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.

Liability and Type I Supporting Organizations

Tax exempt public charities (Charity), such as schools, churches and hospitals, are subject to tort liability for accidents, etc. To help segregate liability, charities may consider owning the property in a separate entity, such as a Type I Supporting Organization.

The Type I Supporting Organization (TI-SO), organized as a separate corporation under state law, is described in Section 509(a) (3) of the Internal Revenue Code and in Treas. Reg. §1.509(a)-4(g) (1). The newly created TI-SO would be "operated, supervised, or controlled" by the Charity through its right of appointment of a majority of the TI-SO’s officers and directors. In fact, the Charity and the TI-SO can have identical officers and directors if desired. All of the TI-SO’s revenue can pass solely to the Charity, in a relationship equivalent to a corporate parent and its wholly owned subsidiary in a for-profit context.

This TI-SO design can shield the Charity from liability; if there is a lawsuit against the TI-SO arising from a tort on the property, the Charity's assets could be protected. In one case, even with identity of officers and directors, by itself, a plaintiff could not pierce the corporate veil and impose liability against the Charity. See, e.g., United States Fire Insurance Company v. Allied Towing Corp., 966 F.2d 820 (4th Cir.1992), where the Court held that, where "no other justification for piercing the veil appears in the record," the fact that the two corporations "effectively have identical officers and directors [is] alone insufficient to permit the piercing of the corporate veil."

Thus, a Charity can create a non profit corporation under state law to own property and seek IRS approval as a TI-SO to help protect the Charity's assets.

Tax Changes for Individuals 2013

The IRS summarizes important tax changes that took effect in 2013. Most of these changes are discussed in more detail throughout publication 17.  Click 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

Directors and Officers Insurance for Nonprofits

The following article is a summary of an NPCC workshop on the topic of whether or not an organization should carry Directors and Officers (D&O) insurance and what the NPCC plan offers. NPCC members can obtain a low-cost comprehensive policy through a program administered by Crystal Financial Services and underwritten by National Union Insurance. NPCC's past president, Peter Swords has been involved with the issue of D&O liability insurance, and led this session.... Read more....

Mystics & Prophets: NEW RELEASE: Religious Life at the Crossroads

Mystics & Prophets: NEW RELEASE: Religious Life at the Crossroads: This book explores the movements in religious life today and the currents that are emerging among the smaller cohorts of younger religious...

Vow of Poverty in Civil and Canon Law

The vow of poverty has many dimensions: spirituality, simplicity, solidarity, work, sustainability, interdependence. The vow of poverty binds members to one another in a common economic unit. Our actions affect one another, for better or for worse. The vow also has raises legal issues under both Civil and Canon Law. Canon 600 gives a theological [...]

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).