990
Redesign and Other Issues
2/1/08 IR 2008-11, the IRS
warned that a current version of a scam e-mail which falsely
claims to come from the IRS appears to be directed toward
certain tax-exempt organizations. The IRS reiterates that
it will never send unsolicited, tax account related e-mails to
taxpayers.
http://www.irs.gov/newsroom/article/0,,id=178061,00.html
12/13/07 IRS releases FY2008 Implementation Guidelines
with agenda for 2008.
The IRS has released its FY 2008
Implementing Guidelines summarizing the EO Division’s
accomplishments for 2007, and their program priorities for
2008. Highlights include a critical analysis of charities
business practices, colleges and universities tax-exemptions,
donor-advised funds, political activities, additional
information on the new IRS for 990s, and donor overvaluation
of charitable gifts.
For the Dec.13, 2007 Chronicle of Philanthropy article go
to
http://philanthropy.com/news/updates/index.php?id=3628.
11/27/07 IRS Standard Mileage Deduction Rates to
Increase on January 1, 2008.
The IRS released the new Optional Standard Mileage rates used
to calculate the deductible costs of operating a vehicle for
business, charitable, medical, or moving purposes. Beginning
January 1, 2008, the standard mileage rates for the use of a
car will be 50.5 cents per mile if driven for business, 19
cents per mile if driven for medical or moving purposes, and
14 cents per mile if driven in service of a charitable
organization. In 2007, the rates were 48.5 cents for business,
20 cents for medical and moving, and 14 cents for charitable
service. For more information go to
http://www.irs.gov/newsroom/article/0,,id=176030,00.html.
11/16/07 New 990-N Postcard Return Rule Effective
January 1, 2008. The IRS has announced that the new Form
990-N Electronic Notice or e-Postcard for small tax-exempt
organizations is now available and will be required as of
January 1, 2008. Small tax-exempt organizations, whose gross
receipts are normally $25,000 or less, are not required to
file Form 990. But as of January 1, 2008, these small
organizations ARE required to file the form 990-N (e-Postcard)
by May 15, 2008 (for tax period ending Dec. 31, 2007).
The e-postcard was enacted as part of the Pension
Protection Act of 2006. It requires small organizations to
provide the legal name of the organization; any DBA, mailing
address, website address, taxpayer ID number; name and address
of a principal officer; evidence of the continuing basis for
the organization’s exemption from filing the Form 990; and
upon termination, notice of that termination. Failure to file
the notice for three consecutive years will result in
revocation of tax-exempt status.
IRS Announcement
IRS letter
11/16/07 New IRS Commissioner concerned over
self-governance & social benefit of tax exemptions.
Steven T. Miller, the new IRS Commissioner for the Tax Exempt
and Government Entities division, spoke at Independent
Sector’s conference in Los Angeles, CA on October 22, 2007
about the current climate for charities. In the Commissioner’s
speech he mentions concerns over blurred lines between
for-profit and non-profit activities by charities, (citing
gyms as one example) and the social benefit of tax exemptions
. The Commissioner’s speech includes the following:
“It is an increasingly skeptical environment – an
environment that is not as willing as before to extend the
benefit of the doubt. Moreover, it is an environment in which
some are questioning whether the public benefits that
tax-exempt organizations are providing are commensurate with
the organizations’ resources and the tax subsidies they
receive. In addition, increased transparency has led to some
absolutely legitimate questions about certain practices and
what they cost the public.”
For text of Commissioner Miller’s October 22, 2007 remarks
go to
http://www.irs.gov/pub/irs-tege/stm_isector_10_22_07.pdf.
The Commissioner also spoke at the Philanthropy roundtable
on November 10, 2007 about the IRS role in an evolving
charitable sector. The official transcript of that speech is
posted on the IRS website at
http://www.irs.gov/pub/irs-tege/stm_speech_--_philantoropy_roundtablestm1107.pdf.
10/10/07 IRS Designates Charitable Contributions of
Certain LLC Membership as Transactions of Interest.
The IRS has issued
Notice
2007-72, designating certain transactions as having the
potential for tax avoidance or evasion and alerting
participants to required disclosures and potential penalties.
