IRS’ Debuts New and Improved Exempt Organization Search

The IRS has debuted a new and improved exempt organization search page.  Previously, the public could use the IRS’ Select Check tool to lookup an organization by name or EIN. However, Select Check only permitted confirmation of an organization’s tax-exempt status and whether the organization was a public charity or private foundation. 

Nonprofit Board Oversight

A nonprofit’s board of directors is legally responsible for exercising the care an ordinarily prudent person in a like position would exercise in overseeing the organization’s operations. This includes the organization’s finances and legal compliance.

Fundraising – When to Seek Permission

Fundraising to carry-out a nonprofit’s charitable purpose is necessary for the survival of the organization.  However, holding a 501(c)(3) tax exemption does not give unlimited permission to fundraise.  Many nonprofits are unaware of charitable solicitation laws within their own state much less other states where they may be asking for and/or receiving contributions.

Changes to Form 1023-EZ

The IRS has revised Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, and its instructions which went into effect January 10, 2018. The $275 1023-EZ user fee remains the same. The changes are designed to reduce filing errors and increase compliance with respect to those eligible to file Form 1023-EZ. Form 1023-EZ filers must now complete the following:

Good News for Nonprofits Moving to a New State

The IRS recently issued a favorable ruling for nonprofits looking to move their domicile from one state to another. Common reasons that nonprofits seek to change their state of incorporationinclude a change in physical location, increasing regulatory burdens, or a lack of meaningful connection to the original state of incorporation. In such cases,

Moving a Nonprofit to Another State

Nonprofits leaders often desire to move their nonprofit organization’s legal domicile from one state to another. Leadership may decide to move and wish to take the organization with them. In cases where the work is dispersed around the country, the organization may become frustrated with burdensome regulation in the state where it is domiciled and decide shop for a more favorable legal home.

Proposed Changes to Form 1023-EZ

On September 28, 2017, the IRS Tax Exempt and Government Entities division released its FY 2018 work plan. Of interest to nonprofits and their advisors, the IRS is planning to make changes to Form 1023-EZ early in 2018. These changes are in response to the concerns of stakeholders regarding whether the 1023-EZ process requires too little information.

Sharing Employees

When affiliated nonprofits work closely together, it is often cost effective to have some shared staff. When structuring shared staffing arrangements, it is important to carefully consider and document how costs will be allocated between the organization. Common arrangements include employee leasing and employee loan arrangements.

The Johnson Amendment: Keeping Charities Nonpartisan Since 1954

The Johnson Amendment ensures that 501(c)(3) organizations remain above the political fray by withholding exempt status (or revoking it) from organizations that engage in any amount of political activity. Requiring 501(c)(3) organizations to abstain from involvement in political activity ensures that they are able to remain dedicated to their missions without the distraction and divisiveness that partisan politics creates.

Creating Joint Ventures with For-Profits

To reduce the risk to the tax-exempt organization, the tax-exempt partner should exercise sufficient power and control over the joint venture’s activities to ensure the joint venture operates in furtherance of its tax-exempt purposes. Tax-exempt organizations must be particularly careful when entering into joint ventures structured as partnerships or LLCs because the IRS attributes the activities of such entities to its owners.