Philanthropy Report Available

As rewarding as it would be to see foundations and grantees agree on funding priorities, simply raising the issue is a valuable conversation starter. According to a study by the Center for Effective Philanthropy, most grants made by foundations they surveyed are program-restricted, small, and short-term. This approach makes it easier for foundations to measure impact. Not surprisingly, grantees prefer general operating support for its flexibility and long-term organizational capacity-building potential. While these givers and takers may not reach complete consensus, they can benefit from a better understanding of the other’s objectives. Report

New Recordkeeping Required for Charitable Contributions by Payroll Deduction

The IRS released new recordkeeping requirements for Charitable Contributions by Payroll Deduction.
Notice 2006-110 provides guidance on how charitable contributions made by payroll deduction may meet the new recordkeeping requirements of section 170(f)(17), added by the Pension Protection Act of 2006. This new provision requires a taxpayer to maintain a bank record or written communication from the donee showing the name of the donee organization and date and amount of the contribution.
See http://www.irs.gov/pub/irs-drop/n-06-110.pdf

Telephone Tax Refund - for Nonprofits Too.

The IRS has released procedures for exempt organizations to estimate their federal telephone excise tax refunds. To request a refund, an EO must file Form 990-T, even if it does not have taxable income to report, and attach Form 8913.

What is the telephone tax refund?
The telephone tax refund is a one-time payment available on your 2006 federal income tax return, designed to refund previously collected long-distance federal excise taxes. It is available to anyone who paid long-distance taxes on landline, cell phone or Voice over Internet Protocol (VoIP) service.

Why is the government refunding these taxes?
Several recent federal court decisions have held that the tax does not apply to long-distance service as it is billed today. The IRS is following these decisions and refunding the portion of the tax charged on long-distance calls. The IRS is also refunding taxes collected on telephone service under plans that do not differentiate between long distance and local calls.
The telephone tax continues to apply to local-only service, and the IRS is not refunding taxes charged on local-only service.
The IRS will refund to you the taxes on long-distance service billed to you for the period after Feb 28, 2003 and before Aug 1, 2006. Taxpayers should request this refund next year when they file their 2006 tax returns.

See the following for more information:
* Telephone Tax Refunds: Questions and Answers for Businesses and Tax-Exempt Organizations
* IR-2006-137, IRS Announces Standard Amounts for Telphone Tax Refunds
* Telephone Tax Refund: Questions and Answers for Individuals
* IR-2006-82, Government to Stop Collecting Long-Distance Telephone Tax
* Notice, Communications Excise Tax; Toll Telephone Service

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.