Receipting Donations

Complacency is Not an Option

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 decide that receipting donations is no longer important.  However, charities should continue to exercise care in receipting donations for the benefit of the donor.

Most organizations are probably familiar with how to receipt cash contributions since cash is the most common type of donation.  Because of this, organizations may become complacent in receipting cash contributions and fail to properly receipt them to donors.  This is not an area where an organization should become complacent because the IRS requires strict compliance with its gift substantial rules.  Continue reading “Receipting Donations”

Outdated Legal Structure

IRS lifts much of the burden of updating legal structures and re-incorporating in a different state.

Does your organization use a legal structure that is no longer adequate for its needs?  Has your organization moved and lost its connection to the state where it was founded?   If either of these apply to your organization, you may want to consider re-structuring your legal entity under new guidance issued by the IRS.  In Rev. Proc. 2018-15, the IRS announced that a new exemption application is not required if a domestic tax-exempt organization changes its legal structure or re-incorporates in another state.  Under prior IRS guidance, an organization was required to file a new exemption application in order to keep its exemption if it made any of these changes.

This new guidance could be useful for tax-exempt organizations that have been active for many years but have been dissuaded from making needed changes because of how complicated the new exemption application would be.  Continue reading “Outdated Legal Structure”

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”

Supreme Court to Hear Case That Could Change Multi-State Sales Tax Law

South Dakota v. Wayfair Inc. Challenges Quill Corp. v. North Dakota Decision

A very important case will be heard by the U.S. Supreme Court that could dramatically change the sales tax landscape.  This spring the Court will hear South Dakota v. Wayfair, Inc., which challenges a prior Supreme Court decision in Quill Corp. v. North DakotaContinue reading “Supreme Court to Hear Case That Could Change Multi-State Sales Tax Law”

“Mark of the Beast”: Fourth Circuit Upholds Judgment That Employer Failed to Accommodate Employee’s Religious Beliefs

A recent Fourth Circuit Court of Appeals ruling highlights an employer’s mistakes when refusing an employee’s request for a religious accommodation. The case, EEOC v. Consol Energy, Inc., upheld the lower court’s judgment against Consol that it failed to accommodate an employee’s religious objection to participate in the employer’s mandated biometric hand scanner system. The Fourth Circuit also upheld the district court’s damages award to the employee of almost $600,000.

Continue reading ““Mark of the Beast”: Fourth Circuit Upholds Judgment That Employer Failed to Accommodate Employee’s Religious Beliefs”

Update: U.S. Department of Labor Withdraws Guidance on Independent Contractors and Joint Employment

On June 7, 2017, the U.S. Department of Labor (DOL) announced that it was withdrawing the Obama-era DOL 2015 and 2016 informal guidance memorandums on independent contractors and joint employment also referred to as joint employer. These memorandums were “Administrator’s Interpretations” meant to provide guidance as to how the law and related regulations with respect to independent contractors and joint employment should be interpreted and applied to employers.
Continue reading “Update: U.S. Department of Labor Withdraws Guidance on Independent Contractors and Joint Employment”