exemption and filing requirements, IRS Exempt Organizations Section is asking more than 2,000 randomly selected central organizations to complete the Group Rulings Questionnaire. See a copy of the Questionaire.

2012 Group Ruling Letter Available

The 2012 Group Ruling letter has been posted on the USCCB website. You may access it here.

Clean Copy of your OCD listing

You can contact the OCD publisher and ask for a PDF copy of the page(s) on which your organization is listed They will attach it to an email so you will have it quickly. Send your request to Agnes Orlowska at the address listed on their Contact Us page.

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.

IRS Webinar: International Activities of Domestic Charitable Organizations

View a recording of the IRS Exempt Organizations webinar on International Activities of Domestic Charitable Organizations on IRSVideos.gov.

New Group Ruling Letter Issued

The new Group Ruling letter for tax exemption for the USCCB has been issued. It can be accessed online here..... You will also find copies of the cover letter and the group ruling application.