Nonprofit Management & Leadership Program

The following is a program that may be of interest to your organization and its leadership

What’s a Bylaw? Why Does My Organization Need Them and How do I Draft Them?

May 29 | 2-5 p.m. | $25

Instructors: Dan Sise, Nonprofit Management & Leadership Program | Laurie Hauber, Legal Services of Eastern Missouri Are you trying to draft bylaws for a nonprofit corporation? Does your nonprofit already have a set of bylaws that could use a review or overhaul? Do you want to learn more about how a well-crafted set of bylaws can lead to good governance and management of your nonprofit? If you answered yes to any of these questions, then you should attend this class. Samples and examples will be provided during class as will a list of helpful sources of information that will guide your organization towards an effective and well-crafted set of bylaws.

Register online

For additional information about this class, and all the continuing education classes offered by the Nonprofit Management & Leadership Program, please check out our web site.


A Positive View on the Impact of the Fiscal Cliff Tax Act

In our January 4 post, we summarized an article where the author presented the viewpoint that the American Taxpayer Relief Act of 2012 could have a negative impact on charitable giving in light of the reinstatement of a limitation on itemized deductions.   The Urban Institute Center on Nonprofits and Philanthropy has released an article “What Does the Fiscal Cliff Deal Mean for Nonprofits” (January 2013), where the authors (Joseph Rosenberg, C. Eugene Steurle, and Katherine Toran) take a different view, providing “[t]he major individual income tax provisions are estimated to increase giving by $3.3 billion or 1.3 percent, relative to 2012 law, mainly because of the increase in the top marginal tax rate.”  The article goes on to explain that the impact of the limitation on itemized deductions “has negligible effects on the tax incentive for charitable giving.”  The full article may be obtained by clicking here.



IRS Updates Retirement Plan Correction Program (Including Plans for Charities)

From BenefitsBryanCave.com

After a long wait, an updated Revenue Procedure for the Employee Plans Compliance Resolution System (EPCRS) was released in the form of Rev. Proc. 2013-12.  The new Revenue Procedure makes some important changes to the EPCRS.

As many plan sponsors know, the EPCRS includes the self-correction program (SCP), which requires prescribed corrections but does not require submission to the IRS; the voluntary correction program (VCP), which requires both prescribed corrections and submission to and approval by the IRS; and correction of problems discovered on audit (Audit CAP).

The purpose of the updated Revenue Procedure is to improve some features of the EPCRS and clarify others, based in large part on comments from the employee benefits community.  The IRS expects to make more changes of this type in the future, also based on comments from the employee benefits community.  Generally speaking, the IRS was responsive to many of the concerns raised by the employee benefits community and addressed them in a helpful manner in the revised EPCRS.

The biggest news is that 403(b) plans, are now eligible for EPCRS.  In particular, 403(b) plan sponsors can now use VCP to correct failure to adopt a written 403(b) plan on time.

Correction procedures are also provided on an experimental basis for 457(b) plans, primarily for governmental 457(b) plans, in a new program separate from the EPCRS.

Other new or revised procedures in the EPCRS include:

  • § SCP correction of recurring excess annual additions under Section 415(c) of the Internal Revenue Code in plans with elective deferrals and non-elective non-matching employer contributions.
  • § Correction of ADP and ACP test failures.
  • § Correction of matching contributions and improper exclusions from safe harbor plans.  (Including, in some circumstances, the ability to make corrective matching contributions subject to vesting.)
  • § Correction of mistakes and other problems that occur in administering distributions from single-employer defined benefit plans subject to Section 436 of the Code.
  • § Correction of overpayments from defined benefit and defined contribution plans.  Additionally, in some cases, if a participant fails to repay the amount of an overpayment from a defined contribution plan, the plan sponsor does not have to make the plan whole.
  • § Procedures for trying to locate lost plan participants.  (Which needed to be updated after the IRS closed its letter-forwarding program for VCP applications, as we previously discussed.)
  • § Revamped forms and procedures for VCP applications, including two new mandatory VCP forms, Forms 8950 and 8951, that are currently only available in draft form from the IRS.
  • § Reduced fees for late plan amendments discovered in the determination letter process.

The IRS also requested comments on the potential for EPCRS revisions to address additional topics, such as:

  • § Administrative errors in implementing Roth contribution elections.
  • § Administrative errors in implementing automatic deferral elections under 401(k) plans.

The effective date of the new rules is April 1, 2013, but plan sponsors can elect to apply them any time after December 31, 2012.

What do you think is the most helpful change made by the new EPCRS?