In these transactions a taxpayer transfers a membership
interest in a limited liability company that directly or
indirectly owns real property to a section 501(c)(3)
charitable organization or government entity, claiming a
charitable contribution deduction for an amount significantly
higher than the original purchase price paid by the taxpayer
to acquire the interest. Charitable organizations that receive
property in these transactions after August 14, 2007, are
participants in these transactions for the first year in which
their tax returns reflect the acquired interest, which is
generally the year of receipt of the interest. For that year,
the charity must disclose certain information to the IRS
required by the reportable transaction regulations or be
subject to penalties as described in the notice.
News Release (IR-2007-143, Aug. 14, 2007)
10/10/07 IRS Issues NPRM on changes to payout
requirements for Type III Supporting Organizations.
The IRS and Treasury Department
have issued an
Advance Notice of Proposed Rulemaking describing rules
they anticipate proposing regarding payout requirements for
certain section 509(a)(3) supporting organizations. The rules
address other aspects of the qualification requirements for
functionally integrated Type III supporting organizations,
which are not subject to certain restrictions adopted by the
Pension Protection Act of 2006 for other Type III supporting
organizations. The proposal would (1) require a
non-functionally integrated Type III supporting organization
to meet a payout requirement, and (2) limit the number of
organizations that such organizations can support. Comments
must be submitted by October 31, 2007 and must reference
REG-155929-06.
More information
8/30/07 IRS Issues Priority Guidance Plan for
2007-2008. The Department of
Treasury and Internal Revenue Service have released the joint
2007-2008 Priority Guidance Plan. This plan outlines the items
that Treasury and the IRS expect to issue technical guidance
on during the next year. It includes a number of projects of
interest to charities. The Plan is listed on the IRS website
at
http://www.irs.gov/charities/article/0,,id=173225,00.html
and posted at
http://www.irs.gov/pub/irs-utl/2007-2008pgp.pdf.
7/16/07 IRS Issues New Procedure on
Application for Charitable Tax Exempt Status. The IRS has
issued new procedures governing applications for charitable
tax exemption status. Revenue Procedure 2007-52 sets forth the
IRS’ procedures for issuing determination letters and rulings
on the exempt status of organizations under §§ 501 and 521 of
the Internal Revenue Code. The IRS generally issues
determination letters and rulings in response to applications
for recognition of exemption from Federal income tax. These
new procedures also apply to the revocation or modification of
determination letters or rulings. The procedure also provides
guidance on the exhaustion of administrative remedies for
purposes of declaratory judgment under § 7428 of the Code. For
a copy of the new Rev. Proc. 2007-52 at
http://www.pgdc.com/pdf/rp-07-52.pdf.
6/13/07 IRS ACT Report
Proposes Voluntary Compliance Program. The Advisory
Committee on Tax Exempt and Government Entities (ACT) has
issued a report that proposes a Voluntary Compliance Program
for Exempt Organizations. For more information go to
http://www.irs.gov/charities/article/0,,id=98353,00.html,
or directly to the pdf at
http://www.irs.gov/pub/irs-tege/tege_act_rpt6.pdf (see pdf
pages 61-101).
6/13/07 IRS Releases
Guidance on Qualified Conservation Easements. Notice
2007-50 provides guidance on new percentage limitations for
qualified conservation contributions made by individuals under
the IRC §170(b)(1)(E)(iii). For more information go to
http://www.irs.gov/charities/article/0,,id=161145,00.html,
or for the Notice go to
http://www.irs.gov/pub/irs-tege/n-07-50.pdf.
5/31/07 IRS to Focus on
Executive Compensation. The IRS announced this week, that
as a result of a recent IRS nonprofit executive compensation
report and negative publicity of nonprofit hospitals, colleges
and universities, executive compensation will be a focus of
future IRS compliance projects. For recent IRS Report on
Executive Compensation go to
http://www.irs.gov/pub/irs-tege/exec._comp._final.pdf.
