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.

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

 1.  Work Opportunity Tax Credit Now Available to Qualified Tax-Exempt Organizations that Hire Qualified Veterans

The VOW to Hire Heroes Act of 2011 provides an expanded Work Opportunity Tax Credit (WOTC) to businesses that hire eligible unemployed veterans and for the first time also makes the credit available to certain tax-exempt organizations.
The Act allows employers, including qualified tax-exempt organizations, to claim the credit for qualified veterans who begin work on or after Nov. 22, 2011, and before January 1, 2013.
The credit is claimed as a credit against the employer’s share of social security tax by separately filing Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans.
IRS Notice 2012-13 contains additional guidance for tax-exempt employers claiming the credit.
Note: For purposes of the credit, a qualified tax-exempt organization is “an employer that is an organization described in section 501(c) and exempt from taxation under section 501(a).”
For more information, including how to claim the credit, read the IRS news release and related materials (including FAQs).

 2.  IRS Worker Classification Webinar Feb. 15th

A critical issue for all businesses is properly classifying workers as employees or independent contractors.

The Internal Revenue Service presents a webinar, Worker Classification, on Wednesday, February 15, 2012 at 2 p.m. ET.

Program Manager for Employment Tax Compliance Policy, Anita Bartels, will present information about worker classification issues and the Voluntary Classification Settlement Program including:

• Defining workers as employees and independent contractors
• What to consider in determining a worker’s status
• Looking at important Forms SS-8 and 8919
• How to treat corporate officers
• Determining if you qualify for federal employment tax relief under Section 530

Viewers can register online anytime before the start of the webinar and download a calendar reminder.

A Certificate of Competition will not be offered for this webinar.

The webinar will be available on demand on the IRS Video Portal three weeks after the original program airs. Also as a part of its outreach delivery suite, IRS offers National/Local Webinars for Small Businesses and video and audio presentations on a variety of tax topics, all of which are free.

 3.  StayExempt Redesign Improves User Experience

The IRS recently launched a new look and improved navigation for its educational website for exempt organizations, StayExempt. The redesigned home page greets visitors with three easy gateways to the information they’re looking for. A “New Organizations” tab leads to information on how to apply for tax exemption as well as a shortcut to the valuable “Life Cycle of an Exempt Organization” page. Organizations that wish to apply for tax-exempt status also will find links to information about Form 1023, Application for Recognition of Exemption. An “Existing Organizations” tab is the door to such topics as “Maintaining Your Tax-Exempt Status,” “Unrelated Business Income,” “Employment Issues,” “Form 990″ and “Required Disclosures.” For a greater level of detail, click on the In-Depth Topics tab. Here, users will find presentations on how to navigate various IRS resources, information on political campaigns and charities, deductible contributions, preparing the Form 990 and Form 990-EZ, and various courses on disaster relief efforts. Stay tuned to StayExempt.irs.gov throughout the year for additional courses and interactive workshops. This website was designed for all tax-exempt organizations, so user suggestions and comments are encouraged. Simply use the survey/evaluation links at the end of each course to tell the IRS what you’d like to see.

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

1. EO Releases FY 2011 Annual Report and FY 2012 Work Plan

EO has posted its FY 2011 Annual Report and FY 2012 Work Plan on irs.gov/charities. This document provides a snapshot of EO’s accomplishments from the past year and profiles projects planned for the current year.

FY 2012 highlights include:

• Launch of Select Check, a new application that consolidates three separate charities search pages into a single entry point on IRS.gov
• Development of risk models to guide compliance using 990 information
• Final stage of EO’s 3-year research project that will correlate taxpayer preferences and EO’s outreach
• A questionnaire to learn more about group exemptions

2. Guidance on Requirements for Tax-Exempt 501(c)(29) Qualified Non-Profit Health Insurers

The Affordable Care Act requires the Department of Health and Human Services (HHS) to establish the Consumer Operated and Oriented Plan program (CO-OP program). It also provides for tax exemption for recipients of CO-OP program grants and loans that meet additional requirements under section 501(c)(29).

Revenue Procedure 2012-11, issued in conjunction with temporary regulations and a notice of proposed rulemaking, sets out the procedures for issuing determination letters and rulings on the exempt status of organizations applying for recognition of exemption under 501(c)(29).

3. EO’s 2012 Graduate Student Summer Internship Applications Due March 2

IRS Exempt Organizations is recruiting graduate students for its 2012 summer internship program. This unpaid opportunity gives participants the chance to enhance their understanding of how EO works and increase their knowledge of the Federal tax code.

Detailed information about the internship, including the application form, can be found on the AII page on IRS.gov. All completed forms should be emailed to tege.eo.ceo@irs.gov or faxed to 202-283-9848 in care of Pilar Jarrin no later than Friday, March 2.

4. EO Seeks Academic Hosts for Workshops for Small and Medium-Sized 501(c)(3) Organizations

EO Customer Education & Outreach is seeking academic partners to host workshops for small and medium-sized nonprofit organizations for the second half of the 2012 fiscal year (June-September 2012).

