Author Archives: Eric Kelderman
December 31, 2008, 2:17 pm
Earlier this year, Congress passed a set of tax laws that extended a beneficial provision for nonprofit organizations. Individuals more than 70 1/2 years old could contribute up to $100,000 of their Individual Retirement Account savings to charity without incurring taxes.
But some charity leaders worry that another recent law may discourage such donations. The Worker, Retiree and Employer Recovery Act of 2008 waives a requirement for IRA holders to accept a minimum distribution from their savings — a move aimed at preventing retirees from paying a tax penalty on IRAs decimated by declining stock values.
In a letter to Congressional leaders from the American Council on Gift Annuities and the National Committee on Planned Giving, the two groups called on Congress to increase or remove the $100,000 cap on charitable donations from IRAs.
They proposed instead to allow “life-income”…
December 9, 2008, 6:45 pm
Just in time for the holiday season, the Internal Revenue Service has released its annual guide to last-minute charity donations.
For starters, the agency is reminding older taxpayers — people 70 1/2 or older — that they can make a tax-free transfer of up to $100,000 from some Individual Retirement Accounts to an eligible charitable organization. Donor-advised funds and supporting organizations are not eligible to receive the transfers.
Donated clothing and household items must be in good condition or better. Such items for which a taxpayer claims a deduction of over $500 do not have to be in good used condition if the taxpayer includes a qualified appraisal of the item with the return, the IRS explains.
For all cash donations, regardless of the amount, donors must get a bank record or written receipt showing the name of the charity and the date and amount of the contribution….
December 8, 2008, 1:16 pm
The Internal Revenue Service has begun a program to streamline how tax-exempt organizations resolve disputes over tax issues.
The new plan will now allow nonprofit organizations to enter into non-binding arbitration with the federal tax agency if there are disagreements over the outcome of an audit, instead of going through the traditional appeal process and eventually filing in court. The IRS has set a target of 60 days for the new process, which uses a service-appointed arbitrator to help the two sides find a solution.
That is “lightning speed” for the IRS, which modeled the new plan on a similar measure begun in 2003 for large corporate taxpayers, said John Klotsche, a tax lawyer in Washington. In the corporate program, more than 80 percent of the companies that enter into the arbitration process come to an agreement, he said.
If the discussions don’t work, then organizations …
November 25, 2008, 4:35 pm
The Internal Revenue Service today announced the projects related to tax-exempt organizations it plans to pursue in 2009, including a long-term study of fund raising and spending by charitable organizations, a broad effort to educate the agency’s employees about governance issues, and an examination of nonprofit student-loan organizations that have related for-profit arms.
Lois G. Lerner, director of the exempt-organization division of the IRS, told reporters that it is especially important to monitor the nonprofit world during the current economic downturn as demand for charitable services rises and donations fall.
“We believe that compliant organizations are better positioned to serve the public interest and meet the growing demand for their services,” said Ms. Lerner, in a letter accompanying the department’s goals.
That philosophy has driven many of the agency’s recent past …
November 21, 2008, 4:28 pm
A U.S. District Court judge has rejected an effort by the Internal Revenue Service to force a Minnesota Church to comply with an audit, ruling that the agency violated a 1984 law that raises the bar for examining churches.
The tax agency was trying to get the federal court to enforce a summons, issued in March, against Living Word Christian Center, in Brooklyn Park, Minn., a suburb of Minneapolis, after the church refused to turn over documents about its financial operations and governance.
The tax agency began investigating the center in 2007, following reports that the church may have been involved in improper political activities, according to court documents.
Instead the IRS said it found financial transactions that may have benefited the organization’s pastor, the Rev. James M. Hammond. Living Word leased planes owned by Mr. Hammond, and the pastor borrowed money from the…
November 17, 2008, 11:27 am
Nonprofit organizations in Washington are continuing their efforts to make sure that lending giants Fannie Mae and Freddie Mac can sustain their levels of charitable giving.
The two mortgage companies, which were taken over by the federal government this fall, donated $47-million to charities last year, according to the Center for Nonprofit Advancement, an association of tax-exempt groups. The association is coordinating its second campaign to press Congress to ensure that donations from the lenders don’t dry up in the current economic downturn.
Tomorrow, association members are being asked to e-mail their Congressional representatives about the matter. A similar effort was made in October, which resulted in a letter from six members of Congress to James B. Lockhart II, director of the Federal Housing Finance Agency. Mr. Lockhart is the conservator placed in charge of Fannie Mae and …
November 6, 2008, 12:10 pm
The Council on Foundations announced today that a San Francisco nonprofit group has been picked to help private foundations in the United States ensure that recipients of grants to foreign charitable groups meet U.S. antiterrorism standards.
TechSoup Global, in the Bay City, is planning to become a repository of information about international groups, noting their purposes and activities, financial data, and copies of relevant foreign laws governing the organization.
Such information is necessary under Internal Revenue Service rules for U.S. groups that distribute grants to foreign organizations. Under the law, each group seeking to award a grant to a foreign group must get approval before doing so. The repository will help foundations by storing the documents, making it easier to navigate the approval process.
The council has been working on the repository project since 2007 with…
October 2, 2008, 1:58 pm
The U.S. Senate attached a package of tax benefits to legislation to rescue the troubled financial sector, increasing the odds that the expired charity tax incentives could be renewed this year.
The package added to the bailout bill would extend for two years a measure allowing donors age 70 1/2 or older to transfer up to $100,000 to charity from their individual retirement accounts each year without paying income taxes on the money.
The Senate-passed legislation would renew the provision retroactive to January 1, 2008, and extend it to the end of 2009.
Additional provisions in the Senate legislation would renew and extend other breaks related to charitable giving, including special deductions that businesses may take for gifts of food and donations of books and computers to schools.
The legislation also creates tax incentives for charitable giving to help victims of summer…
October 1, 2008, 2:44 pm
The Internal Revenue Service today released details of a 42-page questionnaire it is sending to roughly 400 colleges to collect information on their executive compensation, endowments, and outside business income.
Among other things, the questionnaire examines how a range of small, medium, and large institutions report income and losses on business activies that may be taxable and how they manage and spend their endowments.
The agency also will examine, in-depth, how colleges pay their presidents and other top executives, including perks such as first-class travel, personal use of a credit card and other services, such as housekeeping and lawn maintenance.
Like a similar questionnaire the IRS required of some tax-exempt hospitals, the reports for individual colleges will not be made public. The agency will compile a summary of its findings and possibly audit some institutions to …
October 1, 2008, 11:10 am
A group advocating separation of church and state has filed a complaint with the Internal Revenue Service against six churches it says flagrantly violated federal laws that prohibit clergy members from endorsing political candidates.
The six churches were participants in the so-called Pulpit Freedom Sunday, organized and promoted by the Alliance Defense Fund, a nonprofit legal support group intent on challenging the federal ban on political endorsements by clergy members.
The alliance has promised to provide legal support for the churches that face legal action.
In all, ADF says 31 churches participated in the sermon challenge, and two more are planning to do so soon. The alliance argues that the federal rules violate the First Amendment right to free speech.
“Pastors have a right to speak about Biblical truths from the pulpit without fear of punishment. No one should be able…