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IRS to Review Group Ruling Holders

October 28, 2012

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IRS to Review Group Ruling Holders

October 28, 2012

Authored by: Keith Kehrer

The IRS released a notice that it has randomly selected more than 2,000 “parent” entities holding a group exemption ruling to answer additional questions regarding the relationships between the parent organization and its subordinate organizations.   According to the IRS website, the IRS would like to better understand the relationship between central or parent organizations of group rulings and their subordinates, and learn how they satisfy their exemption and filing requirements.  I estimate that there are fewer than 5,000 entities with a group ruling letter. Therefore, it is important that all parent organizations with a group ruling letter proactively confirm that their relationships are firmly within the IRS established precedents.   Similar to other areas where the IRS has engaged in compliance fact gathering, including compensation procedures and compliance with the community benefit standard, I also believe there is going to be additional audit and IRS activity in this area.  Click here

IRS Confirms Review of 3,377 Hospitals for Community Benefit Compliance

We understand that an IRS official today confirmed that the IRS  has identified 3,377 tax-exempt hospitals whose community benefit activities will be reviewed to determine if they are meeting the community benefit standard necessary for tax exemption.  We understand that these reviews began as early as April 2011 following enactment of the Affordable Care Act and that the reviews will be conducted in several waves, with each hospital being looked at in one of three annual phases.  The hospitals will not be notified by the IRS that they are being reviewed, and will not know when the reviews begin or end.

IRS Exempt Organization Newsletter 2012-17

October 15, 2012

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On October 15, the IRS released its Exempt Organization Newsletter, Issue Number 2012-17. Topics include the following:

  • Shulman to Finish His Term as IRS Commissioner on Nov. 9
  • EO launches Group Rulings Questionnaire
  • Heads Up! Keeping Current on Exempt Organizations
  • Register for Upcoming Workshops for Small and Medium-Sized Charities in Virginia
  • SOI Tax Stats: Domestic Private Foundations and Charitable Trust Statistics
  • IRS Seeks Applicants for Advisory Committee on Tax Exempt and Government Entities
  • Renew your PTIN
  • Authorizations: When to use the CheckBox, Form 8821 or Form 2848

Proposed Regulations Regarding Foreign Grants

October 1, 2012

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When a private foundation makes a grant to a foreign organization, special rules apply.   For example, grants for charitable purposes to foreign organizations generally may be treated as a qualifying distribution and not a taxable expenditure if the private foundation makes a good faith determination that the foreign organization is the equivalent of a public charity.  Currently,  a determination is considered as made in good faith if it is based on an affidavit of the foreign organization or an opinion of counsel.  The proposed regulations modify this rule to identify a broader class of tax practitioners upon whose written advice a private foundation may base a good faith determination to include a “qualified tax practitioner”; defined as an attorney, a certified public accountant (“CPA”), or an enrolled agent.

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