On December 20, 2019, the President signed, “The Further Consolidated Appropriations Act” (H.R. 1865), which contained the “Taxpayer Certainty and Disaster Tax Relief Act of 2019” (“Act”). The Act contains two important changes to federal tax laws affecting nonprofits: (1) repeal of the parking tax and (2) reduction in the private foundation excise tax.Continue reading “Year-End Federal Tax Changes Benefiting NonProfits”
In an interesting new development, the IRS granted 501(c)(3) tax-exempt status to a major daily newspaper. On November 3, 2019, the Salt Lake Tribune announced that it had incorporated as a non-profit corporation, re-structured its operations, and obtained IRS recognition of its 501(c)(3) status. Tax-exempt practitioners have speculated for years that a daily newspaper could, in theory, qualify for tax-exempt status under Section 501(c)(3). However, the Salt Lake Tribune’s announcement was the first time that a major daily newspaper is known to have succeeded in obtaining recognition of 501(c)(3) tax-exempt status. Granting tax-exempt status to this daily newspaper means that the IRS has now officially recognized news-reporting as an exempt purpose.Continue reading “IRS Grants The Salt Lake Tribune Tax-Exempt Status”
An early decision founders of new non-profit organizations must make is where to incorporate. A U.S. charitable, religious, or educational organization has its choice of incorporating in any of the 50 states as well as the District of Columbia. With this many choices, founders may ask if it is advantageous to incorporate in one state over another. When it comes to for-profit companies, it is common for them to incorporate or organize in Delaware due to tax or regulatory issues. We recently ran across an article advising non-profits to incorporate in Delaware. We thought it would be helpful to address if non-profits derive any advantage from incorporating in Delaware or another state in particular.Continue reading “Where to Incorporate?”
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”
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”
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”
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”
The Tax Cuts and Jobs Act made sweeping changes to the Internal Revenue Code including some that apply to tax-exempt organizations. Exempt organizations should become familiar with the new tax law and make plans to comply with it. Continue reading “Tax Cuts and Jobs Act: Changes That Affect Tax-Exempt Organizations”