Streamlined Approval Process for New Exempt Organizations

The IRS issued IR-2008-102 on Sept. 8, 2008; these new temporary regulations will streamline the approval process for organizations seeking tax-exempt status as publicly supported charities. The new regulations do away with the so-called advance rulings that granted public charity status for an initial five-year period but required exempt organizations to demonstrate, after the initial period, that they in fact received a substantial part of their support from public sources to receive a final determination letter. The IRS was able to eliminate the advance rulings process because of the recent redesign of the Form 990, the tax return filed by organizations exempt from federal income tax.

990 Resources

Links to resources on the new Form 990 for tax year 2008 are available on my website, www.ahereford.org. Continuing updates will be made as resources become available.

New Form 990 Instructions

The IRS just released new Form 990 Instructions for the 2008 tax year. The new Form 990 consists of an 11-page, 11-part core form that is required to be completed by all organizations that file the Form 990, and Schedules to be completed by those organizations that satisfy the applicable requirements for each Schedule.

Group Ruling Letter for Catholic Organizations

The group ruling letter for Catholic Organizations has been issued and may be downloaded.

Substantiation and Disclosure Requirements

The Service revised Publication 1771 - "Charitable Contributions -- Substantiation and Disclosure Requirements," on the federal tax law for organizations such as charities and churches that receive tax-deductible charitable contributions and for taxpayers who make contributions.
United Church of Christ Cleared in IRS Scrutiny
Senator Barack Obama spoke at the United Church of Christ's biennial General Synod at the Hartford Civic Center in June 2007. Subsequently, the IRS launched an inquiry in response to allegations the church may have jeopardized its tax-exempt status by intervening in a political campaign. The IRS concluded its review and determined the appearance did not violate any rules.

Small Business Guidelines

The IRS has announced several services for small business that may be helpful to non-profits as well:
1) Last week, the IRS announced a campaign to educate new self-employed small business owners about their federal tax responsibilities and about filing Schedule C, Profit or Loss from Business.
2) Social Security’s new online tutorial provides an introduction to Business Services Online. BSO offers step-by-step instructions for 10 business services available online, including: 1) Filing Forms W-2 and W-2c online; 2) Access to Social Security Numbers Verification Service for wage reporting purposes; 3) Information for reviewing and correcting submissions and reports.

Political Activities Compliance Initiative

The IRS announced its Political Activities Compliance Initiative (PACI) once again will be in effect for the 2008 election season. The PACI program seeks to educate section 501(c)(3) organizations such as charities and churches about the federal law concerning political campaign activity and to enforce the law in this area.

Congressional Research report on EO Political Campaign Activities

The Congressional Research Service issued a report that discusses the laws regarding political activities of churches, recent IRS inquiries into church political activity, and legislation to repeal the tax code's prohibition.

IRS Resources

1. Economic Stimulus Payments: How Organizations Can Help
The IRS is encouraging various partners and stakeholders such as charities, churches, employers and governmental organizations to assist in efforts to reach out to those Americans who may be eligible for the 2008 economic stimulus payment but who normally have no requirement to file a tax return.
2. New Exempt Employer's Toolkit
A new page on the IRS website for Charities & Other Nonprofits centralizes federal tax resources commonly needed by tax-exempt organizations that compensate employees.

Economic Stimulus Payments Information Center

Starting in May, the Treasury will begin sending economic stimulus payments to more than 130 million households. To receive a payment, taxpayers must have a valid Social Security number, $3,000 of income and file a 2007 federal tax return. IRS will take care of the rest. Eligible people will receive up to $600 ($1,200 for married couples), and parents will receive an additional $300 for each eligible child younger than 17. Millions of retirees, disabled veterans and low-wage workers who usually are exempt from filing a tax return must do so this year in order to receive a stimulus payment. Find the latest updates at the IRS Information Center on the topic.