5/24/07 IRS Investigating
Charitable Donations of Overvalued Property. According to
Kevin Brown, the IRS’ new Acting Commissioner, the IRS is
investigating abuses of non-cash charitable contributions,
where the interest in a piece of real property is donated to
charity “at an apparently inflated value.” In a letter to
Senate Finance Committee Chair Max Baucus (D-MT), Commissioner
Brown identified 48 organizations, mostly based in New York,
that were engaged in activities that yielded nearly $271
million in charitable deductions. The IRS is trying to
identify taxpayers who participated in these transactions, and
how widely the activity was conducted. The IRS is considering
issuing a guidance statement on the matter, as well as
possible legislative action.
3/28/07 IRS Posts Simple
How-to for Nonprofits Filing for Telephone Excise Tax Refund.
IRS release Publication 4589 which tells Nonprofits how to
apply for and receive their telephone excise tax refund (TETR).
You are encouraged to post this Publication in your
organizations newsletter and on your website to help other
nonprofits understand how to obtain their refund. For more
information go to
http://www.irs.gov/pub/irs-pdf/p4589.pdf.
IRS posts Revenue Procedure Providing Relief for 527
Organizations. IRS posts Revenue Procedure providing
relief for 527 Organizations a Safe Harbor provision, and a
request for public comment. Revenue Procedure 2007-27 contains
safe harbor provisions for 527 organizations that omit certain
information from Form 8872. Also, the IRS requests written
comments from the public by the July 2, COB deadline. For more
information go to
http://www.irs.gov/charities/political/article/0,,id=168623,00.html.
IRS Tells Foundations to Use the “Business Master File”
Information when Making Grants to Supporting Organizations.
In determining whether a grantee is a public charity under IRC
section 509 (a) (1), (2),or (3), an article explains how a
grantor can access the IRS Business Master File (BMF) or may
use a third party to obtain BMF information for the grantor.
For more information go to
http://www.irs.gov/charities/charitable/article/0,,id=168531,00.html.
IRS Suspends Issuance Determination Letters for
Supporting Organizations. In a February 22 memorandum the
IRS announced a suspension of the issuance of determination
letters under section 509(a)(3) of the Internal Revenue Code ,
where a §509(a)(3) organization seeks “functionally integrated
Type III supporting organization” status pending the issuance
of guidance. The Pension Protection Act of 2006 (PPA) enacted
certain requirements that affect all §509(a)(3) supporting
organizations, and effectively created a new category of Type
III supported organization referred to as “functionally
integrated.” Functionally integrated Type III organizations
are excluded from certain new requirements under the PPA, such
as the excess business holding rules of §4943 and the “payout
rules.” This IRS suspension applies to applications for
exemption seeking functionally integrated Type III supporting
organization status as well as determination letter requests
seeking a change in foundation status to functionally
integrated Type III supporting organization. For more
information go to
http://www.irs.gov/charities/article/0,,id=160487,00.html.
For the Treasury Department memo go to
http://www.irs.gov/pub/irs-tege/functionally_integrated_memo_.pdf.
3/14/07 Baucus and Grassley Ask IRS for List of Top Tax
Avoidance Scams Involving Nonprofits. Senate Finance
Committee Chair Max Baucus (D-MT) and Ranking Member Charles
Grassley (R-IA) have asked the IRS to provide the Senate
Finance Committee with the newest and most updated list of
“tax avoidance scams” involving nonprofits. In a statement,
Chairman Baucus said Congress needs to “stop those who are
hiding behind tax-exempt status for their own gain.” For
Grassley’s March 7 press release go to
http://finance.senate.gov/press/Gpress/2007/prg030707.pdf
House Ways & Means Subcommittee to Hold Hearing on IRS
Operations and Tax Gap. US House Ways & Means Oversight
Subcommittee to hold hearing on IRS operations, the 2007 tax
return filing season, and the “tax gap.” (the amount of unpaid
taxes owed to the federal government). The hearing will take
place on Tuesday, March 20, in the main committee hearing
room, 1100 Longworth House Office Building, Washington, DC,
beginning at 10 am.
House Ways & Means Subcommittee to Hold Hearing on IRS
Operations and Tax Gap. US House Ways & Means Oversight
Subcommittee to hold hearing on IRS operations, the 2007 tax
return filing season, and the “tax gap.” (the amount of unpaid
taxes owed to the federal government). The hearing will take
place on Tuesday, March 20, 2007, in the main Committee
hearing room, 1100 Longworth House Office Building, Washington
DC, beginning at 10:00 a.m.
