While there is considerable uncertainty among wealth planners and tax professionals regarding how the incoming administration will impact the federal tax code, nearly everyone agrees that change is imminent. With that in mind, we have assembled this chart, which compares current tax rates with President-elect Donald Trump’s proposed tax plan, and the House Republicans’ Blueprint plan (released in June, 2016). Click here.
Previously, I blogged about the low interest rate environment and how that results in a great opportunity for a donor with charitable objectives who also wishes to pass assets to the next generation free of federal estate or generation-skipping transfer tax. To read that posting about Charitable Lead Trusts, click here. Well, rates have continued to stay at historic lows. The IRS just announced the rates available for June of 1.2%. These low rates mean that it’s easier then ever for these trusts to be productive to pass even more cash to lower generations free of transfer tax. So, if you think that the trust’s investment strategy could beat the IRS-decreed rate of 1.2%, while also benefiting charity, June is the time.
For an overview regarding the basics of lifetime CLTs, see A Primer on Lifetime Charitable Lead Trusts.
On January 16, the IRS released its Exempt Organization Newsletter, Issue Number 2012-22. Topics include the following
- EO’s Annual Report and Workplan for the current fiscal year are now available
- IRS issues proposed regulations on shared responsibility provisions of the Affordable Care Act
- Legislative changes affecting EOs
- Voluntary Classification Settlement Program modified
- 2013 updated procedures
On April 19, the IRS released its Exempt Organization Newsletter, Issue Number 2012-08. Topics include the following:
- Reminder: Don’t Include Social Security Numbers on Publicly Disclosed Forms
- Verifying Exempt Status for Reinstated Organizations
- Proposed Rules on Program-Related Investments
- EO Director Speaks at Georgetown Law CLE
- Guidance on Form 990 and 990-EZ Reporting of Joint Ventures and Other Partnerships
- Tax Forums Offer Good Information for Exempt Organizations
- Register for Upcoming Workshops for Small and Medium-sized 501(c)(3)s in Nebraska
- Free Webinars on Identity Theft/Online Fraud and Ethics
On November 18, the IRS released its Exempt Organization Newsletter, Issue Number 2011-18. Topics include the following:
- IRS Seeks Applicants for Advisory Committee on Tax Exempt and Government Entities
- Reinstatement of Exempt Status after Automatic Revocation
- Certain Small Organizations Not Required to File Application for Exemption Have Annual Filing Requirement
- Filing Form 990-N for a Prior Year
- IRS Survey of Exempt Organizations
- Telephone Numbers for FBAR Hotline
- Webinar on Reporting Employer-Sponsored Health Plan Coverage on Form W-2 Now Available on IRS Video Portal
- Office of Professional Responsibility and Return Preparer Office Offer Free Webinar
In a previous blog, I described the revocation of the church status of Foundation for Human Understanding by the Federal Circuit Court of Appeals. In that case, the Foundation claimed that the critical “associational” aspect required to qualify as a “church” was satisfied by a call-in show and the Court disagreed. As part of the Court’s analysis, it described the different approaches to determine “church” status used by the IRS and courts. The Foundation appealed the ruling to the Supreme Court and the Supreme Court recently denied cert. This may frustrate some who would like to see more uniformity in how “church” status is determined.
My guess is that the Supreme Court did not take the case because the Foundation wouldn’t qualify under any test since all tests require people to associate with each other. (And, as a practical matter, I don’t think the different tests aren’t all that different–so there is no reason for the Supreme Court to clarify which is the right test.)
Just turn on your TV and you will be reminded by the constant smear campaigns that political campaign season is here once again. Section 501(c)(3) organizations must be careful and resist the urge to speak their minds. Section 501(c)(3) organizations (including churches) are strictly prohibited from engaging in political campaign activities, including making statements for or against a candidate for public office. Unlike legislative lobbying (where a Section 501(c)(3) public charity may engage in insubstantial lobbying), any amount of political campaign activity, including the use of the organization’s assets for campaing activities, may result in loss of tax-exempt status. Therefore, Section 501(c)(3) organizations must resist the urge to endorse or oppose candidates, or allow their assets to be used for campaign activities, even though the election of a particular candidate may have a dramatic impact on the organization’s agenda. Watchdog groups and concerned citizens frequently file complaints with the Internal Revenue Service alleging violation of the prohibition on political campaign activities and calling for revocation of exemption. Therefore, make sure your Section 501(c)(3) organization is aware of this strict prohibition as the campaign season heats up.