Tax-exempt organizations will soon receive guidance regarding the issues most likely to trigger an examination by the Internal Revenue Service (IRS), says Sunita Lough, Commissioner of the IRS Tax-Exempt and Government Entities Division (TE/GE).  On a recent call discussing TE/GE’s newly released FY 2017 work plan, Ms. Lough indicated that this interim guidance, which will likely come in mid-October, will be designed to provide nonprofits with a better understanding of how the IRS uses information document requests (IDRs) in order to more efficiently resolve compliance issues.

The 2016 U.S. presidential campaign has reached a fevered pitch, with a little over a month remaining before Election Day.  After Monday’s debate between Hillary Clinton and Donald Trump, the stakes are high and the American public is turning to social media to express powerful emotions ranging from excitement to exhaustion, and to support their chosen candidate (or oppose the other).  

On August 29, 2016, the United States District Court for the Southern District of New York dismissed in its entirety a complaint against the New York Attorney General filed by Citizens United and Citizens United Foundation, challenging the Attorney General’s policy of requiring charities to disclose the names, addresses, and total contributions of their donors in connection with registration to solicit funds in New York.  

A recently passed Delaware law contains new requirements for committees and subcommittees of nonstock corporations to vote and achieve quorum.  

On June 23, the people of the United Kingdom voted to leave the European Union.  The decision to leave—commonly known as “Brexit”—has dominated headlines, rattled financial markets, and triggered political uncertainty in the United Kingdom and throughout the world.  Although the United Kingdom has not yet formally initiated the two-year process to leave the European Union, political, financial, and legal experts are actively working to determine Brexit’s short- and long-term implications.

We have recently written about the increasing importance of cybersecurity as an aspect of risk management for nonprofits in light of the proliferation of data security breaches across different sectors.

On May 10, 2016, the Internal Revenue Service (“IRS”) published proposed regulations that would impose additional reporting and record-keeping requirements on domestic “disregarded entities” that are wholly owned (directly or indirectly) by a foreign person (e.g., a U.S. limited liability company the sole member of which is a foreign corporation or individual). 

We live in an era of increasingly prevalent cybercrime, and nonprofits are in the crosshairs.  Harvard University, Penn State University and two BlueCross BlueShield entities are just a few nonprofit organizations that reported cyberattacks in 2015, breaches to their data security systems ultimately compromising thousands of personal, confidential and proprietary records.

Yesterday, Treasury and the Internal Revenue Service (IRS) finalized the regulations describing nine new program-related investment (PRI) examples that were first proposed on April 19, 2012.  The final regulations incorporate several helpful amendments that were requested by comments received in response to the proposed regulations.

The Administration’s proposed budget for Fiscal Year 2017 features several proposals that would impact charitable organizations and their donors, including proposals to streamline the private foundation excise tax on net investment income, consolidate the deduction limits for charitable contributions and strengthen the requirements for qualified conservation easements.

Since enactment of the PATH Act, exempt organizations have been waiting for IRS guidance on the new Section 501(c)(4) notification requirement and procedures for seeking IRS determination Section 501(c)(4) status.  We’re still waiting for those specifics, but, with Notice 2016-09, the IRS has taken some of the time pressure off (both for itself and the affected organizations).

The end of the year brings a flood of gifts and grants to public charities, as well as perennial questions about how the donor will benefit in return.  

The IRA charitable rollover provision of the Internal Revenue Code, which allows individuals age 70½ or older to transfer, tax-free, up to $100,000 per year from an IRA to one or more eligible charities, has become permanent law, retroactive to January 1, 2015.  This provision entered the Code as a temporary measure under the Pension Protection Act of 2006.  Congress then extended it several times, most recently through December 31, 2014.  It was made permanent when President Obama signed the Protecting Americans from Tax Hikes (PATH) Act of 2015 into law last Friday, and the provision will apply retroactively to all eligible IRA charitable rollovers made on or after January 1, 2015.

