To help stimulate the hiring of workers by the private sector, the new law exempts any private-sector (meaning non-governmental) employer that hires a worker who had been unemployed for at least 60 days from having to pay the employer’s 6.2% share of the Social Security payroll tax on that employee for the remainder of 2010. A company could save a maximum of $6,621 if it hires an unemployed worker and pays that worker at least $106,800—the maximum amount of wages subject to Social Security taxes—by the end of the year. The benefit is available to both for-profit businesses and non-profit organizations.
Congress recently passed a law permitting taxpayers to claim a deduction on their 2009 tax return for contributions to charities […]
A common misconception among nonprofits is that they can’t lobby. In reality, this restriction applies only to private foundations, not public charities. Public charities are explicitly permitted to lobby so long as they adhere to limits.
The joint Department of Treasury/Internal Revenue Service priority guidance plan for 2009-2010 contains the following items of interest to tax-exempt organizations:Revenue procedure to provide terms for hosts of Cyber Assistant software (used to generate Form 1023 exemption applications eligible for reduced user fee).
The Internal Revenue Service is at it again. The IRS recently released a Governance Check Sheet that its examination agents will use when examining charitable organizations (other than private foundations), along with a Guide Sheet providing instructions on how to use the Check Sheet. According to the IRS’s webpage for exempt organization governance issues, the Check Sheet “will be used by IRS’ Exempt Organizations Examination agents to capture data about governance practices and the related internal controls of organizations being examined. The data will be included in a long-term study to gain a better understanding of the intersection between governance practices and tax compliance.” These materials are in addition to the governance training materials previously released by the IRS.
The private inurement rule and private benefit rules exist to ensure that charitable assets are preserved for the benefit of the public and not diverted to private use. This is a fundamental concept that distinguishes tax-exempt organizations from for-profits.
The rules originate in the language of Code Section 501(c)(3). Code Section 501(c)(3) contains the specific requirement that:
[N]o part of the net earnings of [the exempt organization] inures to the benefit of any private shareholder or individual . . . .
In addition, under the regulations, an organization is not treated as organized and operated for exclusively exempt purposes “unless it serves a public rather than a private interest,” Based on this provision, tax exempt status is not available to any organization if its net earnings inure to the benefit of private individuals “in whole or in part.”
In practice, the law distinguishes between different degrees of inurement depending upon who is being benefitted. The two types of inurement are referred to as “private inurement” and “public benefit.”
The I.R.S. has made the guidelines it provides to its exempt organization determination specialists for processing tax exemption applications publicly available.