IRS Proposes Changes to Regulations on 501(c)(4) Organizations
The IRS is modifying regulations governing the political activities of section 501(c)(4) organizations that were originally proposed last November, due to the outpouring of comments received by the IRS concerning these regulations. Section 501(c)(4) comprises of social welfare organizations, and the regulations proposed were intended to limit the political activities these organizations may engage in, while still maintaining their tax-exempt status. For example, in the proposed regulations it states that a section 501(c)(4) organization is “a social welfare organization that must be operated
exclusively for the promotion of social welfare.” Current regulations state that an organization must merely operate
primarily for the promotion of social welfare in order to qualify for tax-exempt status. The IRS intends to review the comments provided, revise the proposed regulations, and hold a public hearing for the new regulation.
Please click to see IRS update regarding the proposed regulation.
Please click to see November proposed regulation.
New Donor Disclosure for California Non-profits Goes Into Effect on July 1, 2014
The new statute S.B.27, signed by Governor Jerry Brown on May 14, 2014, will take effect on July 1, 2014. S.B.27 requires donor disclosure for multipurpose organization which spends more than $50,000 within a 12-month period or more than $100,000 in a period of four consecutive calendar years in California elections. The new donor disclosure applies to any donor who donates $1,000 or more in a calendar year to multipurpose organizations for such political activities unless certain restrictions apply. A multipurpose organization means an organization described in Sections 501(c)(3) to 501(c)(10), a federal or out-of-state political organization, a trade association, a professional association, a civic organization, a religious organization, a fraternal society, an educational institution, or any other association or group of persons acting in concert, that is operating for purposes other than making contributions or expenditures.
Click here to read Senate Bill 27.
Relief for Organizations that Did Not File Returns While Waiting for Exemption Application Approval
The IRS Tax Exempt and Government Entities Division has issued an internal memo that instructs IRS employees on providing relief to organizations that have failed to file required annual information returns for three consecutive years while their applications for exempt organization status were pending.
The memo provides direction in determining the date of exemption and required filings. It also outlines the necessary steps to be taken when an application is filed before the third year of formation and a favorable determination is given.
Click here to see the IRS memo.
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Upcoming Seminar sponsored by Hood & Strong
June 26 – Hood & Strong University (San Francisco)
Practicing Law Institute, San Francisco – 9:00 a.m. to 12:00 p.m.
For more information and to register for the San Francisco session visit:
http://www.rsvpbook.com/HSUniv14SF
