Our Insights

Nonprofits and Taxable Parking Expenses

Navigating the Possibility of Incurring UBTI

Nonprofit organizations that provide employee parking benefits may be surprised to learn that they may be subject to incur unrelated business taxable income (UBTI). In addition, organizations with no UBTI may now be required to file form 990-T.   

The Tax Cuts and Jobs Act (Act) amended Section 274 of the Internal Revenue Code (IRC) to disallow for-profit employers from deducting certain expenses related to transportation fringe benefits provided to their employees. The Act added IRC Section 512(a)(7) to what constitutes UBTI for nonprofits and other tax-exempt entities. The Act states that tax-exempt entities are required to increase their UBTI by expenses related to transportation fringe benefits provided to their employees. The transportation fringe benefits subject to this tax include expenses associated with:

Continue reading “Nonprofits and Taxable Parking Expenses”

Receipting Donations

Don’t be complacent.

Each year tax-exempt organizations in the United States receive hundreds of millions of dollars in donations.  Donors contributing to 501(c)(3) organizations are able to deduct their own contributions from their taxes, subject to IRS limitations.  Recently, a higher standard deduction has been put in place through the Tax Cuts and Jobs Act.  This will likely diminish the number of taxpayers and donors who itemize their deductions, making it tempting for charities to assume that receipting donations is no longer important.  However, charities should continue to exercise care in receipting donations for the benefit of the donor. Continue reading “Receipting Donations”

Law Suit Shows the Danger of Disregarded Employment Law

President Trump Sued for Unpaid Overtime

In July 2018, President Donald Trump learned the danger of disregarding employment law when he was sued by his long-time, personal chauffeur for unpaid overtime. In this case, Trump did not abide by state and federal wage and hour rules.

Reportedly, chauffeur Noel Cintron was “forced to work thousands of hours of overtime without compensation,”1 anywhere from 50-55 hours per week.  He would begin at 7:00 a.m., five days a week, and stay until Trump, his family, or business associates no longer needed Cintron’s services. Continue reading “Law Suit Shows the Danger of Disregarded Employment Law”

Constitution and Bylaws

Does Your Church Need Both?

Sometimes when we analyze governance issues for our clients, we discover that they have two sets of governing documents: a constitution and bylaws. “Constitution” is the title most commonly associated with the governing document of an unincorporated association, whereas “bylaws” govern a corporation.

One of the main reasons churches have both documents is tradition: “It’s always been that way.”  However, it is not legally necessary to have both, and in practice, it can lead to confusion, unclear answers, and unintended outcomes when the organization makes decisions.  To prevent these problems, it is best if the organization has one set of governing documents that addresses all of the relevant governance issues.  Continue reading “Constitution and Bylaws”

The Legal Status of a Church

Is Your Church a Religious Corporation or a Not for Profit?

In Illinois there are two corporation laws that can be used to form churches: the Religious Corporation Act of 1872 and the Not for Profit Corporation Act of 1986.  Most lawyers practicing in the state of Illinois have probably heard of the latter statute, but relatively few may have heard of the former one.

Churches typically function with little awareness of their underlying corporate structure until they need to engage in some sort of commercial transaction–such as the purchase of real estate or obtaining a commercial loan–then the corporate structure becomes a matter of some attention.

Both kinds of corporations can function in the modern world of commercial transactions, but one type functions more easily than the other.   Care to guess which one?  Continue reading “The Legal Status of a Church”

Avoid Copyright Infringement

How to Properly Use Music and Images During Worship Service

Churches today use a variety of intellectual property during worship services, such as music, photographs, quotes, and video clips.  These materials can be important to a worship service by increasing engagement, illustrating a point, or adding extra meaning to the service.  However, most materials are protected by copyright laws.

Using intellectual property without the permission of the copyright owner or other legal authority is copyright infringement and can result in significant monetary damages.  Churches need to know the legal issues that apply to using intellectual property so they can take steps to get permission when needed and avoid copyright infringement.    Continue reading “Avoid Copyright Infringement”

Supreme Court Opens the Door for States to Collect Online Sales Tax

South Dakota v. Wayfair and Its Profound Effects

The U.S. Supreme Court made sweeping changes to how sales tax laws can be enforced by overturning a 26-year-old precedent.  In South Dakota v. Wayfair, the Court held that physical presence is no longer necessary for a state to enforce sales tax laws against out-of-state sellers.  Countless online retailers have relied upon the “physical presence” requirement over the last three decades to avoid paying sales tax where they had no offices, employees, inventory, or other physical contacts.  The Court held that the “physical presence” rule was no longer sound and that states can tax any activity that has a “substantial nexus,” in this case through “extensive virtual presence” within the taxing state. Continue reading “Supreme Court Opens the Door for States to Collect Online Sales Tax”