National Updates
IRS Provides Options for Automatically Revoked Organizations to Apply for Reinstatement.
IRS Revenue Procedure 2014-11, issued on January 2, 2014, provides four options for applying for reinstatement of tax-exempt status for those organizations whose exemption has been revoked for failure to file the required annual forms or notices (Form 990 series) for three consecutive years. The four options are described as (a) for organizations eligible to file either Form 990-EZ or Form 990-N and have not previously had tax-exempt status automatically revoked ("Streamlined Retroactive Reinstatement Process"); (b) for organizations not eligible to use the Streamlined Retroactive Reinstatement Process, if it applies not later than 15 months after the later of the Revocation Letter or the date on which the IRS posted the organization's name on the Revocation List ("Retroactive Reinstatement Process (Within 15 Months of Revocation)"); (c) if more than 15 months has passed since the later of the Revocation Letter or posting on the Revocation List, an organization may apply for retroactive reinstatement only under the "Retroactive Reinstatement Process"; or (d) the "Post-Mark Date Process" for any organization, including those eligible for any other reinstatement process. The Revenue Procedure also explains how the new procedures apply to pending and recently approved applications, and modifies and supersedes Notice 2011-44.
IRS Issues Interim Guidance Regarding Supporting Organizations.
On December 23, 2013, the IRS issued Notice 2014-4 providing interim guidance for organizations described in Section 509(a)(3) that are operated in connection with the public charities they support ("Type III Supporting Organizations"). Type III Supporting Organizations are divided into two categories - those that are "functionally integrated" and those that are not. Notice 2014-4 provides interim guidance for Type III Supporting Organizations that seek to qualify as functionally integrated by supporting a governmental supported organization. Under the Notice, until the earlier of the date final regulations are published under Treasury Regulation Section 1.509(a)-4(i)(4)(iv) or the first day of the organization's third taxable year beginning after 2013, a Type III Supporting Organization will be treated as functionally integrated if it (1) at least one supported organization is a governmental entity to which the Type III Supporting Organization is responsive within the meaning of the Treasury Regulations, and (2) engages in activities on behalf of such governmental entity that perform the functions of, or carry out the purposes of such governmental entity and "that, but for the involvement of the supporting organization, would normally be engaged in by the governmental supported organization itself."
IRS Processing Guidelines for Section 501(c)(3) Applications Involving Potential Political Campaign Intervention.
On December 10, 2013, Karen Schiller, Acting Director, Exempt Organizations, Rulings and Agreements, issued a memorandum to provide interim administrative guidance regarding the processing and review of exemption applications under Section 501(c)(3) that indicate that the applicant may be involved in political campaign intervention for which additional development is necessary to determine qualification for exemption. The memorandum is directed to the Exempt Organizations Determination Unit and Exempt Organizations Determinations Quality Assurance. The memorandum states that the following activities may suggest the potential for political campaign intervention: voter registration; inaugural and convention host committees; post-election transition teams; voter guides; voter polling; get out the vote drives; events at which candidates speak; communications expressing approval or disapproval of candidates' positions or actions; or other activities that appear to support or oppose candidates for public office.
IRS Issues Notices Regarding Charitable Hospitals.
The IRS has issued two Notices related to charitable hospitals regarding the requirements of Section 501(r) of the Internal Revenue Code. Notice 2014-2 confirms that hospital organizations can rely on proposed regulations under section 501(r) of the Internal Revenue Code published on June 26, 2012, and April 5, 2013, pending the publication of final regulations or other applicable guidance. Notice 2014-3 contains a proposed revenue procedure that provides correction and disclosure procedures under which certain failures to meet the requirements of § 501(r) of the Internal Revenue Code will be excused for purposes of § 501(r)(1) (establishing the four requirements for charitable hospitals) and 501(r)(2)(B) (hospital organizations with more than one hospital facility). Notice 2014-3 requests comments regarding the procedures set forth in the proposed revenue procedures.
ABA Business Section Newsletter for Nonprofit Organizations
Megan A. Christensen authored the "National Updates" column for the Q4 2013 edition of ABA Business Section Newsletter for Nonprofit Organizations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
