For an overview regarding the basics of lifetime CLTs, see A Primer on Lifetime Charitable Lead Trusts.

Law Week Colorado

Organizations that are exempt under Section 501(c)(3) of the Internal Revenue Code may not participate or intervene in “any political campaign on behalf of (or in opposition to) any candidate for public office.” IRC 501(c)(3).[1]  This rule applies to all 501(c)(3) organizations—including 501(c)(3) churches.  Yet, just about every election there are accusations that this or that church has violated the rule by its minister preaching support for a candidate from the pulpit.

Pulpit Freedom Sunday

The elections in 2012 were no exception.  But some churches, rather than covertly violating this rule, openly do so.  Since 2008, a religious freedom organization has organized “Pulpit Freedom Sunday” at which religious leaders deliberately break The rules.  According to one report of this event, the position of the churches is that the IRS rule violates their First Amendment right to free speech.  Their plan is to record and send their rule-breaking sermons to the IRS and, when the IRS revokes their exempt status, seek court relief on the grounds that the law against political participation is unconstitutional.[2]  Some 1,500 pastors participated in the October 2012 Pulpit Freedom Sunday.

According to information presently available, there has been no IRS response to Pulpit Freedom Sunday.  This is surprising considering that the churches’ position has already been litigated several times in the past.[3]  In short, the response of the courts and the IRS is that tax exemption is a privilege–a conditional privilege.  And it is not a violation of the First Amendment for Congress to refuse to subsidize first Amendment activities.  In other words, if you really want to promote a candidate, you may do so–just not as a 501(c)(3).

Freedom From Religion Foundation

On November 14, 2012, the Freedom From Religion Foundation filed a lawsuit in the U.S. District Court for the Western District of Wisconsin to enjoin the IRS’ non-enforcement of campaign restrictions against churches and religious organizations.  The basis for the Freedom From Religion Foundation’s standing to bring the claim—that it is discriminated against because, as a non-church, it actually needs to follow the law—may be tenuous.  But it has managed to get the issue into court.

Conclusion

The IRS rules prohibiting campaign activities by 501(c)(3) organizations are clear.  It is interesting that the IRS has not taken action to enforce such rules in the face of blatant violations of them.  The Freedom From Religious Foundation lawsuit may or may not resolve the issue.  But given the public policy of only having rules if you are willing to enforce them, sooner or later the prohibition on campaign activity will either need to be revised or enforced against churches.

Too Much? Too Little? Nonprofit Compensation

Hosted by
ST. LOUIS VOLUNTEER LAWYERS AND ACCOUNTANTS FOR THE ARTS

Sponsored by
THE GREATER SAINT LOUIS COMMUNITY FOUNDATION

May 14, 2013
Regional Arts Commission
6128 Delmar

If you serve on a nonprofit board of directors, advise nonprofits, or
have been following this issue in the news, this seminar is for you. Our expert
panel: Keith Kehrer, Bryan Cave LLP; Judy Murphy, RubinBrown LLP; and Kent M.
Rapp, Grant Cooper & Associates, will discuss best practices in determining
reasonable executive compensation, including the benefits of an articulated
compensation philosophy, compensation policies, IRS Form 990 reporting, pay equity
issues, collecting comparable data, severance packages and tips for working
with a search firm.

1. EO Director, at annual Georgetown conference, announces release of Colleges and Universities report
2. New features debut on EO’s webpages
3. Register for EO workshops
4. Attend the Exempt Organizations Workshop at the 2013 Tax Forums

  1.  EO Director, at annual Georgetown conference, announces release of Colleges and Universities report

Director Lois G. Lerner announced the release of EO’s Final Report on Colleges and Universities in remarks today at an annual conference in Washington, D.C. sponsored by Georgetown University. News release.

The multi-year project, begun in 2008, included a questionnaire sent to 400 colleges and universities and the subsequent audits of 34 selected academic institutions. The final report focuses on the results of these examinations, especially in the areas of unrelated business income and executive compensation.

A 2010 interim report focused on results from the questionnaire.  The final report also provides additional analysis of the questionnaire responses.

In her remarks, Ms. Lerner cited the study as an example of the long-term compliance projects EO undertakes.

“Many of our projects are complex, require sophisticated planning, and go through many phases over their lifetimes – including questionnaire development, statistical sample design, training, data gathering and analysis, and exams,” she said. “Add to that, that all new work must be coordinated among different EO units in a way that accommodates already on-going work. So projects rarely, if ever, fit conveniently into a one-year work-plan cycle.”

