The Law of Tax–Exempt Organizations + Website is the definitive reference for leaders and lawyers of tax–exempt organizations. Written by the field′s most respected authority, this book provides comprehensive coverage of all currently relevant regulations to help you make informed decisions about the future of your organization. Accessible language and extensive tabular information allow for easy navigation and quick reference, while the companion website features additional resources that provide additional depth on specific topics.
Tax laws are continuously evolving, and the statutes and regulations for tax–exempt organizations change more quickly than most. This book compiles all of the latest pertinent statutes, regulations, rulings, and court opinions into a single reference that no nonprofit should be without.
- Get up to date on the latest changes to tax regulations for exempt organizations
- Learn the new and expanded rules for supporting organizations
- Review recent IRS rulings, Treasury Department regulations, and court opinions
- Find answers to the emerging issues surrounding the commerciality doctrine governance, unrelated business, constitutional law issues, and much more
Failure to keep pace with changing tax law can easily result in costly penalties; in the non–profit world, each and every dollar is precious by staying up to date on tax–exempt regulations, you not only avoid penalties, but you may discover new developments that actually benefit your bottom line. The Law of Tax–Exempt Organizations + Website provides the information you need, and the expert guidance to help you take advantage of every opportunity.
Table of Contents
Preface xi
CHAPTER ONE: Definition of and Rationales for Tax–Exempt Organizations 1
∗§ 1.1 Definition of Nonprofit Organization 1
∗§ 1.2 Definition of Tax–Exempt Organization 2
§ 1.4 Political Philosophy Rationale 2
CHAPTER TWO: Overview of Nonprofit Sector and Tax–Exempt Organizations 5
∗§ 2.1 Profile of Nonprofit Sector 5
∗§ 2.2 Organization of IRS 5
CHAPTER THREE: Source, Advantages, and Disadvantages of Tax Exemption 11
∗§ 3.2 Recognition of Tax Exemption 11
CHAPTER FOUR: Organizational, Operational, and Related Tests and Doctrines 13
§ 4.1 Forms of Tax–Exempt Organizations 13
∗§ 4.2 Governing Instruments 13
∗§ 4.3 Organizational Test 14
∗§ 4.5 Operational Test 14
§ 4.9 State Action Doctrine 15
∗§ 4.11 Commerciality Doctrine 15
CHAPTER FIVE: Nonprofit Governance 17
∗§ 5.7 IRS and Governance 17
CHAPTER SIX: Concept of Charitable 19
§ 6.2 Public Policy Doctrine 19
∗§ 6.3 Collateral Concepts 20
CHAPTER SEVEN: Charitable Organizations 21
§ 7.4 Provision of Housing 21
∗§ 7.6 Promotion of Health 21
∗§ 7.7 Lessening Burdens of Government 22
∗§ 7.14 Fundraising Organizations 23
∗§ 7.16 Other Categories of Charity 24
CHAPTER EIGHT: Educational Organizations 25
§ 8.1 Federal Tax Law Definition of Educational 25
§ 8.2 Education Contrasted with Propaganda 25
§ 8.3 Educational Institutions 25
CHAPTER NINE: Scientific Organizations 29
§ 9.1 Federal Tax Law Definition of Science 29
CHAPTER TEN: Religious Organizations 31
∗§ 10.1 Constitutional Law Framework 31
§ 10.2 Federal Tax Law Definition of Religion 32
∗§ 10.3 Churches and Similar Institutions 32
§ 10.5 Conventions or Associations of Churches 33
CHAPTER ELEVEN: Other Charitable Organizations 35
∗§ 11.2 Amateur Sports Organizations 35
∗§ 11.8 Donor–Advised Funds 35
§ 11.9 Endowment Funds 35
CHAPTER TWELVE: Public Charities and Private Foundations 39
§ 12.3 Categories of Public Charities 39
∗§ 12.4 Private Foundation Rules 40
CHAPTER THIRTEEN: Social Welfare Organizations 41
§ 13.1 Concept of Social Welfare 41
§ 13.2 Requirement of Community 41
∗§ 13.3 Conduct of Business 41
∗§ 13.4 Advocacy Organizations 42
CHAPTER FOURTEEN: Business Leagues and Like Organizations 43
§ 14.1 Concept of Business League 43
∗§ 14.2 Disqualifying Activities 43
CHAPTER FIFTEEN: Social Clubs 45
§ 15.1 Social Clubs in General 45
∗§ 15.2 Public Use Limitation 45
∗§ 15.3 Investment Income Limitation 45
∗§ 15.5 Taxation of Social Clubs 46
∗CHAPTER SIXTEEN: Labor, Agricultural, and Horticultural Organizations 47
∗§ 16.2 Agricultural Organizations 47
CHAPTER SEVENTEEN: Political Organizations 49
∗§ 17.6 Taxation of Other Exempt Organizations 49