On September 18, the Department of the Treasury and Internal Revenue Service (the “IRS”) proposed regulations relating to the substantiation of charitable contributions made to Section 501(c)(3) organizations.  If approved, the proposed regulations would expand the ways in which charities can acknowledge donations.  Under the current regulations, charities must provide a contemporaneous written acknowledgement to donors who contribute $250 or more stating (i) the amount of cash and a description of any property other than cash contributed; (ii) whether any goods or services were provided by the organization in consideration of the contribution; and (iii) a description and good faith estimate of the value of any goods or services provided.  This acknowledgement is routinely provided as part of the “thank you’s” sent out by charities for contributions they receive, including those that fall below the $250 threshold.

In April of this year, the Financial Accounting Standards Board (“FASB”) circulated a series of proposed changes to generally accepted accounting principles (“GAAP”) applicable to certain not-for-profits.  These changes, which are intended to provide clearer information to donors, creditors, and other users of financial statements, may have a significant impact on not-for-profit financial reporting (which has remained largely unchanged for nearly twenty years) and will, among other things, (i) impact the reporting of operating performance in an entity’s statement of activities and related metrics in the statement of cash flows, (ii) require the use of the direct method for preparing the statement of cash flows, and (iii) modify the reporting disclosure of net assets and “underwater” endowments.

The Internal Revenue Service (the “IRS”) has updated the procedures applicable to the IRS Exempt Organizations Determinations unit (“EO Determinations”) requests for additional information in connection with applications for tax exemption and related determinations.  Under these new rules, applicants have much less time to respond to requests for additional information (and IRS staff have less discretion in granting applicants extensions of time to respond to such requests).

The IRS has released final regulations that will impact how U.S. private foundations determine that a foreign charitable organization – i.e., one not organized under U.S. law or recognized as a public charity by the IRS – is the “equivalent” of a U.S. public charity for certain purposes.  This determination is useful in the context of a private foundation’s compliance with the qualifying distribution rules under Section 4942 of the Internal Revenue Code (the “Code”) as well as with the taxable expenditure rules under Section 4945 of the Code.

On September 15th, the Internal Revenue Service (the “IRS”) issued much anticipated guidance (the “IRS Notice”) that should help facilitate mission-related investing by private foundations organized as corporations.

In a recent article in Private Funds Management, Dahlia Doumar and Carl Merino discuss planning opportunities and challenges faced by private equity managers who are considering a donation of their carry or their stake in a management company to a donor-advised fund.  

A federal district court in New York has upheld the New York Attorney General’s policy requiring registered charities to disclose the names, addresses and total contributions of their major donors.  This is the second federal court to rule on this issue, after the United States Court of Appeals for the Ninth Circuit upheld a similar requirement by California’s Attorney General in May in a suit brought by the Center for Competitive Politics, a 501(c)(3) public charity.

An article in the Stanford Social Innovation Review suggests that the language non-profits use to describe their operations fails to adequately and efficiently convey the complexity of their work.  For-profits rely on a large vocabulary to describe their business models.  

Since the first social impact bond financing was launched in the United Kingdom in 2010, more and more attention is being directed to pay-for-success (or social impact) financing, both domestically and abroad.  

Representative Dave Camp, the current chair of the House Ways and Means Committee (the “Committee”), introduced a discussion draft of the Tax Reform Act of 2014 (the “Camp Bill”) on February 26, 2014.  Although it is widely predicted that the Camp Bill will not pass, exempt organizations should still examine it closely, because it is emblematic of a new trend in legislative proposals dealing with tax reform.

The Treasury Department and IRS released the 2014-2015 Priority Guidance Plan on August 26, 2014.  The Guidance Plan lists a total of 317 projects that are priorities for allocation of Treasury Department and IRS resources for July 2014 through June 2015.  Of these, only sixteen relate directly to exempt organizations.  Eleven of the sixteen are carryovers from the 2013-2014 Priority Guidance Plan; the remaining five projects are new, but two of these (dealing with Form 1023-EZ and related streamlined application procedures) were completed before issuance of the 2014-2015 Plan. 

In our May 2014 blog post, “Introducing Form 1023-EZ,” we provided an overview of the new streamlined three-page Form 1023-EZ, which the Internal Revenue Service (the “IRS”) was set to introduce this summer for small charities seeking tax exemption.  The IRS formally announced the Form 1023-EZ’s introduction on July 1, 2014.  Now that the form is live, we would like to highlight the key updated points.