On January 20, the IRS released its Exempt Organization Newsletter, Issue Number 2012-02. Topics include the following:

1. IRS Launches New Online Search Tool
2. IRS to Co-sponsor Conference on Nonprofit Governance
3. Academic Institution Initiative
4. Top 10 Helpful Features on the IRS Website

On January 12, the IRS released its Exempt Organization Newsletter, Issue Number 2012-1. Topics include the following:

1. Updated Procedures for Issuance of Rulings and Determinations
2. 2012 User Fees for Exempt Organizations Matters
3. More Guidance on Reporting Employer Health Care Coverage on Forms W-2
4. Renew Your Preparer Identification Number
5. Workshops for Small and Medium-Sized Exempt Organizations
6. SSA/IRS Reporter Features Informative EO Articles
7. Revised Form 2848, Power of Attorney and Declaration of Representative
8. Fact Sheet 2012-5, Choosing a Tax Preparer

On December 20, the IRS released its Exempt Organization Newsletter, Issue Number 2011-20. Topics include the following:

1. IRS Offers Tips for Year-End Contributions
2. Renew Your PTIN Now
3. Sharpen Your Record Keeping Skills

On December 16, the IRS released its Exempt Organization Newsletter, Issue Number 2011-19. Topics include the following:

1. IRS Announces Two Month Suspension of IRS Modernized e-File Operations for 990 Filers
2. IRS Reminds Hospital Organizations of 2011 Filing Requirements and Requests Additional Public Input
3. IRS Issues 2012 Optional Mileage Rates
4. Renew Your PTIN Now
5. Exempt Organizations to Offer Internships for Students Interested in Nonprofit Management
6. 2012 Workshops for Small and Medium-Sized 501(c)(3) Organizations
7. Revised Publication 557 Now Available
8. Treasury Issues Report on Supporting Organizations and Donor Advised Funds

In 2006, Congress instructed Treasury to prepare a report regarding supporting organizations (SO) and donor advised funds (DAF), including whether contributions to SOs or DAFs should be deductible and/or whether SOs and DAFs should be subject to minimum distribution requirements.   This long-awaited report was released by Treasury on December 5 and can be found by clicking here.   Based on a quick review of this 100+ page report, there are no recommendations that would seem to require additional regulation beyond those amendments made by the Pension Protection Act of 2006 – the report concludes contributions are generally deductible, and no minimum distribution requirement is necessary.  Of course, the report does not end the discussion – indeed, Senator Grassley immediately criticized the report calling it disappointing and unresponsive.  Please stay tuned for more commentary as we continue to digest this report.

Yesterday we briefly posted the news about the combination of Holme Roberts & Owen (HRO) into Bryan Cave.  The Tax-Exempt and Charitable Planning Team is particularly excited about this combination, which will add substantial depth and experience to our Team.  The following is a brief introduction to HRO’s Nonprofit Organizations and Religious Organizations Practice Teams, which will be combining with our Team effective January 1, 2012:

HRO’s longstanding Nonprofit Organizations Practice Team is organized to provide nonprofit clients with the full range of legal experience needed to use their limited resources effectively to address virtually unlimited community needs. The Practice Team is composed of lawyers who specialize in the tax and corporate laws distinct to this important sector of the community, and lawyers who practice in a wide variety of other legal areas, but who have specific knowledge of the unique nonprofit issues in their areas of expertise.

HRO represents a diverse nonprofit client base that includes major foundations, educational and cultural institutions, health care providers, and sports organizations. In addition, HRO brings a distinct expertise and substantial client base in the religious sector. HRO’s religious organization clients include:

• Compassion International
• The Navigators 
• Young Life 
• Fellowship of Christian Athletes 
• The Salvation Army – Western Territory 
• Catholic Health Initiatives Colorado 

Both Stuart Lark and John Wylie devote significant time to the religious organization client base, and they have developed substantial expertise on religious accommodations in various laws.  John has recently guided a major religious organization in a restructure of its international operations, including the formation of two offshore trusts.  And Stuart is currently representing in the Colorado Court of Appeals two large religious organizations which are challenging the position of government agencies that their activities are not sufficiently religious to merit sales and property tax exemptions. 

We are delighted to announce the combination of Holme Roberts & Owen LLP into Bryan Cave LLP, effective January 1, 2012.

Please click here for more information.

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…)

When a taxpayer makes a charitable donation, he or she must maintain adequate records.  Without such records, the taxpayer is not entitled to a charitable deduction under Section 170 of the Internal Revenue Code.  This situation occurred in Joyce A. Linzy v. Commissioner because the taxpayer, who ironically owned and operated an income tax return preparation business, was unable to provide proper records.

The taxpayer made charitable contributions to Church 1 and Church 2 in 2007.  The contributions to Church 1 totaled $7,500 and were acknowledged by both a letter dated January 1, 2010 and copies of checks, all for amounts greater than $250.  The contributions to Church 2 were evidenced by a tithing statement dated January 1, 2010 which acknowledged that the taxpayer donated a total of $2,255 and included several copies of checks, some of which were for amounts less than $250.

For cash donations less than $250, a canceled check, a receipt or other reliable evidence is considered an adequate record.  To be reliable, the other evidence must show the name of the donee, the date of the contribution and the amount of the contribution.  However, for contributions of cash of $250 or more, the donor must obtain a contemporaneous written acknowledgement of the donation from the donee.   This acknowledgement must, at a minimum, contain a description of the contribution, a statement about whether any goods or services were provided in consideration and a good faith estimate of the value of any such goods or services.  Critical for the taxpayer in the above case, the acknowledgement must be obtained on or before the earlier of: (1) the date on which taxpayer files a return for the taxable year in which the contribution was made; or (2) the due date for filing such return. 

Thus, unfortunately for the taxpayer, the contributions made to Church 1 were not deductible because the letter did not state whether goods or services were received as consideration and it was not received by the proper date. As for the contributions to Church 2, the tithing statement is sufficient evidence for those donations under $250 but does not work for those over $250 because it was also received two years after the appropriate date.

As we discussed in our Janaury 18, 2011 post, credit counseling and down payment assistance organizations are subject to special scrutiny by the IRS.  The IRS recently issued “Frequently Asked Questions” regarding credit counseling organizations, including factors the IRS considers to determine whether such organizations qualify under Section 501(c)(3).   This information is useful for new organizations as well as existing organizations to confirm the organization continues to operate within the IRS guidelines.