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Small Business Health Care Tax Credit FAQs

October 28, 2010

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The IRS has posted additional FAQs on how eligible small business and exempt organizations can claim the Small Business Health Care Tax Credit.  The new health reform law gives a tax credit to certain small employers that provide health care coverage to their employees, effective with tax years beginning in 2010.  A tax-exempt employer described in Code section 501(c) that is exempt from tax under Code section 501(a) claims the refundable credit by filing a Form 990-T with an attached Form 8941 showing the calculation of the claimed credit.  For more information, click here.

Board Liability Primer

October 25, 2010

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Board Liability Primer

October 25, 2010

Authored by: Keith Kehrer

Volunteer board members often ask whether they are personally liable for the actions of the nonprofit corporation.  The short answer is generally “no” – unless of course, the board member engages in some willful misconduct that caused harm (e.g., criminal misconduct, gross negligence, reckless misconduct, or flagrant indifference to safety).  The Federal Volunteer Protection Act, along with the State law equivalents, generally protect volunteer directors of nonprofit corporations from personally liability. 

Form 990 Deadline Extended in Disaster Situations

October 22, 2010

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The IRS recently announced that Form 990 filing due dates are postponed for organizations located in declared disaster areas, including victims of recent storms in North Carolina, Wisconsin, Illinois, Iowa, Texas, Kentucky and West Virginia.  For additional information, click here.

Patience is a Virtue – And Can Also Save Money

October 19, 2010

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As we discussed in our prior blog entry, the IRS is going to introduce an online Form 1023 exemption application process called the “cyber-assistant.”  Although the IRS originally projected that the cyber-assistant would be available in 2010, the IRS announced in July that it would not meet this deadline.  Instead, the cyber-assistant is expected to be available some time in 2011.  A major advantage of the cyber-assistant will be a significant reduction in the application fee from $850 (the current fee for the paper Form 1023) to $200.  As 2010 winds down, newly formed charities may want to delay filing the Form 1023 application until the cyber-assistant is available.  Of course, a delay in filing will delay the IRS review of the Form 1023 and delay the potential receipt of a favorable determination letter.  In addition, charities that do choose to wait must be diligent to file the Form 1023 (either the paper Form or cyber-assistant) no

A Commitment to Charitable Giving and the Giving Pledge.

October 13, 2010

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Have you heard about the Giving Pledge? Forty U.S. billionaires have committed to give at least 50% of their wealth to charity. Here is the website to check it out as well as the billionaires’ personal pledge letters: givingpledge.org. The likely suspects are there: Buffett, Gates, Ellison, Turner. I’m seeing the same idea in my practice, just on a smaller scale.

I’m continually amazed at so many of our estate planning clients’ commitment to philanthropy, and these individuals aren’t necessarily the childless. Many have children, grandchildren, and actually have very strong relationships with them, not necessarily the dysfunction you might suspect when you find out a client wants to give substantially all of his or her wealth to charity, although there are occasionally those who are “disinheriting” the kids for various reasons.

Does Your Board Vote by Email?

October 10, 2010

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Does Your Board Vote by Email?

October 10, 2010

Authored by: Keith Kehrer

As email has become a primary form of communication, more and more nonprofit boards are taking action by email vote.  I personally believe email voting is an efficient method of board approval for very specific questions where little or no discussion is necessary.  Unfortunately, most states have declined to adopt specific legislation regarding email voting. 

Without a special rule, email voting likely constitutes voting by written consent.  Unlike in-person or telephonic meetings that only require a majority vote to approve a resolution, most states require a unanimous vote of all the directors in order for a written consent to be effective.

Why I don’t like “members”

Why I don’t like “members”

October 7, 2010

Authored by: Nathan Boyce

As discussed in a previous blog, in most jurisdictions a “member” is someone (other than a director or delegate) entitled to vote for directors of a nonprofit corporation; members also generally get to vote for important corporate actions, like mergers and dissolutions. Most states ask for a response on the articles of incorporation to a question like the following: does the corporation have members?

Now, whether or not you like the concept of someone with rights like “members”, it is hard to imagine a worse term of art for nonprofit corporations.

Employee Benefits Provisions of the Small Business Jobs Act of 2010

October 4, 2010

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Last week, the Small Business Jobs Act of 2010 was signed into law. While the Act mainly focuses on providing tax and other assistance to small businesses, it also includes provisions aimed at promoting retirement preparation that are not limited to small businesses. These include allowing governmental 457(b) plans to permit Roth contributions and permitting amounts deferred under section 401(k), 403(b) and 457(b) plans to be converted to designated Roth contribution accounts.  Many charities may find these provisions relevant.  Click here for a summary of these provisions.

Medium-Sized Charities – The New Form 990 Clock is Winding Down

October 2, 2010

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Just ask your friends at a larger charity, preparation of the new Form 990 for the first time is no picnic.  As we discussed in our blog post on July 5, medium-sized charities with gross receipts ≥ $200,000, or total assets ≥ $500,000 must complete the substantially re-designed Form 990 for the 2010 tax year.  In light of the fact the new Form 990 requires substantially greater information than ever before, we strongly recommend that medium-sized charities that will be filing the re-designed Form 990 for the first time become familiar with the new Form 990 now and ensure that it will be able to gather the required information.  Larger charities spent most of the summer and fall of 2008 leading up to the calendar year end to ensure they understood the new Form 990 and could gather the necessary information.  Medium-sized charities should follow this lead.

Campaign Season is Upon Us Again – 501(c)(3)s Beware

Just turn on your TV and you will be reminded by the constant smear campaigns that political campaign season is here once again.  Section 501(c)(3) organizations must be careful and resist the urge to speak their minds.  Section 501(c)(3) organizations (including churches) are strictly prohibited from engaging in political campaign activities, including making statements for or against a candidate for public office.   Unlike legislative lobbying (where a Section 501(c)(3) public charity may engage in insubstantial lobbying), any amount of political campaign activity, including the use of the organization’s assets for campaing activities, may result in loss of tax-exempt status.  Therefore, Section 501(c)(3) organizations must resist the urge to endorse or oppose candidates, or allow their assets to be used for campaign activities, even though the election of a particular candidate may have a dramatic impact on the organization’s agenda.  Watchdog groups and concerned citizens frequently file complaints with the Internal Revenue Service alleging violation of the prohibition on political campaign

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