If you are interested, please contact Pilar Jarrin at pilar.jarrin@irs.gov or 202-283-8946.

Dates and Locations for Upcoming Workshops

Each one-day workshop, presented by experienced Exempt Organizations specialists, will explain what 501(c)(3) organizations must do to keep their tax-exempt status and comply with tax obligations.

This popular introductory workshop is designed especially for administrators or volunteers who are responsible for an organization’s tax compliance as well as those interested in careers in the nonprofit sector.

To register, click on the city of your choice. Registration is now available for the following workshop locations:

• Bloomington IN (February 28) and Indianapolis, IN (February 29) hosted by the Indiana University – Bloomington School of Public and Environmental Affairs and the Center on Philanthropy at Indiana University
• South Orange, NJ (March 14) hosted by Seton Hall University
• Glassboro, NJ (March 15) hosted by Rowan University
• San Diego, CA (April 24), hosted by University of San Diego – Nonprofit Leadership & Management Program
• San Francisco, CA (April 26), hosted by San Francisco State University – Nonprofit Management Certificate Program

For a description of the workshop, as well as a current schedule of dates/locations, go to Calendar of Events.

“… 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).

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

1. IRS Launches New Online Search Tool

The IRS today launched a new online search tool, Exempt Organizations Select Check, to help users more easily find information about tax-exempt organizations. Users can now go to one location on IRS.gov to search for:

• Organizations eligible to receive tax-deductible contributions (formerly listed in electronic Publication 78). Users may rely on this list in determining deductibility of contributions, just as they did with Pub. 78
• Organizations whose federal tax exemption automatically revoked for not filing a Form 990-series return or notice for three consecutive years (Auto-Revocation List)
• Form 990-N (e-Postcard) filers and their submissions

EO Select Check offers improved search options. Users can now look for organizations eligible to receive deductible charitable organizations (Pub. 78 data) by Employer Identification Number (EIN), which wasn’t possible previously. And this data is now updated monthly instead of quarterly.

In addition, the Auto-Revocation List may now be searched by EIN, name, city, state, ZIP code, country, exemption type, and revocation posting date, rather than only by state.

The EO Select Check site also contains search tips that offer suggestions on how to use the search application.

2. IRS to Co-sponsor Conference on Nonprofit Governance

The IRS, Georgetown Law School and Independent Sector will co-sponsor a program on Nonprofit Governance: Empowering Board Leadership on Wednesday, April 18, 2012 at the Georgetown Law Center. Find more information and register online today.

Back to Top

3. Academic Institution Initiative

IRS Exempt Organizations (EO) plans to recruit several graduate students for unpaid internships this summer as part of its Academic Institution Initiative (AII). The program offers students the opportunity to enhance their knowledge of how EO works and become familiar with the federal tax code. Detailed information about the initiative, as well as the intern application and fact sheet, can be found on the AII page on IRS.gov. All completed forms should be emailed to tege.eo.ceo@irs.gov or faxed to 202-283-9848, to the attention of Pilar Jarrin no later than Friday, March 2.

4. Top 10 Helpful Features on the IRS Website

Find the tax information you need 24 hours a day, seven days a week. All you need is a computer and Internet access because the IRS website has a wealth of free information and online tax support. Read the top 10 reasons to visit IRS.gov.

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

Watchdog groups have been calling on the IRS to investigate many of the high profile organizations behind the ads, questioning whether these organizations should maintain their status as a Section 501(c) organization in light of what they would argue is substantial political activity.  As things heat up for the 2012 election year, I anticipate even more political ads sponsored by Section 501(c) organizaitons.  I also anticipate that there will be even more IRS scrutiny and resources devoted to compliance.  In order to protect tax-exempt status, any Section 501(c)(4) and Section 501(c)(6) organization that engages in political campaign activities should be cautious to maintain sufficient sufficient records to demonstrate that their primary activities are not political campaign activities.  This includes a proper allocation of expenses among the organization’s activities, such as overhead.

My suburban St. Louis, of course, does not have a monopoly on garage sales. In PLR 201149033, the IRS retroactively revoked the 501(c)(3) status of an organization that provided “therapeutic [horseback] riding lessons to disabled and at risk children and adults.” When times got tough, the organization sold off horses and other equine assets, including a “month-long garage sale”, but the proceeds did not end up in the organization’s account. Rather, the proceeds were given to its directors. Section 501(c)(3) and Reg. 1.501(c)(3)-1(c) provide that an organization will not qualify under section 501(c)(3) if more than an insubstantial part of its activities is not in furtherance of an exempt purpose. And it will not qualify if its earnings inure to its insiders. The organization in PLR 201149033 violated these provisions because its earnings inured to its directors and because its only activity for over a year was selling assets.

I hope PLR 201149033 does not discourage charities from holding garage sales (they just should give the money to the charity rather than its directors and keep conducting its charitable activities). I would love it. Imagine how long a baby could play with the wrapping paper around a real life saddle, a bucket of oats, or a Shetland Pony.