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Nonprofit Archives

Nonprofit Exempt Organizations - Tax Filings

Nonprofit Exempt Organizations may be exempt from income taxation, but not from the IRS or State taxing entities.  Exempt organizations are generally required to file annual returns of the income and expenses for the nonprofit.  (Do not forget your State filing!)

Free Speech Fairness Act Proposed in the House of Representatives

Last week, legislation was filed, entitled the "Free Speech Fairness Act," which would permit nonprofit organizations to engage in political communications in the course of their regular and customary activities. The bill, H.R. 6195, aims to fix the 1954 "Johnson Amendment," which bars churches and other nonprofit organizations from "participat[ing] in, or intervene[ing] in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office."

Fiduciary Duties in Nonprofit Organizations

"I'm a member of the Board of Directors of a local nonprofit organization and have been told that I owe a 'fiduciary duty' to the tax-exempt organization. What is a fiduciary duty?"

Nonprofit Organizations and Public Access to IRS Records

We all know that certain information regarding nonprofit organizations is public information.  If a person requests information such as the nonprofit's tax returns, the organization is required to provide the information in a reasonable time.

What's the Difference Between a Public Charity and Private Foundation?

Every nonprofit organization that qualifies for a tax exemption under Internal Revenue Code Section 501(c)(4) is a private foundation, unless it falls into an excluded category. According to I.R.C. Section 509(a), the following organizations are considered "public charities":

Restriction of Political Campaign Intervention by Section 501(c)(3)

Tax-exempt nonprofit corporations in this controversial election cycle need to be mindful of the restrictions related to political activity.  A reminder to 501(c)(3) tax-exempt organizations regarding specifically the absolute prohibition against support or opposition to political candidates is appropriate.

3 Steps to Successfully Start and Operate a Nonprofit

  1. Forming a Nonprofit Organization: Before an entity may quality for tax-exempt status with the IRS, it must be created as a corporation, a trust, or an unincorporated association (note: partnerships generally do not qualify). In California, the nonprofit formation process includes filing articles of incorporation, adopting bylaws, obtaining an employer identification number, and documenting formation activities at the first meeting of the board of directors. Several of these formation documents will be included with the entity's tax-exempt application to the IRS and must contain specific provisions. This is one important reason that you should utilize an attorney that is familiar with tax-exempt nonprofit organizations.
  2. Complete the Tax-Exempt Application: Once the nonprofit is formed under California law, the organization must submit an application to be recognized as exempt under section 501(c)(3) of the Internal Revenue Code. The Form 1023 and required worksheets need to be completed and submitted, as incomplete applications will not be processed by the IRS. While a simple application seems straightforward, many people will soon realize that the Form 1023, like most IRS documents, is anything but simple.
  3. Continued Compliance: After the organization has obtained tax-exempt status, it must be sure to comply with ongoing federal and state compliance regulations. Specifically, it's very important that the nonprofit organization remains focused on the exempt purpose of the organization. If the organization ceases to further that exempt purpose in a substantial way, it may risk its exempt status. As experienced nonprofit attorneys, we help guide our clients to avoid these potentially debilitating issues before they ever arise.

If you are a member of the Board of Directors on a nonprofit or if you're considering forming a nonprofit for the first time, we'd love to speak with you.

Nonprofits - Are Your Donors' Gifts Safe?

Public Nonprofits and 501(c)(3) chartiable organizations have an obligation to     ensure the donations received are properly documented.  The IRS regulations are complicated and cumberson.  The failure to follow the IRS regulations related to documentation can be financially harmful to both the nonprofit and to the donor.

New Regulations for Homeowners' Associations & Other 501(c)(4) Organizations

Homeowners' Associations and other social welfare organization exempt under IRS section 501(c)(4) are subject new regulations.  As part of section 405 of the "Protecting Americans from Tax Hikes Act of 2015", enacted December 18, 2015, certain provisions affect social welfare organizations described in section 501(c)(4) that are established after December 18, 2015 and certain organizations existing on that date.  

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