  2.  New features debut on EO’s webpages

With more than 1 million visitors a month, EO’s website is a main source of information about tax administration for many in the tax-exempt sector. Continual updates and improvements help make the visit more efficient and rewarding for those readers.

Our goal is to make your visits to the site more useful. To further that goal, we have re-opened our email feedback channel,EO.Web.Comments@irs.gov, so you can provide comments, suggestions, and problems you may have with the EO website pages.

Comments have already resulted in some positive changes, such as:

• Added a News feature on the top right-hand side of the homepage to help call attention to current topics and new developments
• Moved the A-Z Index – the best guide to what information is located where – to a more prominent position on the left-hand side
• Launched new webpages that tell the story of EO Examinations, including what to expect if you are audited

Fact: EO Select Check, the place to search for charities and their exempt status, receives more than 600,000 visits a month.

  3.  Register for EO workshops

It’s not too late to register for workshops for small and medium sized 501(c)(3) organizations:

• April 30 – St. Louis, MO
  hosted by University of Missouri – St. Louis
• May 2 – Springfield, MO
  hosted by Missouri State University
• May 21 and 22 – Southfield, MI
  hosted by Lawrence Technological University
• June 4 – Minneapolis, MN
  hosted by University of St. Thomas
• June 5 – St. Paul, MN
  hosted by Hamline University
• June 25 – Paducah, KY
  hosted by University of Kentucky
• June 27 – Burlington, KY
  hosted by University of Kentucky

  4.  Attend the Exempt Organizations Workshop at the 2013 Tax Forums

This two-hour workshop will include a review of recent changes to the Form 990, Return of Organization Exempt from Income Tax. In addition, the workshop will present several topics that are of interest to tax professionals who work with exempt organizations.

Exempt Organizations will participate in the IRS Nationwide Tax Forums in six cities starting in July. The forums are a major outreach event providing three packed days of seminars, workshops, focus groups and an exhibit hall for the tax practitioner community. In addition to getting the latest tax information, tax professionals can earn continuing professional education credits for their attendance.

For more information about upcoming events, go to the Calendar of Eventspage.

1. IRS issues proposed regulations on Community Health Needs Assessments,requests comments
2. IRS releases the Dirty Dozen tax scams for 2013
3. Register for EO Workshops
4. IRS releases FY 2012 Data Book
5. Public comment invited on recommendations for 2013-2014 Guidance Priority List

Comments and requests for a public hearing must be received by July 5, 2013.

Hospital organizations whose 2012 tax years began after March 23, 2012 are required to complete all questions on their 2012 Form 990, Schedule H. Hospital organizations whose 2012 tax years began on or before March 23, 2012 are required to complete all parts and sections of Schedule H for tax year 2012, with the exception of Part V, Section B, lines 1-8 regarding CHNAs. The IRS continues to welcome public input on the new requirements for charitable hospitals under the Affordable Care Act.

• April 30 – St. Louis, MO
  hosted by University of Missouri St. Louis
• May 2 – Springfield, MO
  hosted by Missouri State University
• May 21 and 22 – Southfield, MI
  hosted by Lawrence Technological University

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.

1. IRS Exempt Organizations to launch Self-Declarers Questionnaire
2. IRS releases new required form for TEB VCAP submissions
3. Notice 2013-14 provides guidance on extending tax credit to veterans’ employers
4. IRS and Treasury issue proposed regulations on health insurance providers fee
5. Register for EO workshops
6. Retirement news for tax-exempt employers
7. IRS has $917 million for people who have not filed a 2009 income tax return

• Work Opportunity Tax Credit
• Work Opportunity Tax Credit Extended
• Work Opportunity Tax Credit – frequently asked questions      and answers

Comments and Public Hearing

The IRS and the Treasury Department invite comments on all aspects of the proposed regulations. All comments will be available for public inspection and copying.

A public hearing has been scheduled for June 21, 2013 at 10 a.m.

• April 30, St. Louis, MO
  Hosted by University of Missouri-St. Louis
• May 2, Springfield, MO
  Hosted by Missouri State University

• Didn’t adopt a 403(b) written plan by December 31,      2009? – pay a reduced fee if you correct by December 31, 2013, under      the Voluntary Correction Program
• Use the VCP submission kit if you missed the 403(b) written      plan deadline
• What your organization should do if it has a 403(b)      plan but has lost its tax-exempt status
• Is your organization ineligible to sponsor a 403(b) plan? Here’s how to      correct it
• The new 403(b) Fix-It Guide helps you find, fix, and avoid      403(b) plan errors
• Required minimum distribution FAQs – new Q&A # 5      explains the requirements for pre-1987  contributions to a 403(b)      plan

Unless you’ve been under a proverbial (or actual) rock for the last several months, you are probably aware that the health reform law has a really big tax that could hit employers for not offering (or not offering good enough) health coverage to their full-time employees and dependents, referred to as play or pay (or “shared responsibility”) rules. We’ve discussed the proposed regulations previously here. But starting with this post, we are going to cover these rules in digestible portions. This will help you see some of the finer points of the rules, without having to swallow the entire regulations in a single sitting. In this first post, we’ll cover how you determine full-time employees (so you know who has to be offered coverage effective January 1, 2014)in a Q&A format. It’s worth noting the rules discussed here technically apply to all ongoing employees (we’ll touch on new hires later).

