Tim-Mooney.com | Nonprofit Law Blog

Nonprofit Law Podcast #51: Ten Basic Responsibilities of Nonprofit Boards

2009-02-22T18:17:00.007-05:00

Ten Basic Responsibilities of Nonprofit Boards

Download: Nonprofit Law Podcast #51 (mp3, 6:49)

Check out the shownotes and online player here.

CNN report on 'Pulpit Freedom Sunday'

2008-09-29T12:26:00.002-04:00

Sadly, the hubris of the heads of these churches may hurt their parishioners. Remember, the Constitution protects the right to speech and religion, but not tax exemption...

'Tis the season for pastors to risk their churches' tax status

2008-09-03T19:44:00.002-04:00

The New York Times has the latest... Pastors’ Web Electioneering Attracts U.S. Reviews of Tax Exemptions.

Nonprofit Law Podcast #43 - The Best IRS Publication Revamped

2008-08-24T16:11:00.002-04:00

Download: Nonprofit Law Podcast #43 (mp3, 9:11)

Craigslist Foundation Nonprofit Bootcamp
Highly recommend this great day of learning about nonprofits, including nonprofit law
Alliance for Justice session on lobbying was excellent
NYC 2008 Podcasts should be up soon - in the meantime, check out past ones
If you're in the Bay Area, I highly encourage you to attend the west coast version on October 18, 2008 in San Mateo, CA

IRS revamps Pub 1828, the Guide to Churches and Religious Organizations

- IRS Publication 1828 (PDF) - Designed for religious organizations, but this guide is an excellent parallel resource for secular charities as well
- Inurement and Private Benefit
- No special deals for insiders
- No charitable dollars to individuals' "private benefit"
- Employment Tax - The basic ins and outs of withholding and other issues
- Payment Of Employee Business Expenses - How to properly reimburse
- Recordkeeping Requirements - Simple rules for keeping the IRS happy if you're audited
- Substantiation and Disclosure Rules for Donations - What you have to do when you receive tax-deductible donations
- A great index to other relevant IRS pubs (special note to my silver medal for best IRS pub: Publication 557)
- Update reflects some of the examples and guidance from Rev. Rul. 2007-41
- Examples illustrating the application of the facts and circumstances test for campaign intervention
- If you're a non-religious org, check out the Revenue Ruling... Pub 1828 focuses on the religious org examples

Resources

- IRS Publication 1828 (PDF)

This podcast provides general information about legal topics but it is not a complete discussion of all legal issues that arise in relation to nonprofits nor is it a substitute for legal advice. This podcast does not create an attorney-client relationship. This is general legal information and the contributors make no warranties regarding the general legal information provided in this podcast , and disclaim liability for damages resulting from its use to the fullest extent permitted by the applicable law

CraigsList Foundation Nonprofit Bootcamp

2008-08-09T12:53:00.003-04:00

I am very happy to report that I'm going to be attending the CraigsList Foundation Nonprofit Bootcamp in New York a week from today. I have heard amazing things about the resources and networking opportunities... more to come in the blog on this.

Nonprofits, campagn interventions and the Internet

2008-08-06T13:30:00.002-04:00

The IRS has issued a new directive (PDF) that gives a couple of pages of not terribly helpful guidance on 501(c)(3)s links on their websites to affiliated and unaffiliated organizations. Nothing earth shattering in this doc other than what most nonprofit attorneys have been suggesting over the last few years: watch the context of your links. The one piece of good news is that it looks like the IRS isn't going to spend a lot of time looking at links to affiliated organizations (501(c)(4)s, etc.). I always appreciate guidance from the IRS, but restating the "facts and circumstances" analysis generally doesn't help too much. It's a double edged sword... less guidance may allow more leeway, but it also creates a lot of uncertainty as we head towards November.