Oversight Subcommittee Chairman John Lewis (D-GA) will
address the estimated annual $345 billion tax gap, and ways in
which the IRS can improve compliance. IRS Commissioner, Mark
W. Everson, will be the only witness, and will address
priorities in taxpayer services, examinations, collections,
modernization, and staffing levels. Individuals or
organizations may submit a written statement by close of
business by April 3, 2007 for consideration by the Committee
and for inclusion in the printed record.
For Advisory No. OV-3 go to
http://waysandmeans.house.gov/hearings.asp?formmode=view&id=5671
for more information contact: (202) 225-5522
For the tax gap according to US Senate Finance Committee
Ranking Member Grassley go to
http://finance.senate.gov/press/Gpress/2007/prg031307a.pdf
and see how “...you can have a blue moon, [ ] blue cheese, and
[ ] even [ ] blue suede shoes, but when it comes to balancing
the budget you can’t do it with blue smoke.
1/31/07 IRS launches free online training module on 501(c)(3) tax compliance. IRS launches free web-based training module on tax compliance issues for 501(c) (3) charities. This new web-based training program covers a range of tax compliance issues facing small and mid-sized tax exempt organizations. For more information on the new IRS training module go to http://www.irs.gov/charities/article/0,,id=166625,00.html.
1/3/07 IRS Issues New Guidance
on the Telephone Excise Tax Refund. IRS has updated its
instructions of how to claim the telephone tax refund (Notice
2007-11. Individuals and businesses are eligible for refunds of
the long-distance portion of the federal telephone excise tax.
This Guidance restates the standard amounts available for
individuals, provides the formula for businesses and nonprofits
to use to calculate their refunds, offers an estimation method
for tax-exempt organizations to use to determine their credit or
refund using a percentage of telephone bills between April and
September 2006, and explains how to distinguish between
local-only and bundled service. For more information go to
http://www.irs.gov/newsroom/article/0,,id=164032,00.html.
11/16/06
IRS
Announces Formula for Charities to Use to Receive Federal
Telephone Tax Refund. The IRS has just announced a formula
for charities to estimate their federal telephone excise tax
refunds. IR-2006-179 provides a formula for charities to use to
receive a refund on telephone excise taxes paid. In May of
2006, the Treasury Department announced that it would stop
collecting the federal excise tax on long-distance telephone
service. Refunds will be paid for these excise taxes billed
during the 41 months between February 28, 2003 and Aug. 1,
2006. Few charities took advantage of the refund because it was
too complicated to demonstrate that the money was billed and
paid. The burden outweighed the benefit. With this new
formula, charities can benefit from the excise tax refund.
PANO worked
with the office of US Senator Rick Santorum to help negotiate
this arrangement. We thank PANO members for their
participation, and we thank the Senator’s staff for their
effort.
To request a
refund, tax-exempt organizations must complete Form 8913, Credit
for Federal Telephone Excise Tax Paid. To complete this form,
tax-exempt organizations may determine the actual amount of
refundable long-distance telephone excise taxes they paid for
the 41 months from March 2003 through July 2006, or use the
formula to figure their refunds. Attach Form 8913 to your
regular 2006 income Form 990-T.
For a copy of
IR-2006-179 go to
http://www.irs.gov/newsroom/article/0,,id=164305,00.htmlIRS
Form 8913
The
IRS Form 8913
is now available to request a refund for the Telephone Excise
Tax.
Background: 9/13/06 IRS Seeks Comment on
Telephone Excise Tax refund for charities.
The IRS is asking charities to
help them develop the best procedure to refund the Telephone
Excise Tax. Individuals and businesses are entitled to a tax
refund on long distance services billed between March 1, 2003,
and before July 31, 2006. While individuals are permitted to
substantiate the refund by taking a snap-shot of a single month
and prorating for the entire 41 months, businesses including
nonprofits are required to produce actual phone bills and
cancelled checks for all 41 months. This refund could provide a
small boost to Pennsylvania’s nonprofit community, but only if
the benefit outweighs the burden. Please help us to ensure that
nonprofits in Pennsylvania are represented in this national
conversation. Submit your recommendations to the IRS by
September 15. For more information go to:
http://www.irs.gov/businesses/small/article/0,,id=160214,00.html.