Q: So what’s full time?

For this purpose, “full time” means working an average of 30 hours per week or 130 hours per month.

Q: How do I determine if someone works an average of 30 hours per week?

To determine if someone is full-time, you measure his or her hours over a period (called the “standard measurement period”). Then you take some time to do the math to figure out who is full-time and make the offer of coverage (this is the “administrative period”). Finally, you treat them as full-time (or not) for a specified length of time (called the “stability period”).

Q: Okay, but what if I’m absolutely, positively, no-doubt-about-it sure that someone is going to work more than 30 hours per week?

Even if you know that someone is for sure going to be full-time, you still are technically treated as counting his or her hours, whether or not you actually count them. That means that, if you don’t want to count someone’s hours and you know she will be full-time, you must treat her as full-time during your “stability period,” even if her hours are reduced during that period.

Q: What if I’m absolutely, positively, no-doubt-about-it sure that someone is going to work less than 30 hours/week (like my deadbeat cousin Harry)?

You should probably still his or her hours too. Even Harry’s. That is because, if you are wrong, and your employee goes on the Exchange and gets subsidized coverage, you could be hit with penalties.

Q: So what’s standard measurement period?

The standard measurement period is a period where you measure someone’s hours. It can’t be longer than 12 months.

Q: Do I have to use the same standard measurement period for all employees?

No. You can vary the standard measurement periods. You can have periods of different lengths, and different starting and ending dates, for the following categories of employees;

(1) union v. non-union

(2) each group of union employees

(3) salaried v. hourly

(4) employees whose primary place of employment is in different States

Q: Once I count the hours, then what do I do?

If you determine someone worked at least 30 hours/week or 130 hours per month during the standard measurement period…

Q: Sorry to interrupt, but can we come up with an abbreviation for “standard measurement period”? How about SMP?

Fine.

Q: So now, back to my earlier question…

Right. If you determine that someone worked at least 30 hours/week or 130 hours per month during the SMP, then you have to treat him as full-time for the stability period. The stability period for these full-timers must be at least 6 months and cannot be shorter than the SMP.

Q: What if it’s Harry?

Assuming Harry (or anyone else) doesn’t work at least 30 hours/week or 130 hours per month during the SMP, then you are not required to offer him coverage for the following stability period. In this case, the stability period cannot be longer than the SMP.

Q: Do I have to figure this all out in one day and turn around and make an offer of coverage and somehow do all my enrollment and get the information to my carrier or TPA and start offering coverage IMMEDIATELY?!?!?

Calm down. You can have an administrative period of up to 90 days to count the hours and make the offer of coverage. The administrative period begins at the end of the SMP and ends at the beginning of the stability period.

Q: Can you give me an example?

Say you have a calendar year plan, you might want to have an SMP for ongoing employees that starts on October 15 of one year and ends on October 14 of the following year. Then you would have from October 15 through December 31 as your administrative period. And your stability period could be the calendar year.

Q: What if a full-time employee comes to me during the stability period and asks to have his/her hours cut?

You still have to treat the employee as full-time for the rest of the stability period.

Q: And if Harry decides to get off his tukus and actually do full-time work for a change?

You can treat Harry as not full-time for the remainder of that stability period. (The same rule applies regardless of whether the employee is not full-time due to sloth or any other reason.)

Q: What if I have payroll periods that don’t perfectly line up with a month or year?

If you pick an SMP, like 12 months, and you have weekly, every-other-week, or semi-monthly payroll periods, you can start at the beginning of one payroll period instead of a specific date. To do this, either the first payroll period needs to include the beginning date of your SMP or the last payroll period needs to include the ending date of your SMP, but not both.

Q: OH MY GOSH! I have a calendar year plan and I want to use a 12-month SMP, but it’s too late! This stuff is effective January 1, 2014! What do I do?