Phill Kline: at some point, he's got to get a tax lawyer

2008-08-01T18:35:00.002-04:00

Phill Kline and I have never met, but I feel like I know him. He once was Attorney General in the state of Kansas, and when he ran for re-election in 2006 used some very, very questionable tactics in getting church support for his campaign. As you know if you're a regular reader, that's illegal under tax law. I wrote a complaint to the IRS on behalf of an organization I used to work for, and it got a fair amount of attention from the local press. Kline lost that election, but became a county DA in Kansas right afterwards. This year he's running for reelection and lo and behold, guess who's got yet another 501(c)(3) problem? Phill Kline. This time, it's a supporter who has put her pro-life group's tax status in jeopardy by basically fundraising for Mr. Kline's campaign under the banner of her group's letterhead. Check out the letter at the Nonprofit Law Prof blog (a regular read for me these days!).

In any event, it's funny running into Phill Kline again in the pages of Kansas newspapers for more issues with campaign intervention by (c)(3)s...

Contributions over $250? Send a letter!

2008-07-31T19:13:00.002-04:00

Gomez v. Commissioner just came down from the federal Tax Court, and it reinforces something you should absolutely be on top of as a charity... if you receive a contribution over $250, send a letter to your donors stating so. If not, the contribution is technically not deductible and if the donor's audited, they run a substantial risk of ending up in the same (losing) boat as the taxpayer in this case... more from the Nonprofit Law Prof blog here.

Hate church loses tax case

2008-07-26T19:01:00.002-04:00

I try to be objective here on the blog, but I really can't do that with Westminster Baptist Church... I won't bother repeating their beliefs, but most of you have heard of their act. This week, they lost a tax case regarding exemption of their van used to drive to and fro. The nonprofit law prof blog raises a good point that this may not necessarily have been a good ruling from a pure tax law standpoint. If we replaced the petitioner with another group, would many of us feel ok about the ruling?

Are churches different from other charities?

2008-07-22T15:57:00.003-04:00

The ongoing saga of Sen. Grassley's investigation into megachurches, including Kenneth Copeland Ministries, brought this response from KCM in a press release:

However, the Church respectfully disagrees with Senator Grassley’s position that churches are no different from any other tax-exempt organization. Any government inquiry into the affairs of a church raises serious constitutional issues that must be carefully balanced against the government’s need to evaluate the effectiveness of the laws of the land. To ensure its constitutional rights are not unnecessarily infringed upon, the Church firmly believes that it must be given the protections from disclosure afforded by the federal tax laws and the benefit of the processes and procedures that apply to inquires of churches made by the IRS.

When I have taught tax exempt law concepts in seminars and conferences, I have found that some in the secular charitable world find the unofficial distinctions and preferences often afforded to religious entities as unfair and unjust. I'm not sure I totally agree with that (there are a host of reasons why churches and religious institutions should be held to different standards than groups like Nature Conservency or even small community charities). I think it's an interesting discussion however - what do you think? Should churches and religious institutions be treated differently by the IRS and tax law?

Update... today's Des Moines Register... did Sen. Grassley lose his delegate spot at the GOP convention because he's pursuing churches?

National taxpayer advocate to IRS: Speed it up!

2008-07-10T16:48:00.002-04:00

The Chronicle of Philanthropy reports that Nina Olson, the national taxpayer advocate, has noted an improvement in the Internal Revenue Service's processing of exemption applications, but still sees room for improvement. As anyone who has applied for exemption recognition recently can attest, she's absolutely right. The process needs to improve - ten years ago the process was measured in months (even weeks if you were lucky). Now, the length of your wait can last over a year under some circumstances...

Churches testing the courts on politics

2008-05-09T19:40:00.002-04:00

The Chronicle is reporting an impending legal firestorm:

In a test of federal tax law, a conservative legal group is encouraging pastors to preach about election candidates in September, reports The Wall Street Journal.

The Alliance Defense Fund hopes a court case will result from this open defiance of tax rules, which bar churches from engaging in partisan politics, and that the restrictions will be struck down by the courts.

Would the current Supreme Court turn back the decades-old ban on electioneering by churches? Would there be an equal protection problem if this was not also extended to other public charities? These and other questions might be answered in the next couple of years...

