New Revenue Procedures from the IRS

By | Nonprofit

The IRS releases new revenue procedures at the beginning of the year that address how to proceed with all sorts of things you may need from the IRS. Those changes can include changes to user fees/filing fees, and this year it does.

The fee for filing a 1023 or 1024 went down to $600. The filing fee for the 1023-EZ is still $275. The filing fee applicable to organizations seeking a group ruling went down to $2,000.

ABA Section of Taxation Comments Concerning Form 1024-A

By | Nonprofit

There may be a new Form 1024-A coming, applicable only to 501(c)(4) organizations applying for tax exemption. On November 21, 2017, the ABA Section of Taxation submitted Comments Concerning Form 1024-A, Application for Recognition of Exemption Under Section 501(c)(4) of the Internal Revenue Code. If you read carefully — you will see a certain Rubric Legal attorney contributed to the comments!

A copy of the submission can be found here. An early release draft of the form can be found here.

Nonprofits and Tax Reform – Thoughts on Initial Draft

By | Nonprofit
The first draft of the Tax Cuts and Jobs Act was released yesterday.  For folks who really know how to have a good time on the weekends, you can find the full text of the bill here.  For others who may be interested to see what this draft may have in store for the nonprofit/exempt organization sector but know their eyes would start crossing by the second page — read a focused summary instead.

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More on unrelated business income

By | Nonprofit

The theme of the week on the Rubric legal blog is unrelated business taxable income (see yesterday’s post) and the ways that it can impact a nonprofit organization.  The IRS is in on the game and has posted a few relevant issue snapshots:

The above are all just further illustrations of how complex and nuanced the unrelated business income tax can be.  Analysis of the issues around the unrelated business income tax — including whether an exception applies — is very fact specific and nonprofits are encouraged to regularly review the facts with a qualified professional.  Just because you were able to avoid tax when you started conducting the activity 5 years ago doesn’t mean you still can – things change!

When your unrelated business is a hobby…

By | Nonprofit


Back in 2013, the IRS released the final report of the College and University Compliance Project and one of the important takeaways for institutions of higher education was that they needed to pay closer attention to whether they are conducting any unrelated businesses at a loss on a consistent basis, and if so, then they are at risk of greater tax liability due to what are called the “hobby loss” rules. A recent Tax Court case gave us a further example of how those rules could impact tax exempt organizations and their operations.

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Johnson Amendment

By | Nonprofit

Since 1954, the so-called “Johnson Amendment,” a portion of the provision in the Internal Revenue Code that lays out the basic requirements for Section 501(c)(3) organizations, has prohibited charities from implicitly or explicitly endorsing or opposing political candidates. Read More

Pharma-funded Charities and Private Benefit

By | Nonprofit


Too close for comfort?

Many patient assistance charities provide funding for patients to purchase treatments from the same pharmaceutical companies that provide the majority of funding for these charities. They are accused of increasing the profits of prescription drug companies and continuing to prop up inflated prices by enabling people to purchase expensive treatments. More recently, court records indicate that a new level of scrutiny has arisen for one of the patient assistance charities, which is under an IRS audit in large part due to the organization’s funding sources and the benefits they appear to reap from that funding.

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EO Update – Gulf Coast TEGE

By | Nonprofit
The next Gulf Cost TEGE Exempt Organizations Update is coming up June 16, 2017, in Dallas, TX.  Heidi Christianson of Nilan Johnson Lewis and I are co-hosting the local participation of this great event again this year. Heidi has graciously agreed to provide us again with WebEx capability to participate in this meeting at the Nilan Johnson Lewis offices.
As usual, it looks to be a great line-up of topics with great speakers:
“Update from Director of Exams, Maria Hooke”
“Capitol Hill Update” – moderated by Alex Reid (joined by counsel to JCT, Ways & Means, and Senate Finance)
“EO Technical Update from TEGE Associate Chief Counsel Office”
“Updates from TEGE Quarterly Call with Margaret Von Lienen (Acting Director, Exempt Organizations)”
Additional anticipated speaker from IRS Division Counsel
“Controversy Topics the Non-Controversy Practitioner Needs to Know”
We also have a request in to state regulators
The agenda and all details are available here, and registration is open now. Please submit any questions for speakers to danika at mendrygallaw dot com.
Heidi has applied for CLE credit, and the event is already approved for CPE credit. Please feel free to reach out to me if there are questions.

Upcoming presentation: Nonprofits and Political Activity

By | Nonprofit

On April 24, 2017, I’ll be presenting with Rebecca Lucero, Public Policy Director with MCN, at the Minnesota State Bar Association. We will be discussing Nonprofits and Political Activity in These  Political Times. This presentation will provide an overview and specific examples on the types of issues most nonprofits need to consider in order to manage the risks that exist with engaging in advocacy activities, particularly during these times when organizations may be expanding their advocacy and lobbying work.