On January 20, 2017, President Trump signed an executive order entitled “Regulatory Freeze Pending Review” (the “Freeze Memo“).  The Freeze Memo was anticipated, and mirrors similar memos issued by Presidents Barack Obama and George W. Bush during their first few days in office.  In light of the Freeze Memo, we have reviewed some of our recent posts discussing new regulations to determine the extent to which the Freeze Memo might affect such regulations.

The Regulatory Freeze

The two-page Freeze Memo requires that:

1. Agencies not send for publication in the Federal Regulation any regulations that had not yet been so sent as of January 20, 2017, pending review by a department or agency head appointed by the President.
2. Regulations that have been sent for publication in the Federal Register but not yet published be withdrawn, pending review by a department or agency head appointed by the President.
3. Regulations that have been published but have not reached their effective date are to be delayed for 60 days from the date of the Freeze Memo (until March 21, 2017), pending review by a department or agency head appointed by the President. Agencies are further encouraged to consider postponing the effective date beyond the minimum 60 days.

Putting a Pin in It: Impacted Regulations

We have previously discussed a number of proposed IRS regulations which have not yet been finalized.  These include the proposed regulations to allow the use of forfeitures to fund QNECs, regulations regarding deferred compensation plans under Code Section 457, and regulations regarding deferred compensation arrangements under Code Section 409A (covered in five separate posts, one, two, three, four and five).

Since these regulations were only proposed as of January 20, 2017, the Freeze Memo requires that no further action be taken on them until they are reviewed by a department or agency head appointed by the President.  This review could conceivably result in a determination that one or more of the proposed regulations are inconsistent with the new administration’s objectives, which might lead Treasury to either withdraw, reissue, or simply take no further action with respect to such proposed regulations.

A Freeze on Reliance?

The proposed regulations cited above generally provide that taxpayers may rely on them for periods prior to any proposed applicability date.  Continued reliance should be permissible until and unless Treasury takes action to withdraw or modify the proposed regulations.

The DOL Fiduciary Rule

The Freeze Memo does not impact the DOL’s fiduciary rule, which was the subject of its own presidential memorandum, discussed in detail elsewhere on our blog.

With lobbying efforts on the rise, the IRS has issued notice requirements for new 501(c)(4) social welfare organizations. These requirements follow the addition of Section 506 to the Code, where notification requirements for new 501(c)(4) organizations were outlined by the legislature.

A newly formed 501(c)(4) is required to notify the IRS within 60 days from the date it becomes a new legal entity. In providing notice, the organization must include the following information:

(1) the organization’s name, address, and taxpayer identification number;

(2) the date and state law under which the organization was formed; and

(3) a statement of the organization’s social welfare purpose.

The IRS has developed a new form – Form 8976 – that organizations should use to provide this notification. Note that continuing to file a Form 1024 is optional, and does not waive the requirement to provide notice. A Form 8976 can only be completed electronically through the IRS Electronic Notice Registration System. The system allows organizations to complete the notification process, keep account information current, and receive secure, digital communications from the IRS. You can access the Form 8976 here. Once notice is received, the IRS will issue a receipt of confirmation to the 501(c)(4) organization. However, this acknowledgement does not constitute approval of the organization’s qualifications for tax-exempt status under 501(c)(4), which is a separate determination.

When: Thursday, Feb. 23, 2017, 2 p.m. to 5 p.m.

Where: # 202 J.C. Penney Conference Center on the UM-St. Louis North Campus

Fee: $ 25

Program Description: Come to this class to learn the basics of effective grant management and implementation, and to learn the proper accounting procedures and practices you will need to employ as you put your grant funds into action.

Instructor Dan Sise, JD, joined the Nonprofit Management and Leadership Program (NPML Program) at UM-St. Louis in October, 2008, and serves as the NPML Program’s Academic Coordinator and Community Engagement Manager. A 1997 graduate of the University of Illinois College of Law, Dan is currently licensed to practice law in Missouri and Illinois. In the course of his legal career, Dan has dealt with a wide range of issues, including regulatory compliance, insurance coverage and defense, community redevelopment, and nonprofit governance and oversight. He serves on the board of directors of a number of nonprofit organizations, including the St. Louis-Jefferson Solid Waste Management District and The Daughters of Charity Foundation of St. Louis. Prior to joining the faculty of the NPML program, Dan worked at Habitat for Humanity St. Louis where he was director of operations.

Instructor Pamela Stuerke, Ph.d., is an Associate Professor of Accounting in the College of Business Administration at UM-St. Louis, and also serves as Chair of the Faculty Senate and University Assembly. In the College of Business Administration, she teaches Financial Accounting and Reporting, Accounting for Governmental and Not-for-Profit Entities, and Writing and Professional Research in Accounting. She also teaches Financial Issues in Managing Nonprofits for the Nonprofit Management and Leadership Program. She holds a Ph.D. from Indiana University’s Kelley School of Business, and a Missouri CPA certificate (inactive). She has served on the Board of Directors of the St. Louis Women’s Chorale, the Center for the Eucharist, and on the Chapter of Christ Church Cathedral (St. Louis). Before joining the accounting faculty at U.M. – St. Louis, she held faculty appointments at the University of Rhode Island and Case Western Reserve University.