Calm down! It’s not too late. For this year only, the IRS is allowing a one-time shorter SMP for those employers wanting to use a 12-month SMP. The transitional SMP must not be shorter than six months, has to start by July 1, 2013, and has to end no more than 90 days before the first day of the 2014 plan year. So for example, if you have a calendar year plan, you could start counting April 15, go through October 14, for your transitional SMP, and then have an administrative period through December 31.

Q: What about new hires? And counting hours? And fiscal year plans? I have so many questions!

We’ll cover those in a future post.

1. Effect of Sequestration on Small Business Health Care Tax Credit
2. Register now for EO workshops
3. 2012 Form 990 and 990-EZ – Significant changes
4. IRS Expands Voluntary Worker Classification Settlement Program
5. IRS Nationwide Tax Forum information
6. EO’s free e-newsletter helps keep charities and nonprofits up to date
7. IRS Exempt Organizations wants graduate students for the summer volunteer program

  1.  Effect of Sequestration on Small Business Health Care Tax Credit

Pursuant to the requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, certain automatic cuts will take place as of March 1, 2013. These required cuts include a reduction to the refundable portion of the Small Business Health Care Tax Credit for certain small tax-exempt employers under Internal Revenue Code section 45R. As a result, the refundable portion of your claim will be reduced by 8.7% percent. The sequestration reduction rate will be applied until the end of the fiscal year (Sept. 30, 2013) or intervening Congressional action, at which time the sequestration rate is subject to change.

  2.  Register now for EO workshops

It’s not too late to register for our upcoming workshops for small and medium-sized 501(c)(3) organizations on:

• March 13 – Gainesville, FL
  Hosted by Santa Fe College/College of Central Florida with the Nonprofit Center of Central Florida and the Nonprofit Business Center
• March 14 – Ocala, FL
  Hosted by Santa Fe College/College of Central Florida with the Nonprofit Center of Central Florida and the Nonprofit Business Center

  3.  2012 Form 990 and 990-EZ – Significant changes

This chart summarizes significant changes to the Form 990, Form 990-EZ, schedules and instructions for tax year 2012.

  4.  IRS Expands Voluntary Worker Classification Settlement Program

The program paves the way for more taxpayers to take advantage of this low-cost option for achieving certainty under the law by reclassifying their workers as employees for future tax periods. Read article.

  5.  IRS Nationwide Tax Forum information

The IRS Nationwide Tax Forums offer three full days of seminars with the latest word from IRS leaders and experts in the fields of tax law, compliance and ethics. Attendees can:

• Select from more than 40 seminars and workshops
• Earn up to 18 continuing professional education credits
• Explore the expo for the latest tax professional products and services

Click here to find locations and register.

  6.  EO’s free e-newsletter helps keep charities and nonprofits up to date

EO Update is a free electronic newsletter that helps charities, nonprofits and other tax-exempt organizations comply with their tax responsibilities.

Help spread the word by asking people to subscribe now.

Each edition provides important information about:

• Changes to the Internal Revenue Code, new forms, guidance and publications
• Additions to the IRS’s charities and nonprofits website (irs.gov/charities)
• Dates for upcoming training and outreach events

EO Update is recommended reading for anyone interested in tax-exempt issues – especially tax practitioners, attorneys and leaders and staff of tax-exempt organizations.

For more information about tax-exempt issues and exempt organization educational materials, go to our Charities and Nonprofits page.

E-mail questions/comments about the publication to tege.eo.ceo@irs.gov.

  7.  IRS Exempt Organizations wants graduate students for the summer volunteer program

Are you a graduate student interested in nonprofit law, management or policy? Are you looking for a unique opportunity to become familiar with federal tax provisions that govern many charities and nonprofits? If so, then keep reading.

The IRS Exempt Organizations (EO) graduate student summer volunteer program is an exciting opportunity to learn about the federal tax code and the projects and programs the IRS uses to promote education and enforce compliance among tax-exempt organizations nationwide.

Requirements

• Current graduate students
• Concentration or interest in nonprofit law, management or policy preferred
• Proficient in Microsoft Office
• Strong writing and research skills
• United States citizens only

Other Details

• Student volunteer program located in EO’s HQ offices in Washington, DC
• Volunteers will be placed in either EO Rulings and Agreements or Customer Education & Outreach office
• 15-20 hours a week
• Unpaid, with the opportunity for school credit

To Apply

Submit application packet via email to tege.eo.ceo@irs.gov. by Friday, April 5, 2013. Packet must include:

• Application form
• Cover letter
• Resume
• Letter of recommendation from current or former professor or supervisor

Applications will be considered on a rolling basis. Questions? Contact Pilar Jarrin at tege.eo.ceo@irs.gov.