IRS releases 2008 goals on enforcing political activity

2008-04-22T17:37:00.001-04:00

Alliance for Justice has a nice summary of the latest on the IRS Political Activities Compliance Initiative:

On April 17, 2008, the IRS Tax Exempt and Government Entities Division issued a letter providing guidance on how they will treat certain activity in the 2008 political campaign season. The letter stated the goals of the Political Activities Compliance Initiative (PACI) task force in the 2008 election season and provided limited guidance on PACI's enforcement of 501(c)(3)s engaging in election-related activity in two specific areas: 501(c)(3)-501(c)(4) websites and issue advocacy.

See more here.

Vermont poised to create charity-business hybrid

2008-04-22T17:30:00.002-04:00

From the Chronicle of Philanthropy:

The new business entity is to be called a low-profit limited liability company, or L3C, and Vermont’s governor is expected to sign into law at the end of the month the bill creating the designation.
An L3C, a variation of a limited-liability company, would operate like a for-profit business generating at least modest profits, but its primary aim would be to offer significant social benefits, such providing jobs in an economically depressed area. Such business models already exist: The Vermont law would give them a name, and, its advocates hope, both encourage the creation of more socially conscious businesses and attract more money to them.

I'm really intrigued with this new model, having been working more closely with a socially responsible LLC that also has an affiliated sister 501(c)(3) charity, it seems this might be a new path. Often we see a lot of these corporate models beginning in a few states (the laboratories for laws) and see them sweeping across the country. This one bears watching.

IRS cracking down on political activities of nonprofits... again?

2008-04-14T16:09:00.004-04:00

Roll Call reports...

Tax regulators are hinting at an imminent crackdown of outside political outfits masquerading as nonprofit organizations, groups that already are making a splash in the 2008 Congressional primaries.

So, we might see some of the new 501(c)(4)s that were gearing up to engage in a lot of activity supporting or opposing candidates drop out before they begin... this might prompt some litigation depending on how the IRS chooses to enforce things. It's still stinging from losing the DLC case recently, and I suspect the DLC's success may prompt other 501(c)(4)s to fight it out in the courts with the IRS over anything in the exempt activity (loosely speaking, anything that supports or opposes a candidate) category.

New Form 990 instructions

2008-04-08T20:42:00.002-04:00

Considering the new form is not to be filed until 2009, it might be a bit premature for most people to take a peek, but if you want to see what next year's Form 990 instructions look like, the IRS is ready to show you... here. More on this from the Chronicle.

IRS engaged in political-speech crackdown?

2008-03-18T18:27:00.002-04:00

Church Executive Magazine asks whether the IRS is amping up enforcement this year.

IRS reaches out to charities to aid in economic stimulus

2008-03-14T13:28:00.002-04:00

From the IRS:

The IRS is encouraging various partners and stakeholders such as charities, churches and governmental organizations to assist in efforts to reach out to those Americans who may be eligible for the 2008 economic stimulus payment but who normally have no requirement to file a tax return. People who receive certain Social Security, Veterans Affairs, Railroad Retirement or wages from earned income or combat pay may be eligible and not know it.

It's good to see that the IRS is trying to make it easier for low-income individuals receive the allocated funds. Asking charities to aid in the process strikes me as a good idea to facilitate the effort... more about this program here.

Housecleaning

2008-03-14T13:01:00.001-04:00

We'll be having some downtime here at the site as we shift servers on March 20th (next Thursday as I type this). You might experience some delays in getting in touch with us during that process, but everything should be operational in short order. Thanks!

Senate deepens financial review of television ministries

2008-03-12T20:57:00.002-04:00

NBC is reporting that the Senate Finance committee is renewing its demands for certain churches to provide detailed financial information. The letters sent today are a follow-up to letters sent last year to a virtual who's who of large televangelist ministries, including Benny Hinn and Kenneth Copeland.

These ministries are 501(c)(3) organizations that are required to turn over certain financial information through their Form 990s upon public request. The Senate investigation is turning up the heat on the financial practices of some of these organizations.

