Louis E. Michelson, A Professional Corporation

Providing Legal and Tax Advisory Services to Nonprofit Organizations

Preserving the Charitable Deduction Traps for the Unwary: Appraisals Instructional Video

March 9th, 2016 · charitable contributions, Charitable deduction

This instructional video covers the following topics:

● Property donations

● Substantiation and qualified appraisal

● Appraisal summary

● Disallowed deduction cases

● IRS review and penalties

Comments Off on Preserving the Charitable Deduction Traps for the Unwary: Appraisals Instructional VideoTags:·····

Preserving the Charitable Deduction Traps for the Unwary: Substantiation and Acknowledgment Rules Instructional Video

March 9th, 2016 · charitable contributions, Charitable deduction

This instructional video covers the following topics:

● Substantiation and acknowledgment rules

● Contemporaneous – example

● Written acknowledgment

● Substantiation – amount and type of property

● Good faith estimate – examples

● Property donations

Comments Off on Preserving the Charitable Deduction Traps for the Unwary: Substantiation and Acknowledgment Rules Instructional VideoTags:···

Preserving the Charitable Deduction Traps for the Unwary: Identity of the Donee and Tax-Exempt Status Instructional Video

March 9th, 2016 · charitable contributions, Charitable deduction

This instructional video covers the following topics:

● Who is the Donee?

● Verification of Exempt Status

● Automatic revocation

● Donor Due Diligence

Comments Off on Preserving the Charitable Deduction Traps for the Unwary: Identity of the Donee and Tax-Exempt Status Instructional VideoTags:···

Preserving the Charitable Contribution Deduction; Traps For the Unwary — Limits on Deductions Instructional Video

March 9th, 2016 · charitable contributions, Charitable deduction

Preserving the Charitable Deduction Traps for the Unwary: Limits on Deductions.
This instructional video covers the following topics:

● Factors that limit charitable contributions deductions

● 50% limitation

● Special 30% limitation; and 30% limitation

● 20% limitation

● Carryover of Charitable Contributions

● An example which applies these limitations

 

Comments Off on Preserving the Charitable Contribution Deduction; Traps For the Unwary — Limits on Deductions Instructional VideoTags:·

Multistate Registration Filing Portal for Nonprofit Organizations: Request for Information

February 19th, 2016 · Charity, Multistate Registration, Request for Information, Single Portal Initiative, state compliance

California is part of a pilot project to simplify registration burdens on nonprofits.  The Multistate Registration and Filing Portal, Inc., a Delaware nonprofit corporation (MRFP), working with the National Association of State Charities Officials (NASCO), and the National Association of Attorneys General (NAAG) are in the process of developing an online system that will allow nonprofit organizations and their professional fundraisers to comply with all states’ registration and annual filing requirements through a single online portal (“The Single Portal Initiative”).

A single Internet portal for charity registration and renewal has been something the nonprofit sector and professional fundraisers have requested for years.  The Single Portal will simplify the registration burden on nonprofits, make all non-confidential information available to the public in an open data format and improve the overall quality of data available.

The Single Portal system, once it is operational, should:

  • Allow charitable organizations and their professional fundraisers to register and file annual renewals and reports with multiple state charity offices through a single process.
  • Allow population of registration fields with data from electronically filed IRS 990 and 990EZ Tax Returns for tax exempt entities (Forms 990), and allow receipt of electronically filed 990s in machine-readable form from IRS, the user, or other sources.
  • Allow registration service providers to transmit data for multiple registrant/clients electronically.
  • Allow private foundations to file a copy of their IRS Form 990-PF with their state attorney general in machine-readable electronic form, if available, or as a PDF.
  • Make the non-confidential collected registration data public in an open data format. Confidential data and Personally Identifiable Information must be inaccessible to unauthorized users.
  • Allow users to attach supporting documents as necessary.
  • Provide analytic tools for charity regulators to identify outliers that will enable improved response by regulators to potential fraud prevention, negligence or poor governance practices that may lead to loss or waste of charitable assets.
  • Use a transaction-based funding model.
  • Accept payment of state registration fees from applicants and allocate them to the appropriate state(s).

On February 17, 2016 MRFP issued a Request for Information (RFI) seeking input from vendors, government officials, technology and public policy professionals and anyone with knowledge of platforms, processes, tools and/or methods to simplify the completion and submission of forms, including the submissions of relevant data and to allow charitable organizations and their professional fundraisers to comply with all states’ registration and annual filing requirements through a unified “one-stop” solution.  MRFP stated that the project goal is to maximize efficiency, customer convenience, data transparency, and information sharing by enabling compliance with the registration and reporting requirements of any state, or any combination of multiple states, via a single online software product, without duplication of data entry.

