New Group Ruling Letter for Catholic Entities Available

The annual group ruling letter for Catholic Entities has been issued and is available on the internet at the following address: http://www.usccb.org/ogc/2007GroupRulingMemo.pdf The cover letter by the USCCB Office of General Counsel provides a helpful update on changes in tax law in 2007.

New Exempt Status Determination Procedures

Revenue Procedure 2007-52 sets forth the procedures for issuing determination letters and rulings on exempt status of organizations under section 501 and 521 of the Code. It also applies to revocation and modification of determination letters or rulings, and provides guidance on the exhaustion of administrative remedies for purposes of declaratory judgment under section 7428. It will be published in IRB 2007-30 dated July 23, 2007.

New Information Reporting Requirement for Many Nonprofits

The IRS is mailing educational letters this month to more than 650,000 small tax-exempt organizations that may be required to submit a new annual notice, Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ. Exempt organizations with receipts of less than $25,000 will need to file the e-Postcard in 2008. Get more information in news release IR-2007-129.

IRS: Exempt Organization Developments

The IRS issued an advance copy of Rev. Proc. 2007-52 setting forth the procedures for issuing determination letters and rulings on exempt status of organizations under sections 501 and 521. These procedures also apply to revocation and modification of determination letters or rulings, and provide guidance on the exhaustion of administrative remedies for purposes of declaratory judgment under section 7428.

In a separate development, the House Ways and Means Oversight Subcommittee will hold an overview hearing on tax exempt organizations according to Subcommitte Chairman John Lewis (D-GA). The hearing will focus on charities and foundations described in Internal Revenue Code section 501(c)(3) and will take place on Tuesday, July 24, 2007, in the main Committee hearing room, 1100 Longworth House Office Building, beginning at 10:00 a.m. More information.

IRS Unveils New "Life Cycle" Resource Tools

The IRS website has new information tools ("Life Cycles") to help guide tax-exempt organizations through the federal tax rules that pertain to them. These tools are resources for certain organizations exempt under IRC sections 501(c)(3), (c)(4), (c)(5), and (c)(6). The website provides information about points of intersection between organizations and the IRS with explanatory information and links to forms an organization may need to file with the IRS. Click here.

IRS Releases Discussion Draft of Redesigned Form 990 for Tax-Exempt Organizations

The IRS released for comment and discussion a draft Form 990, the annual return required to be filed by tax-exempt organizations to report information about their operations. The comment period lasts until Sept. 14, 2007. For details on providing comments, see news release IR-2007-117.

News from the IRS

1. Comments Requested on Draft Redesigned Form 990 The IRS released for comment and discussion proposed revisions to Form 990, Return of Organization Exempt from Income Taxation. The IRS hopes to have the form ready for use for the 2008 filing year (returns filed in 2009).
2. Report of the ACT The Advisory Committee on Tax Exempt and Government Entities (ACT) has issued a report on project recommendations for the Tax-Exempt and Government Entities Division. The report includes a proposal for an Exempt Organizations Voluntary Compliance Program.
3. Gaming Phone Forum Script The IRS has posted the script from a recent phone forum on "Gaming and Exempt Organizations."
4. Qualified Conservation Easement Guidance Notice 2007-50 provides guidance on new percentage limitations imposed by Internal Revenue Code section 170(b)(1)(E)(iii) on qualified conservation contributions made by individuals.

Political Campaign Activities of Exempt Organizations

Revenue Ruling 2007-41 provides guidelines for exempt organizations on the scope of the the tax law prohibition of campaign activities by section 501(c)(3) tax-exempt organizations. The ruling sets out 21 factual situations involving 501(c)(3) organizations, including churches, and activities that may be prohibited campaign intervention. In each situation, the ruling applies tax law and regulations and concludes that prohibited political activity has or has not occurred.
The IRS also released its Report on the Political Activity Compliance Initiative for the 2006 election cycle. This report, PACI 2006, follows the report on prohibited political intervention in the 2004 election cycle, which was issued in February 2006.
Links:
http://www.irs.gov/pub/irs-drop/rr-07-41.pdf
http://www.irs.gov/pub/irs-tege/2006paci_report_5-30-07.pdf
IRS Reports on Political Activity Compliance Initiative (2004)

Utilizing Employees as Volunteers

When employees volunteer in their own workplace, it blurs the lines (factually and perceptually) between employment and voluntary engagement. It can become very difficult to distinguish between what employees do for salary and what they do voluntarily. This article looks at the legal and management implications of allowing staff to volunteer within the same organizational structure. Click here.

Nonprofit Employees and Volunteers

Fair Labor Standards Act (“FLSA”) provides that true volunteer activities are not impeded or discouraged while minimizing the risk that the FLSA’s minimum wage and overtime requirements were being abused by employers. Amending the act in 1985, Congress made clear that a volunteer may receive “no compensation,” but may be paid “expenses, reasonable benefits, or a nominal fee.” An individual will be considered a volunteer under the FLSA if the individual:
(1) performs hours of service for a public agency for civic, charitable, or humanitarian reasons, without promise, expectation, or receipt of compensation for services rendered; although a volunteer can be paid expenses, reasonable benefits, or a nominal fee to perform such services;
(2) offers services freely and without pressure or coercion; and
(3) is not otherwise employed by the same public agency to perform the same type of services as those for which the individual proposes to volunteer. This last provision is explored in a newsletter available here.