A federal court of appeals has given clear direction for employers who are faced with an employee whose illness or disability makes it impossible to return to work when Family Medical Leave expires. The case exemplifies the conundrum when a number of well-meaning but sometimes contradictory federal laws apply to the fact situation. Continue reading “How Much FMLA Leave is Reasonable?”
Two Illinois nonprofits that were in the news in recent years provide good examples of ill-considered schemes to hide the compensation of their chief executives.
Executive Club of Chicago. In 2007, The Executive Club of Chicago’s long-time CEO raised eyebrows and brought on an inquiry by Crain’s Chicago Business when she formed a solely owned company and hired it as the employee base for the Club. She was the manager. Because the cost of management was not revealed in the Club’s 990s, it was impossible for anyone to tell how much she was paid. Continue reading “Avoid Risky Executive Compensation Schemes”
The IRS concluded a multi-year study of colleges and universities last year, issuing a report that is now being carefully reviewed by advisors to the nonprofit sector[1]. The IRS is using the study to send a message to the entire exempt sector, so the information we can glean from it must be considered a strong indication of IRS concerns about all 501(c) entities.
The report focuses on three aspects of IRS concern: (1) the underreporting of unrelated business income (UBI) generated by for-profit activities, (2) compensation of officers, directors, trustees and key employees, and (3) employment taxes. Continue reading “IRS Highlights Concerns with Tax on Unrelated Business Income and Compensation”
The United States Tax Court issued a decision in late January of 2014 that fleshes out IRS regulations regarding appraisals of donated property. In Alli v. Commissioner (T.C. Memo. 2014-15, Jan. 27, 2014), the Tax Court upheld the IRS’ decision to disallow a charitable deduction for property donated by a Michigan taxpayer to Volunteers of America (VOA), a 501(c)(3) exempt organization. The decision provides guidance for exempt organizations that are receiving donated property and wish to give their donors some direction about how to properly document the gift. Continue reading “Appraisal of Donated Property”
Emergency situations involving churches are making headlines more often than many churchgoers would like to believe. As recently as November 16, 2013, tornados touched down in Illinois on a Sunday evening when many were attending church. Churches were targeted in at least 108 incidents of violence in 2011 and over 135 incidents in 2012.[1] In addition, many churches were affected by technological disasters, such as leaks from industrial plants, roadway spills, and power failure. Continue reading “Churches Should Plan for Disasters and Shooter Situations”
In the fall of 2013, the Commission on Accountability and Policy for Religious Organizations released its report on government regulation of political speech by 501(c)(3) organizations. A copy of the report is available here. The Commission was formed to study abuses by tax-exempt organizations and to recommend solutions. This report focuses on the restriction in Section 501(c)(3) of the Internal Revenue Code that prohibits tax-exempt organizations from participating or intervening in any political campaign. The restriction is designed to prevent tax-exempt funds from being used for political purposes. This issue is of particular importance to churches due to concerns that churches could be punished for making statements about moral or social issues. Continue reading “Commission Recommends Changes to Political Speech Prohibition for 501(c)(3)s”
If your organization is exempt under Section 501(c)(3) of the Internal Revenue Code, it probably qualifies to use the nonprofit mailing rate offered by the U.S. Postal Service. Continue reading “Nonprofit Mail Eligibility”
Many states provide sales tax exemptions to non-profit organizations. Exemptions are usually one of two types: a purchaser exemption or a seller exemption. A purchaser exemption exempts the organization from paying sales tax on purchases of goods for the organization’s use, whereas a seller exemption exempts the organization from charging sales tax to those who purchase goods that the organization sells. Seller exemptions are usually narrower than purchaser exemptions and may apply to specific products. A non-profit organization desiring to use either type of exemption should carefully evaluate the exemption to determine if it falls within its parameters. Understanding how exemptions apply may require information that does not appear in the express language of the statute. Thus, it is advisable for a non-profit organization to seek legal advice from counsel experienced in sales tax exemptions before relying upon an exemption. Continue reading “Exercise Caution When Relying on Sales Tax Exemptions”
During the last few election seasons, an effort known as “Pulpit Freedom Sunday” encourages pastors to publicly endorse political candidates in their Sunday sermons. The purpose of Pulpit Freedom Sunday is to challenge the constitutionality of a federal law that restricts the political activities of churches. The law applies not only to churches, but to all organizations that are exempt from federal income tax under section 501(c)(3). The restriction prohibits 501(c)(3) organizations from “directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office.”[1] Continue reading “Should Churches Endorse Candidates?”
Alliance for Children and Families, June 15, 2012
Embarking on Social Enterprise:
Part One
Introductory guide for understanding unrelated business income tax
Given the current reality of dwindling government resources, many nonprofit organizations are exploring new revenue streams. Opportunities for generating earned income from social enterprises are as varied as nonprofits themselves.
Earned income can be derived from any activity that results in revenue generation; however, in the context of social enterprise, we’re talking about forprofit activities that may be significantly different from the day-to-day programs and services that define tax-exempt organizations like members of the Alliance for Children and Families. Continue reading “Social Enterprise Part 1: Understand UBIT”