Click here to register.

WASHINGTON – The Internal Revenue Service, state tax agencies and the tax industry issued an urgent alert today to all employers that the Form W-2 email phishing scam has evolved beyond the corporate world and is spreading to other sectors, including school districts, tribal organizations and nonprofits.

In a related development, the W-2 scammers are coupling their efforts to steal employee W-2 information with an older scheme on wire transfers that is victimizing some organizations twice. “This is one of the most dangerous email phishing scams we’ve seen in a long time. It can result in the large-scale theft of sensitive data that criminals can use to commit various crimes, including filing fraudulent tax returns. We need everyone’s help to turn the tide against this scheme,’’ said IRS Commissioner John Koskinen.

When employers report W-2 thefts immediately to the IRS, the agency can take steps to help protect employees from tax-related identity theft. The IRS, state tax agencies and the tax industry, working together as the Security Summit, have enacted numerous safeguards in 2016 and 2017 to identify fraudulent returns filed through scams like this. As the Summit partners make progress, cybercriminals need more data to mimic real tax returns.

Here’s how the scam works: Cybercriminals use various spoofing techniques to disguise an email to make it appear as if it is from an organization executive. The email is sent to an employee in the payroll or human resources departments, requesting a list of all employees and their Forms W-2. This scam is sometimes referred to as business email compromise (BEC) or business email spoofing (BES).

The Security Summit partners urge all employers to be vigilant. The W-2 scam, which first appeared last year, is circulating earlier in the tax season and to a broader cross-section of organizations, including school districts, tribal casinos, chain restaurants, temporary staffing agencies, healthcare and shipping and freight. Those businesses that received the scam email last year also are reportedly receiving it again this year.

Security Summit partners warned of this scam’s reappearance last week but have seen an upswing in reports in recent days.  (more…)

WASHINGTON — The IRS announced today the release of an updated Form 990-EZ, Short Form Return of Organization Exempt From Income Tax, that will help tax-exempt organizations avoid common mistakes when filing their annual return.

The updated Form 990-EZ includes 29 “help” icons describing key information needed to complete many of the fields within the form. The icons also provide links to additional helpful information available on IRS.gov. These “pop-up” boxes share information to help small and mid-size exempt organizations avoid common mistakes when filling out the form and filing their return.

(more…)

Bryan Cave’s Private Client Services Group welcomes a new partner in our London office:

David Adler has joined us in the London office, and will be a member of the Private Client Group. David is a U.S. tax lawyer who advises international entities, individuals and intermediaries on planning that has a U.S. component. Along with core U.S. federal income, estate and gift tax advice, he provides a U.S. perspective on issues of wealth preservation and transfer, as well as on corporate governance and family succession for privately held businesses. He is also a highly experienced adviser on issues arising under the U.S. Foreign Account Tax Compliance Act (FATCA) and the OECD Common Reporting Standard. David is joining us from the London office of another large firm.

On February 13, 2016, Doug Stanley, partner in the Private Client Services group at Bryan Cave, and Justin Flach of The Commerce Trust Company (an alumnus of the Bryan Cave Private Client Services group), will present “Creating A Living Legacy”, addressing estate planning basics to a group of artists.  The presentation is hosted by the Volunteer Lawyers and Accountants for the Arts and will be held at the Regional Arts Commission, 6128 Delmar, St. Louis, Missouri.

1.  Form 990-N e-Postcard page unavailable 12/26/16 to 1/6/17

The Annual Electronic Filing Requirement for Small Exempt Organizations — Form 990-N (e-Postcard) page will be down from December 26, 2016 at 11:59 a.m. until January 6, 2017 at 1:00 p.m. EST due to an annual planned maintenance. We apologize for this inconvenience.

2.  Tax Preparedness Series: Remember donations may cut tax bills

As tax filing season approaches, the IRS reminds taxpayers who give money or goods to a charity by December 31, 2016 that they may be able to claim a deduction on their 2016 federal income tax return and reduce their taxes.

3.  Helpful tax tips

Review these helpful tax tips.

When: Thursday, Jan. 26, 2017, 2 p.m. to 5 p.m.
Where: # 202 J.C. Penney Conference Center on the UM-St. Louis North Campus
Fee: $ 25

Program Description: Changes are coming for nonprofit financial statements. This class will cover some specific, technical topics that nonprofits need to know as they prepare for future changes in their financial management and reporting. Topics include:

• Changes to net asset classifications
• Disclosure of allocation methods
• Functional expense information
• Reporting of investment returns
• Reporting of leases
• And more…

Some of these are fairly technical topics that nonprofits should start hearing about and planning for now so they can address them more proactively, prior to audit time.

Instructor Linda Howdeshell founded her firm to serve nonprofits in May 2015 after almost 30 years of working with nonprofits. Linda works with clients to improve efficiency of systems and internal controls. She serves on the Not-for-Profit Committee of the Missouri Society of CPAs and is a member of both the MSCPA and AICPA. Linda also serves as a fiscal volunteer on United Way panels.

Click to Register

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.