The one-stop solution should be focused on a user-friendly design. The Beta testing process should include iterative development based on feedback from regulators, and from charities and their professional fundraisers and advisors to further system development.

A copy of the RFI can be downloaded at the following link. The RFI will remain open until April 1, 2016.

Comments Off on Multistate Registration Filing Portal for Nonprofit Organizations: Request for InformationTags:····

IRS Withdraws Proposed Gift Substantiation Regulations

January 27th, 2016 · charitable contributions, Proposed Regulations, tax returns

A donor who claims a charitable contribution deduction for any contribution of $250 or more requires that the donor obtain substantiation in the form of a contemporaneous written acknowledgment from the charity.  Under an exception to this requirement (Internal Revenue Code Section 170(f)(8)(D)), a contemporaneous written acknowledgment is not required if the charity/donee organization files a return with the IRS in accordance with IRS regulations (“donee reporting”).

The Treasury Department and the Internal Revenue Service published proposed regulations in September, 2015 for donee reporting that would have allowed, but not required, charities to file a new, separate information return with the IRS (in addition to the Form 990) by February 28 every year to substantiate contributions of more than $250 in value.  The proposed regulations would create another alternative, and would not replace, the existing substantiation rules for contributions of $250 or more.

The new form would include donor names, addresses, and taxpayer identification numbers for all gifts over $250.  In addition to collecting donor information and filing the additional form, participating charities would also be required to provide each donor a copy of the report that contains his or her personal information.

The IRS on January 7, 2016 announced the withdrawal of the proposed regulations.  Nearly 38,000 comments on the proposed rules were submitted to the IRS.  The comments raised concerns for risk to donor privacy, including charities’ ability to safely collect and protect donor data.  Other comments focused on potential decrease in charitable giving and the significant administrative burdens on charities because of the proposed rules.

A copy of the withdrawal notice published in the Federal Register can be found at the following link.

Comments Off on IRS Withdraws Proposed Gift Substantiation RegulationsTags:

Extended Due Date for Notification by Social Welfare Organizations of Intent to Operate

January 20th, 2016 · Federal Income Taxes, Uncategorized

Social welfare organization must provide a notification to the IRS of their intent to operate.  This notification requirement is found in new Section 506, which was added to Internal Revenue Code by the Protecting Americans from Tax Hikes Act of 2015 (the “PATH Act”) which was enacted on December 18, 2015.

Under the PATH Act:

  • New social welfare organizations are required to notify the IRS no later than 60 days after the organizations are established.
  • For certain existing social welfare organizations, the notification is due no later than June 15, 2016.

The IRS issued Notice 2016-09 on January 19, 2016 which extended the notification requirement because the Treasury Department and the IRS intend to issue temporary regulations prescribing the manner in which social welfare organizations must notify the IRS of their intent to operate.

Under Notice 2016-09:

  • Social welfare organizations are now required to notify the IRS at least 60 days from the date that the temporary regulations are issued.
  • Social welfare organizations should wait to submit information until the regulations are issued.
  • No penalties under section 6652(c)(4) will apply to a 501(c)(4) organization that provides the section 506 notification by the due date provided in the regulations.
  • The IRS is required to acknowledge receipt of the section 506 notification, but this receipt is not a determination by the IRS that the organization qualifies for section 501(c)(4) status.
  • Organizations that seek IRS recognition of tax-exempt status under section 501(c)(4) should continue to use IRS Form 1024. The filing of Form 1024 (which is optional) does not relieve an organization of its section 506 filing requirement.
  • The full text of Notice 2016-19 is found at the following link.

Comments Off on Extended Due Date for Notification by Social Welfare Organizations of Intent to OperateTags:···

Streamlined Administrative Dissolution Process for Nonprofit Corporations

November 9th, 2015 · Dissolution, Inactive nonprofit corporation, State and Local Taxes, state compliance, State Exemption

Beginning January 1, 2016, inactive nonprofit corporations, which are eligible for administrative dissolution under the recently enacted law under AB 557, can be automatically or voluntarily dissolved.

There is a significant problem with non-profit corporations filing incorporation papers with the Secretary of State, and then failing to launch or continue operations and remain up to date and filing and tax requirements. These inactive non-profits never go through the formal dissolution process and become a hindrance to the state. The Secretary of State (SOS), Franchise Tax Board (FTB), and Attorney General are responsible for regulating nonprofit corporations and spend a significant amount of resources and time attempting to register, tax, and audit nonprofits that no longer exist. The SOS and FTB estimate that there are close to 60,000 nonprofits currently in their systems that would be eligible for the administrative dissolution process established under AB 557.

AB 557 creates a streamlined administrative dissolution process for nonprofits that have been suspended for at least 48 continuous months after proper notice has been served.