Specific
instructions for a tax-exempt organization to obtain a refund
(which can be done only on its 2006 Form 990T) see page 11 of
the document at of
http://www.irs.gov/pub/irs-drop/n-06-50.pdf.
11/13/06
IRS Seeks Applications for TE/GE Advisory Committee.
The Internal Revenue Service is seeking applications for
vacancies on the Advisory Committee on Tax Exempt and Government
Entities (ACT). The committee provides a venue for public input
into critical tax administration areas. Two vacancies exist for
Exempt Organizations. Members are appointed for two-year terms
by the Secretary of the Treasury. Applications can be made by
letter or by completing an application form available on the IRS
website here.
http://www.irs.gov/pub/irs-tege/act_membership_application_2006.pdf.
For additional information go to
http://www.irs.gov/charities/article/0,,id=163733,00.html.
IRS Announces New Procedures to Change Public Charity
Classification. The IRS has announced new procedures for
private foundations and supporting organizations to change their
tax status so as to benefit from the IRA rollover provision
under the Pension Protection Act of 2006. The Pension Protection
Act permits specified individuals to make contributions from
their Individual Retirement Accounts (“IRA”) to certain public
charities without including the amounts in the contributor’s
taxable income. The Act also restricted private foundations from
making distributions to certain public charities. Charities like
private foundations and supporting organizations were not
permitted to benefit from these charitable giving incentives.
Announcement 2006-93 explains how 501(c)(3) supporting
organizations and private foundations that are currently
classified under IRC § 509(a)(3) can change their tax-exempt
classification to either 509(a)(1) or 509(a)(2). For a copy of
the IRS Announcement 2006-93 at
http://www.irs.gov/pub/irs-drop/a-06-93.pdf.
IRS issues transitional guidance defining “qualified
appraisal" for charitable deductions. The IRS has issued
“transitional guidance” on the new definitions of “qualified
appraisal" and “qualified appraiser” for certain charitable
contributions under the Pension Protection Act of 2006. Under
current law, a person contributing property and claiming a
deduction of more than $5,000 must obtain a qualified appraisal
from a qualified appraiser. Under Notice 2006-96 an appraiser’s
qualifications may be based on among other things, background,
experience, education, and professional memberships. The IRS and
Treasury Department request comments on future guidance on the
new provisions. Until regulations are issued, taxpayers may rely
on Notice 2006-96 to comply with the new provisions. For a copy
of IRS Notice 2006-96 go to
http://www.irs.gov/charities/charitable/article/0,,id=163650,00.html.
For a copy of this Notice 2006-96 go to
http://www.irs.gov/pub/irs-drop/n-06-96.pdf.
IRS increases 2007 optional standard mileage rate. On
November 1, 2006, the Internal Revenue Service increased the
2007 optional standard mileage rate used to calculate the
deductible costs of operating an automobile for business,
charitable, medical or moving purposes. Beginning on January 1,
2007, the standard mileage rates for the use of a car, vans,
pickups or panel truck, 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. The prior 2006 rates were 44.5 cents
per mile for business miles and 18 cents per mile for medical or
moving purposes. The rate for charitable miles is set by statute
[§170(i)]. The IRS raised this rate primarily due to higher
prices for both vehicles and fuel in 2006. A copy of IRS Revenue
Procedure 2006-49 is available at
http://www.irs.gov/pub/irs-drop/rp-06-49.pdf.
11/07/06 IRS Issues new
Implementing Guidelines for FY 2007. The IRS has issued its
Implementing Guidelines for FY 2007. The Guidelines report on
the IRS Exempt Organizations Division’s accomplishments in 2006,
and describe the EO's program plan for 2007. In 2007, EO plans
to enhanced enforcement of the tax laws, improved customer
service, education and outreach, and a focus on better business
processes through improved technology. A copy of the FY 2007
Exempt Organizations (EO) Implementing Guidelines is available
at
http://www.irs.gov/pub/irs-tege/fy07_implementing_guidelines.pdf.
|