CHAPTER EIGHTEEN: Employee Benefit Funds 51
§ 18.3 Voluntary Employees Beneficiary Associations 51
CHAPTER NINETEEN: Other Categories of Tax–Exempt Organizations 53
§ 19.6 Cemetery Companies 53
§ 19.19 Qualified Tuition Programs 53
§ 19.20 ABLE Programs 54
∗§ 19.22 Governmental and Quasi–Governmental Entities 54
CHAPTER TWENTY: Private Inurement and Private Benefit 57
§ 20.1 Concept of Private Inurement 57
∗§ 20.3 Definition of Insider 57
∗§ 20.4 Compensation Issues 58
∗§ 20.5 Other Forms of Private Inurement 58
§ 20.12 Private Benefit Doctrine 59
CHAPTER TWENTY–ONE: Intermediate Sanctions 61
§ 21.9 Rebuttable Presumption of Reasonableness 61
∗§ 21.10 Excise Tax Regime 61
∗§ 21.16 Interrelationship with Private Inurement Doctrine 61
CHAPTER TWENTY–TWO: Legislative Activities by Tax–Exempt Organizations 63
§ 22.3 Lobbying by Charitable Organizations 63
§ 22.6 Legislative Activities of Business Leagues 63
CHAPTER TWENTY–THREE: Political Campaign Activities by Tax–Exempt Organizations 65
∗§ 23.2 Prohibition on Charitable Organizations 65
∗§ 23.4A Religious Liberty Executive Order 66
§ 23.5 Political Activities of Social Welfare Organizations 67
§ 23.7 Political Activities of Business Leagues 67
CHAPTER TWENTY–FOUR: Unrelated Business: Basic Rules 69
§ 24.1 Introduction to Unrelated Business Rules 69
∗§ 24.2 Definition of Trade or Business 69
∗§ 24.3 Definition of Regularly Carried On 70
∗§ 24.5 Contemporary Applications of Unrelated Business Rules 70
∗§ 24.9 Unrelated Debt–Financed Income 72
§ 24.10 Tax Structure 72
§ 24.11 Deduction Rules 72
CHAPTER TWENTY–FIVE: Unrelated Business: Modifications, Exceptions, and Special Rules 75
∗§ 25.1 Modifications 75
∗§ 25.2 Exceptions 76
§ 25.3 Special Rules 77
CHAPTER TWENTY–SIX: Exemption Recognition and Notice Processes 79
∗§ 26.1 Recognition Application Procedure 79
∗§ 26.2 Requirements for Charitable Organizations 93
§ 26.3A Notice Requirements for Social Welfare Organizations 94
§ 26.6 Requirements for Certain Prepaid Tuition Plans 95
∗§ 26.9 Rules for Other Organizations 95
∗§ 26.10 Group Exemption Rules 95
∗§ 26.14 Forfeiture of Tax Exemption 96
§ 26.14A Modification of Tax Exemption 96
§ 26.15 Constitutional Law Aspects of Process 97
CHAPTER TWENTY–SEVEN: Administrative and Litigation Procedures 99
∗§ 27.1 Administrative Procedures Where Recognition Denied 99
∗§ 27.2 Revocation or Modification of Tax–Exempt Status: Administrative Procedures 101
∗§ 27.3 Retroactive Revocation of Tax–Exempt Status 102
∗§ 27.4 Tax Consequences of Retroactive Revocation of Exempt Status of Public Charities 103
∗§ 27.6 Revocation of Tax–Exempt Status: Litigation Procedures 104
∗§ 27.7 IRS Examination Procedures and Practices 105
∗§ 27.10 IRS Disclosure to State Officials 108
CHAPTER TWENTY–EIGHT: Operational Requirements 109
§ 28.1 Changes in Operations or Form 109
∗§ 28.2 Annual Reporting Rules 110
∗§ 28.3 Annual Information Return 110
∗§ 28.11 IRS Document Disclosure Rules 111
∗§ 28.12 Document Disclosure Obligations of Exempt Organizations 112
§ 28.18 Tax–Exempt Organizations and Tax Shelters 113
§ 28.19 International Grantmaking Requirements 113
CHAPTER TWENTY–NINE: Tax–Exempt Organizations and Exempt Subsidiaries 115
∗§ 29.4A Potential of Attribution 115
§ 29.6 Revenue from Tax–Exempt Subsidiary 116
CHAPTER THIRTY: Tax–Exempt Organizations and For–Profit Subsidiaries 117
∗§ 30.2 Potential of Attribution to Parent 117
§ 30.7 Revenue from For–Profit Subsidiary 117
CHAPTER THIRTY–TWO: Tax–Exempt Organizations: Other Operations and Restructuring 119
§ 32.7 Single–Member Limited Liability Companies 119
§ 32.10 Conversion from Nonexempt to Exempt Status 119
§ 32.11 Conversion from One Exempt Status to Another 120
APPENDIX A: Sources of Tax–Exempt Organizations Law 121
Cumulative Table of Cases 127
Cumulative Table of IRS Revenue Rulings 157
Cumulative Table of IRS Revenue Procedures 171
Cumulative Table of IRS Private Determinations Cited in Text 173
Cumulative Table of IRS Private Letter Rulings, Technical Advice Memoranda, and Counsel Memoranda 191
Cumulative Table of Cases Discussed in Bruce R. Hopkins Nonprofit Counsel 225
Cumulative Table of IRS Private Determinations Discussed in Bruce R. Hopkins Nonprofit Counsel 239
Table of Tax Reform Legislation 265
Index 269
