On May 16, the IRS released its Exempt Organization Newsletter, Issue Number 2012-09. Topics include the following:

1. EO redesigns homepage on IRS.gov
2. Holly Paz named Director, EO R&A
3. May 30 EO webinar: Starting and Operating Charities for Disaster Relief
4. IRS seeks applications for Volunteer Income Tax Assistance Program grants
5. Information for employers on health care benefits reporting
6. News for enrolled agents awaiting renewal cards
7. Telephone Excise Tax refund deadline July 27
8. TEB to host two free telephone forums

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How would your board of directors react if it discovered potential wrong doing?  The answer to this question is critical.  Recently, Robert Carlson, the Missouri Assistant Attorney General who oversees charity enforcement in Missouri, indicated that a board’s quick action to address an issue, such as a potential breach of fiduciary duty or misuse of charity assets, may keep the board of directors and/or charity from being sued by the Attorney General’s office.  Such a reaction includes a proper investigation of warning signs.  The IRS has similarly provided that a board’s reaction will be a key factor in determining whether the IRS will seek revocation of exempt status in instances involving private inurement, including whether the board has corrected the current situation (which may include firing and suing the offending party) and put safeguards in place to prevent future problems before the IRS gets involved.   See Treas. Reg. 1.501(c)(3)-1(f).  While it is not possible to prevent all acts of wrongdoing, the manner in which a board reacts when potential wrong-doing is discovered is critical to (i)demonstrate that the board has satisfied its fiduciary duties, (ii) protect the charity and board from potential lawsuit, and (iii) maintain tax-exempt status.

On April 19, the IRS released its Exempt Organization Newsletter, Issue Number 2012-08. Topics include the following:

1. Reminder: Don’t Include Social Security Numbers on Publicly Disclosed Forms
2. Verifying Exempt Status for Reinstated Organizations
3. Proposed Rules on Program-Related Investments
4. EO Director Speaks at Georgetown Law CLE
5. Guidance on Form 990 and 990-EZ Reporting of Joint Ventures and Other Partnerships
6. Tax Forums Offer Good Information for Exempt Organizations
7. Register for Upcoming Workshops for Small and Medium-sized 501(c)(3)s in Nebraska
8. Free Webinars on Identity Theft/Online Fraud and Ethics

On March 26, the IRS released its Exempt Organization Newsletter, Issue Number 2012-07. Topics include the following:

1. Reporting Partnership Interests using Form 1065/Schedule K-1 Optional for Tax Year 2011
2. IRS Releases FY 2011 Data Book
3. IRS Revises Publication 1771
4. IRS Issues Final Regulations on Public Inspection of EO Material
5. Register for Upcoming Workshops for Small and Medium-sized 501(c)(3)s
6. YouTube: Work Opportunity Tax Credit
7. Deducting Charitable Contributions: Eight Essentials

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On March 14, the IRS released its Exempt Organization Newsletter, Issue Number 2012-06. Topics include the following:

1. Reliance for Contributors and Grantors
2. Removing an Organization from the Auto-Revocation List
3. Select Check Data Alerts
4. IRS Encourages Employers to Check Out the Small Business Health Care Tax Credit
5. IRS and Treasury Invite Recommendations for 2012-13 Guidance Priority List
6. Winter 2012 Statistics of Income Bulletin Features Exempt Organizations Topics
7. Check Out the IRS YouTube Channel
8. IRS to Co-Sponsor Conference on Nonprofit Governance

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On March 7, the IRS released its Exempt Organization Newsletter, Issue Number 2012-05. Topics include the following:

1. Tax Year 2011 990 Series Returns Now Available
2. Register for Upcoming Workshops for Small and Medium-sized 501(c)(3)s
3. Payroll Tax Cut Extended: Revised Payroll Tax Form Now Available
4. EO’s 2012 Summer Internship Application Deadline Extended
5. Dirty Dozen Tax Scams for 2012
6. Disaster Relief Resources for Charities and Contributors

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On February 28, the IRS issued final regulations amending sections 301.6104(a)-1(i) and 301.6110-1(a) to expressly allow public inspection of letter rulings denying or revoking an organization’s tax exempt status. The amendments are in response to Tax Analysts v. IRS, 350 F.2d 100 (D.C. Cir. 2003), in which the court held that including denials and revocations of tax exempt status “within the ambit of section 6104″ and, thus, preventing disclosure, violated the plain language of section 6110. The final regulations are published in T.D. 9581, which can be read in full here.

On February 8, the IRS released its Exempt Organization Newsletter, Issue Number 2012-04. Topics include the following:

1. Work Opportunity Tax Credit Now Available to Qualified Tax-Exempt Organizations that Hire Qualified Veterans
2. IRS Worker Classification Webinar Feb. 15th
3. StayExempt Redesign Improves User Experience

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On February 8, the IRS released its Exempt Organization Newsletter, Issue Number 2012-03. Topics include the following:

1. EO Releases FY 2011 Annual Report and FY 2012 Work Plan
2. Guidance on Requirements for Tax-Exempt 501(c)(29) Qualified Non-Profit Health Insurers
3. EO’s 2012 Graduate Student Summer Internship Applications Due March 2
4. EO Seeks Academic Hosts for Workshops for Small and Medium-Sized 501(c)(3) Organizations

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As we pointed out in our Oct. 19, 2010 entry, it might have been worthwhile to delay filing a new Form 1023 until the IRS launched its “Cyber Assistant” online version which enabled online filing at a substantreduced fee. However, buried in Internal Revenue Bulletin 2011-1 is the following statement:

“… the Service does not expect Cyber Assistant (a Web-based software program designed to assist organizations in preparing their application for recognition of exemption under § 501(c)(3) of the Internal Revenue Code (Form 1023)) to become available in 2011.”

Therefore, if you were waiting to file a Form 1023 until this service was available, you might consider proceeding with the paper version, even at the higher fee. Generally, an organization has 27 months from the date of formation to file the Form 1023, and if the tax exempt status is approved by the IRS, the organization will be deemed to be tax-exempt since the formation date (and donations to the organization since the formation date will generally be deductible to the donors).