On October 21, the IRS released its Exempt Organization Newsletter, Issue Number 2011-17. Topics include the following:

1. Tax-Exempt Organizations Participating in the Medicare Shared Savings Program through Accountable Care Organizations
2. Earn CPE Credits at Nationwide Tax Forums Online
3. IRS Issues Guidance on Inflation Adjustments for 2012
4. Register Now for Fall Workshops for Small and Medium-Sized 501(c)(3) Organizations

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In a recent decision, the Tax Court granted the IRS’s motion for partial summary judgement on the basis that the taxpayer’s appraisal for a non-cash charitable contribution did not satisfy the “qualified appraisal” rules.  Friedberg v. Comm., TC Memo 2011-238 (Oct 3, 2011).  Section 170(f)(11)(C) of the Code denies a charitable deduction for non-cash contributions in excess of $5,000 unless the taxpayer-donor obtains a qualified appraisal of the property and attaches to its return for the tax year of the contribution the information about the property and the appraisal as the IRS requires.   Unfortunately, denial of a charitable deduction for a contribution of valuable property to a charity for failure to satisfy the qualified appraisal and other IRS donation substantiation rules is a common occurrence. 

There are numerous cases and rulings denying the charitable deduction for failure to precisely comply with the IRS substantiation rules, including the qualified appraisal rules.   These cases may seem unfair to individual taxpayers, who are often not represented by a tax professional.  However, these rules were adopted to protect against over-inflated deductions and other abuses.  Therefore, it is critical to carefully follow these rules.

On October 4, the IRS released its Exempt Organization Newsletter, Issue Number 2011-16. Topics include the following:

1. Webinar: Reporting Employer Health Care Coverage on Form W-2
2. New Voluntary Worker Classification Settlement Program
3. Western Conference on Tax-Exempt Organizations
4. Register Now for Workshops for Small and Medium-Sized 501(c)(3) Organizations
5. Political Organization Filing System Unavailable October 8-10
6. Reminder: Renew PTINs Beginning October 15
7. New Guidance on Church Plan Determination Letter Requests

Click here to review IRS Newsletter Issue 2011-16.

Economic development organizations may be exempt if the assistance they provide is “targeted (1) to aid an economically depressed or blighted area; (2) to benefit a disadvantaged group, such as minorities, the unemployed or underemployed; and (3) to aid businesses that have actually experienced difficulty in obtaining conventional financing (a) because of the deteriorated nature of the area in which they were or would be located or (b) because of their minority composition, or to aid businesses that would locate or remain in the economically depressed or blighted area and provide jobs and training to the unemployed or underemployed from such area only if the economic development corporation’s assistance was available.” 1992 EO CPE Text G. Economic Development Corporations.

This basis for exemption seems to be often misunderstood–many organizations seek exemption on the grounds that (more…)