Related Links

Revenue Procedure 2013-12

Brief IRS Summary of Changes Made by Rev. Proc. 2013-12

IRS 14-Page Summary of Changes Made by Rev. Proc 2013-12

IRS Topical Index of Rev. Proc. 2013-12

IRS Webpage on Correcting Plan Errors


Could theTax Relief Act Hurt Charitable Giving?

Effective December 31, 2012, Congress passed The American Tax Relief Act of 2012 (the “Act”) to avoid the fiscal cliff and President Obama is expected to sign the bill into law.  The full text may be obtained by clicking here.  In a Chronicle of Philanthropy article (which may be obtained by clicking here), Doug Donovan writes that the Act may hurt charitable giving in light of the fact the Act “reinstates a provision eliminated in 2010 that reduces itemized deductions by 3 percent of the amount that household income exceeds $300,000.”  Mr. Donovan goes on to explain that “[w]rite-offs grow more limited the more taxable income a person has and could reduce the value of deductions by up to 80 percent for the highest-income taxpayers, according to the Tax Policy Center.”

Although it is too soon to gauge the actual impact of the Act, on its face such a provision would arguably have a negative impact on charitable giving.  However, exactly how significant the negative impact depends on several factors, including the importance of the income tax deduction to donors impacted by the provision, as well as the relative amount donated to charity by such impacted donors vs. all other donors.  To the extent charitable giving increased in 2010-2012 due to the elimination of the 3 percent reduction rule for itemized deductions for such donors, such a fact would arguably support the conclusion that charitable giving will now decline.  However, it may be difficult to gather such data in light of the economy in 2010-2012.  Regardless, we will continue to monitor and report as we see new developments.


IRS Offers Tax Tips for “The Season of Giving”

December is traditionally a month for giving generously to charities, friends and family. But it’s also a time that can have a major impact on the tax return you’ll file in the New Year.  In its Special Edition Tax Tips, a copy of which may be obtained by clicking here, the IRS offers tips regarding charity donations before year end.


Call Me Ishmael

I have heard it said by boat owners that the second best day in your life is the day you buy your boat.  The best day is the day you sell your boat.  Having never owned a boat, my boat experience consists of falling when trying to ski, falling when trying to wakeboard and reading Moby Dick. I asked my wife what she thought about boats and I (literally) got these responses:

(1) Sailor hats look dorky.
(2) Why can’t they just say ”right” and “left”?



Donor Advised Funds Scrutinized by the Treasury Department

At the request of Congress, the Department of Treasury recently issued a report on donor advised funds. Among other things, Congress had asked the Department of Treasury whether donations to a donor advised fund should be tax-deductible, whether such donations should be treated as donations to a public charity, and whether donor-advised funds should have a minimum distribution requirement. The Department of Treasury answered “yes” to the first two questions and “no” to the third, maintaining the status quo.

The full report can be read here: http://www.treasury.gov/resource-center/tax-policy/documents/supporting-organizations-and-donor-advised-funds-12-5-11.pdf.


LLCs and the Charitable Deduction

Under the so-called “check the box regulations” a single member limited liability company (“SMLLC”) is disregarded for federal income tax purposes unless it elects to be taxed as a corporation.  Therefore, where a Section 501(c)(3) organization establishes a SMLLC that does not seek Section 501(c)(3) status or otherwise elect to be taxed as a corporation, the SMLLC is treated as a division of the 501(c)(3) organization for federal income tax purposes.   Strangely, the IRS has declined to rule whether a donation to a SMLLC qualifies as a deductible charitable contribution made to or for the use of a Section 501(c)(3) organization for purposes of Section 170.  The New York State Bar Association recently sent a report to the Treasury and the IRS in support of the position that contributions to such SMLLCs should be eligible for the charitable deduction.   I also believe that this is the appropriate treatment for federal income tax purposes and hope the IRS will be prompted to issue formal guidance soon and finally put this important issue to rest.


IRS Guidance for Gifts of Conservation Easements

The IRS recently issued an Audit Technique Guide to provide guidance to IRS agents for the examination of charitable contributions of conservation easements.  The Guide incliudes a discussion of the general requirements for charitable contributions and additional requirements for contributions of conservation easements.  The Guide provides a good overview for advisors and donors exploring a possible contribution of a conversation easement.


Keep the change, ya filthy animal!

In Home Alone 2, the villains from the first movie have inexplicably broken out of jail and end up in New York. Daniel Stern’s character, Marv, wraps his glove in tape, dips it in a holiday donation receptacle manned by a Santa Claus, and pulls it out covered with coins. 

Harry: That’s very smart, Marv. You bust outta jail to rob 14 cents from a Santa Claus?

Marv: Every little bit helps. Besides, now we’ve got our new nicknames: We’re the Sticky Bandits!

At this point in the movie, only the most prescient (more…)

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