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Defining Church

July 26, 2011

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Defining Church

July 26, 2011

Authored by: Nathan Boyce

In a previous blog , I described the revocation of church status of the Foundation for Human Understanding.  In that case, the Federal Circuit Court of Appeals  discussed three different tests to determine church status.  These tests (naturally) intrigued me so gave up playing angry birds for three days to dedicate myself to researching all of the cases I could find that determine church status.  I determined that all of the different approaches that have been used to determined if an organization is a church (and there are more than 3) could all fit under one of the tests–the approach set forth in the 1980 District Court case: American Guidance Foundation, Inc. v. U.S.  In short, the test requires examining 14 Factors established by the IRS and requires at a minimum that the organization have “a body of believers

IRS Exempt Organization Newsletter 2011-12

July 19, 2011

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On July 7, the IRS released its Exempt Organization Newsletter, Issue Number 2011-12.  Topics include the following:

  • Notice and Request for Comments Regarding the Community Health Needs Assessment Requirements for Tax-Exempt Hospitals
  • Report of the Advisory Committee on Tax-Exempt and Government Entities
  • New YouTube Video: How to Get Your Tax-Exempt Status Back
  • New Directive on Booster Clubs and Non-Exempt Activity
  • Summer SSA/IRS Reporter
  • New IRS Webinar Recordings
  • Save the Date:  NASCO Annual Conference Scheduled for October 3, 2011
  • Register Now for Nationwide Tax Forums
  • Click here to review IRS Newsletter Issue 2011-12.

     

    IRS Exempt Organization Newsletter 2011-11

    July 15, 2011

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    On June 13, the IRS released its Exempt Organization Newsletter, Issue Number 2011-11.  Topics include the following:

  • IRS Names New Members to Advisory Committee on Tax-Exempt and Government Entities — Public Meeting to be Held June 15
  • Report of Foreign Bank and Financial Accounts (FBAR) Due June 30
  • Guidance for Organizations Automatically Revoked for Failure to File Annual Return or Notice for Three Consecutive Years and Contributors
  • Return Preparer Office Now on Facebook
  • Click here to review IRS Newsletter Issue 2011-11.

    IRS Healthcare GuideWire – Notice 2011-52

    Notice 2011-52 describes regulatory provisions that Treasury and the IRS intend to propose regarding the community health needs assessment (CHNA) requirements applicable to charitable hospital organizations under the Patient Protection and Affordable Care Act of 2010. The notice describes how hospital organizations can document a CHNA in a written report, make the CHNA widely available to the public and adopt an implementation strategy to meet the health needs identified through the CHNA.

    Gift Tax and 501(c)(4)s

    July 10, 2011

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    Gift Tax and 501(c)(4)s

    July 10, 2011

    Authored by: Keith Kehrer

    For decades there has been a risk and concern whether the IRS would seek to apply the gift tax to contributions made to a Section 501(c)(4) social welfare organization.  In May the IRS confirmed that it had sent letters to five donors who had not filed gift tax returns in connection with a contribution to a Section 501(c)(4) in order to determine if returns should have been filed and if the gifts were taxable.  Obviously, the impact of taxing contributions to Section 501(c)(4) organizations is substantial and arguably represents a deviation from “industry” practice. 

    On July 7, the IRS Deputy Commissioner for Services and Enforcement announced that any current audits should be closed and that his office will be coordinating with the Office of Chief Counsel to determine whether there is a need for further guidance in this area.  Click here to read his full statement.  The IRS website was also

    The Private Benefit of Social Networking

    The so-called “private benefit doctrine” prohibits 501(c)(3) organizations from providing a “substantial” benefit to private parties. Much has been said and written about what constitutes a substantial benefit; for purposes of this blog, I will simply provide an example to illustrate the point. An organization that presents musical performances, for example, may generally qualify under 501(c)(3). But if it (i) pays its performers twice fair market value, (ii) arranges for all performers to sign a subsequent contract with a for-profit arts company or (iii) if it only performs for one wealthy family, then it would violate the private benefit doctrine by providing a prohibited substantial benefit to (i) the actors, (ii) the for-profit company or (iii) the wealthy family.

    In PLR 201125045, the organization’s mission was to “foster intercultural understanding to the world through cultural exchange” and it sought 501(c)(3) status on the basis that it furthers an educational purpose through

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