There are three new ways a nonprofit corporation can be dissolved:

o Automatic dissolution – FTB may automatically administratively dissolve a corporation that is suspended or forfeited for a period of more than 48 continuous months and is no longer in business. AB 557 allows the FTB to waive delinquent taxes, penalties and interest under specified conditions. Due to the anticipated high number of nonprofit organizations that may meet the requirements, it is anticipated that it will take time for FTB to complete the automatic process.

o Short form dissolution – The California Secretary of State will allow a short form dissolution for eligible nonprofit corporations that file for dissolution within 24 months from the date the articles of incorporation were filed.

o Voluntary dissolution – The FTB will be developing a form that practitioners and/or nonprofit corporations can complete and submit to FTB to voluntarily request the administrative dissolution of nonprofit organizations that may be eligible. The FTB indicates that this form should be ready in early 2016.

For the text of AB 557, including Legislative Counsel’s Digest, see the following link.

Comments Off on Streamlined Administrative Dissolution Process for Nonprofit CorporationsTags:···

Obtaining Recognition of Tax-Exempt Status

October 22nd, 2015 · Form 1023, Process for Obtaining Recognition of Tax Exemption, State Exemption, Streamlined Application, tax exemption

Nonprofit organizations are not automatically recognized as tax-exempt.  This raises all sorts of questions:  What types of tax-exemption are there?  Do charitable organizations, tax-exempt under IRC 501(c)(3) need to abide by certain rules or criteria?   Are there different criteria for other tax-exempt organizations?  How does a nonprofit apply for recognition of tax-exemption from federal income tax?  Can you use the streamline application for federal exemption?  How do you apply for exemption in California?

The webinar below addresses the following topics:

  • Available Tax Exemptions
  • Criteria for 501(c)(3) Organizations
  • Criteria for Other Exempt Organizations
  • Process of Obtaining Recognition of Tax-Exemption – Form 1023
  • Form 1023-EZ, Streamlined Application
  • Securing State Exemption

For a free webinar on this topic please see below.

 

For more information contact:

Louis E. Michelson,
A Professional Corporation
10811 Washington Boulevard, Suite 258
Culver City, CA 90232
(310) 843-0700

Legal Disclaimer

Louis E. Michelson, A Professional Corporation, publishes this web page as a service to our clients and friends for informational purposes only. It is NOT intended to be used as a substitute for specific legal advice or opinions and the transmission of this information is NOT intended to create an attorney-client relationship between sender and receiver.

Facts or fact patterns which may be described herein are merely illustrative examples and not intended to contemplate or anticipate any actual incident, problem or issue, legal or factual, and no attempt has been made to address any specific incident, problem or issue. The information contained in this web page is not legal advice and may or may not reflect the most current legal developments.

Internet users and online readers should not rely upon the transmission of an e-mail message to Louis E. Michelson, A Professional Corporation, to create an attorney-client relationship. Internet users and online readers should not act upon any information in this web site without first directly seeking independent professional legal counsel.

No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers.

Comments Off on Obtaining Recognition of Tax-Exempt StatusTags:

Formation of A Charitable Nonprofit Entity

October 22nd, 2015 · Articles of Incorporation, Board of Directors, Bylaws, California nonprofit law, Fiduciary Duties, Governance

When forming a new nonprofit organization, what are the legal issues one should think about? Are there different types of nonprofit corporations? What should be included in organizational documents such as the Articles of Incorporation and the Bylaws? What are the fiduciary duties of directors of a nonprofit organization?

The webinar below addresses the following topics:

● Legal Issues

● Types of Nonprofit Corporations

● Board of Directors

● Articles and Bylaws

● Governance Structure

● Fiduciary Duties

For a free webinar on this topic please see below.

 

 

For more information contact:

Louis E. Michelson,
A Professional Corporation
10811 Washington Boulevard, Suite 258
Culver City, CA 90232
(310) 843-0700

Legal Disclaimer

Louis E. Michelson, A Professional Corporation, publishes this web page as a service to our clients and friends for informational purposes only. It is NOT intended to be used as a substitute for specific legal advice or opinions and the transmission of this information is NOT intended to create an attorney-client relationship between sender and receiver.

Facts or fact patterns which may be described herein are merely illustrative examples and not intended to contemplate or anticipate any actual incident, problem or issue, legal or factual, and no attempt has been made to address any specific incident, problem or issue. The information contained in this web page is not legal advice and may or may not reflect the most current legal developments.

Internet users and online readers should not rely upon the transmission of an e-mail message to Louis E. Michelson, A Professional Corporation, to create an attorney-client relationship. Internet users and online readers should not act upon any information in this web site without first directly seeking independent professional legal counsel.

No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers.

Comments Off on Formation of A Charitable Nonprofit EntityTags: