State Requirements for Charities on IRS Website

A collection of links to State government web sites with useful information for tax-exempt organizations. Whether you are already operating or just starting, there is something here for you.
Visit the State web sites below and find information on state registration requirements for charities, taxation, information for employers, and more. Click here

Anti-Terrorist Financing Guidelines from US Treasury

The U.S. Department of Treasury ("Treasury") is publishing an updated version of its Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities ("Guidelines") along with a new Annex. The Guidelines were originally released in November 2002. A revised version of the Guidelines was published for public comment on December 5, 2005. Treasury received nine (9) comments on the revised Guidelines and made a number of additional revisions in response to those comments.
See http://www.treas.gov/offices/enforcement/key-issues/protecting/

IRS Announces 2007 Standard Mileage Rates

WASHINGTON -- The Internal Revenue Service today issued the 2007 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes. Beginning Jan. 1, 2007, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:
* 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.

Records: Privacy in and Electronic Age

Monthly Webcast:
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.

Register online

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.

US Treasury Updates Anti-Terrorist Financing Guidelines for Charitable Sector

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

Guidance on Recordkeeping Requirements for Gifts to Charity Sought from IRS

Patrick Lester of the United Way has asked Treasury for immediate guidance on new recordkeeping requirements for monetary gifts to charity under the Pension Protection Act of 2006, noting that the way the new requirements are interpreted could cause problems for United Way workplace-giving campaigns.

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.

Sincerely,
Patrick Lester

Five Unrelated Cases on Charitable Deduction Substantiation

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.

New Tax Filing Requirement for Small Nonprofits

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

NATRI 2006 National Conference

Marriott Anaheim California
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.

1023 Application Status

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.

More information on the process for submitting exemption applications and requests for rulings or determination letters may be found on this website.