Ethics and nonprofits

2008-03-11T12:59:00.002-04:00

If you're in Atlanta, this looks like a great opportunity to learn about running an ethical organization:

Seminar Announcement

What: The Nonprofit Studies Program of the Andrew Young School of Policy at Georgia State University presents its Brown Bag Seminar Series in Nonprofit Research.

Who: John Knapp of The Center for Ethics and Corporate Responsibility at the J. Mack Robinson College of Business will address the topic: "Fostering Ethical Cultures in Non-Profit Organizations"

When: Tuesday, March 11, 2008 at 12:30 PM

Where: Seminar Room #749 at the Andrew Young School of Policy Studies Building at 14 Marietta Street, NW

The purpose of these seminars is to discuss research-in-progress by faculty associated with the nonprofit program.

We invite students, faculty and interested members of the community to join us!

Drinks and cookies will be served.

All that and cookies too... I wish I could swing the trip down for this one! Hat tip to the good folks at the Nonprofit Law Profs blog for the original pointer.

Still more on churches and politics

2008-03-10T16:13:00.002-04:00

The Wall Street Journal is the latest to report on the various issues related to churches and politicking... I was happy to see that it noted that there have only been two revocations since 1954. One of them (the more recent... 1992) was a church in Binghamton that took out full page ads telling readers to vote for Bob Dole. Good old Branch Ministries... I don't know if they had any inkling how badly they violated tax law, but they didn't jsut cross the line... they jumped over it!

Nonprofit Law Podcast #34: What triggers an IRS audit?

2008-03-04T12:54:00.001-05:00

Nonprofit Law Podcast #34 covers the murky world of IRS audit procedures (now less murky!).

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Obama campaign takes fire over church conference speech

2008-02-29T17:13:00.002-05:00

Sen. Obama's speech at last summer's United Church of Christ conference has managed to pull an IRS investigation according to the AP. Here's some interesting analysis from two sources:

John Wilson's IRS Probe Of Obama's Church Underscores Anxieties For Nonprofits underscores the difficulty charities and other nonprofits are facing with these subjective rules... something I've blogged about before.

Over at the Nonprofit Law Prof blog, there's a a great pointer to Jack Siegel's take on the situation. Quoting their quote of him:

We do think Congress must step in and write a prohibition on political campaign activity that addresses the reality of how churches and other Section 501(c)(3) organizations interact with political candidates. In addressing this problem, we would like to see Congress take an approach akin to that taken by the intermediate sanctions in Section 4958. That is, rather than penalizing the innocent entity or the entity that can't control a speaker once the speech has begun, the sanctions should focus on the speaker's conduct, penalizing the speaker. Many will argue that this raises First Amendment issues. We recognize that possibility, but are not convinced. Obviously, the speaker has a right to speak, but the speech in question is by invitation. Consequently, this is not silencing the speaker in terms of access to the public square.

A safe harbor for the charity in case the speaker slips into campaign mode would probably face a lot less resistance compared to the flip side: penalizing the speaker. I'd be very surprised if that idea ever got off the ground.

Law schools

2008-02-25T13:20:00.002-05:00

I got a question in my email box from a prospective law student... unfortunately the student's email bounced back on me so I couldn't respond! So, if you fit that bill... email me at tim at tim dash mooney dot com and I'll resend it to you directly.

A lot of people ask me about how to go about training to become a lawyer serving nonprofits... I think the bottom line is that law schools are - for the most part - not the place where you'll learn that craft. There are absolutely some great programs out there (Columbia and Boston College come to mind immediately) but I've always maintained that no matter what type of law you'd like to practice, you want to find a good clinical program rather than seek out the best academic program. I'm sure others may disagree, but I can honestly say I learned far more about being a lawyer in my litigation clinic than in any of my classes.

One major piece of advice I give to anyone thinking about nonprofit work in law school... take administrative law. You'll be shocked how often it's relevant to the work you do!