On January 31, 2020, the IRS announced that it has released a new online version of Form 1023. The revised Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code is reformatted for electronic filing.
On January 21, 2020, the IRS issued guidance detailing how nonprofits can apply for refunds of the repealed “parking tax.” Recall that in December 2017, the Tax Cuts and Jobs Act imposed an unpopular and widely criticized 21% tax on employee transportation benefit expenses incurred by nonprofits. The transportation tax, or “parking tax” as it came to be known, was retroactively repealed in December of 2019. The retroactive nature of the repeal creates an opportunity for nonprofits that paid the tax to seek refunds.
At the close of 2019, Congress passed legislation that has a significant impact on nonprofits. On December 20, 2019, the “Further Consolidated Appropriations Act, 2020,” also known as H.R. 1865, became law. This act includes two provisions that significantly impact nonprofits:
The simplification of the excise tax on net investment income; and
The retroactive repeal of the unrelated business income tax on qualified transportation fringe benefits.
Arizona has a robust system of state charitable tax credits that permit taxpayers to direct their state tax dollars to […]
There is no doubt that 2020 is going to be an exhilarating year for nonprofits. Fundraising is more competitive than […]
Your Privacy and Legal Notice Webpage cannot be a last-minute matter anymore but must be a prominent feature on your entire website and be composed of words that the average user can comprehend without the need for a lawyer.
Many non-profit’s use the 51% benchmark for a quorum as a concession that directors will not be able to attend all meetings, but having a majority of board members in attendance for official business ensures a representative cross-section of participation which will not simply reflect the will of a very small clique of directors. However, organizations that value strong hands-on participation by board members may set a higher quorum requirement to encourage meeting attendance and broader participation.
Carrying out these duties as the Secretary is crucial to the smooth functioning of all nonprofit corporations. The role of […]
A “UBIT blocker” is a for-profit corporation that is wholly owned by a tax-exempt organization, but whose activities are not attributable to its tax-exempt parent.
The need for committees and which types will vary based on your organization’s age, size, and activities. Newer organizations may be able to get by with a small working board and few or no committees, while large and established nonprofits would be hamstrung without the robust use of committees.
Technology now offers businesses and boards many advantages, including the ability to meet via teleconference, video conference, or even conduct discussion and voting via electronic communications, such as email. But while email is commonplace among many organizations for its ease of use, especially for busy and geographically diverse volunteers sitting on nonprofit boards, there are several reasons to think twice before using email for your next important nonprofit board vote.
At a baseline, your board needs to meet with sufficient frequency to adequately carry out your basic fiduciary and governance duties. This includes hiring the CEO and monitoring the CEO’s performance, creating a vision and direction for the nonprofit, setting goals and monitoring their progress, developing policies and procedures, ensuring sufficient financial resources, and generally safeguarding the organization and its mission.
Does your nonprofit serve a charitable class? It matters, because, to obtain and maintain IRS 501(c)(3) tax-exempt status, non-profit corporations […]
Beginning January 1, 2020, updated salary thresholds for overtime will become law, resulting in over 1 million Americans becoming eligible […]
In non-profit finance and accounting, restricted contributions are those given by donors in which the donor intends the funds to be used for specific programs or purposes. As in all matters regarding donations, the stated intent of the donor rules when it comes to the purposes for which donation revenue can be allocated. If the donor allocates funds for program B, and states verbally or in writing that such funds cannot be used for administrative costs (back office, IT support, human resources, insurance, operations, etc.) to support such programming, than they cannot be used for that purpose. However, if no such explicit statement is made by the donor, non-profits can use a reasonable amount of the restricted funds received to pay for administrative costs allocable to the program designated by the donor.
In a recent post, Non-Profit Urban Myths Debunked, we discredited the myth that non-profit board members cannot be paid for their service. We related that IRS regulations do allow non-profit board members to be compensated for their services. We explained: “First, non-profits can—and many do—enact board reimbursement policies for reasonable expenses incurred in the performance of board duties, such as travel to organization events, purchasing supplies for board business out of pocket, etc. Second, although most non-profit board members serve as volunteers, board members can be paid as board members for their services.”
There are several misconceptions about the legal requirements of non-profits that not only pervade the general public, but also creep their way into the media and in non-profit governance and management. Below are a few such myths followed by a debunking overview.
The Service announced in Rev. Proc. 2018-38 that it would no longer require most tax-exempt organizations to report the names and addresses of substantial contributors. The change did not apply to purely public charities exempt under Sec. 501(c)(3). Substantial donor information is currently reported on Schedule B, Schedule of Contributors, of Form 990, Form 990-EZ, Form 990-PF and Form 990-BL. The ruling reduced transparency with respect to substantial contributors and was widely seen as a boon to dark-money forces seeking to influence our elections.
The new Revenue Procedure was swiftly challenged in court. Montana and New Jersey filed suit to challenge the rule change on the basis that the federal data is shared with the states and they rely on the substantial-contributor information in enforcing their own laws. On July 30, 2019, a federal district court in Montana ruled that the IRS violated federal law when it adopted Revenue Procedure 2018-38.
The main potential problem areas for nonprofits regarding private inurement are: 1) Compensation agreements for executive employees or trustees; 2) Business relationships with entities in which an organization insider or insider’s family member has an interest; and 3) Benefits paid to an insider or a member of the insider’s family as a member of the charitable class the organization serves. Fortunately, there are steps that non-profits can take to ensure these improper benefits do not occur.
Nonprofit bylaws govern the internal operations of the organization. Too many nonprofits make the mistake of ignoring their bylaws. In […]