Not-For-Profit/Exempt Organizations Blog : Non-Profit Lawyers & Attorneys : Proskauer Rose Law Firm : Tax & Corporate Law for 501(c), 501(3) Organizations

Medical Resident FICA -- Action on Individual Refund Claims

Posted on August 30, 2010 by Elizabeth M. Mills

We have been closely following the medical resident FICA refund issue. As we noted in our blog entry in March on the topic, the IRS conceded that refund claims for FICA taxes for medical residents for the periods before April 1, 2005 will be paid. The IRS has now announced this month that it has begun sending letters to individual medical residents who filed individual claims for FICA refunds. These letters ask the individuals to submit copies of their claims.

Medical residents who filed a claim but did not receive a letter by August 16, 2010 should contact the IRS.

The IRS has prepared FAQs for these refund claims that are available here.

For additional information on the medical resident FICA refund issue, please review our June 2, 2010 blog entry.

Tags: FICA, Healthcare Organizations, hospitals

Proskauer's Pro Bono Initiative Committee Discusses Expansion

Posted on August 27, 2010 by A. Nicole Spooner

Earlier this month, the Metropolitan Corporate Counsel interviewed Scott Harshbarger, Chair of Proskauer's Pro Bono Initiative Committee, and Stacey O'Haire Fahey, Pro Bono Counsel at Proskauer, about the Pro Bono Initiative at Proskauer. Harshbarger and Fahey are also members of the Firm's Not-for-Profit/Exempt Organizations group.

The MCC interview highlights the Firm's commitment to pro bono service, both on a domestic and international level. Read more about the interview here.

In addition to the many pro bono matters, including asylum, adoption, and advocacy projects, on which the Pro Bono Initiative works, the Initiative also represents all kinds of not-for-profit and exempt organizations (including community organizations and start-ups) that meet the financial criteria for pro bono services.

Tags: Pro Bono, community organization, grassroots

Is the Foreign Corrupt Practices Act on Your Radar Screen?

Posted on August 18, 2010 by Emily Stern

Charities and other exempt organizations that engage in cross-border charitable giving often conduct extensive due diligence before giving funds to international grantees. If these charities are unaware of how the Foreign Corrupt Practices Act can affect their grantmaking and other activities abroad, they should become aware very quickly. In fact, the FCPA is a real risk for U.S. exempt organizations that are operating globally and face pressures to make corrupt payments in order to obtain government support abroad.

Tags: Charitable Giving, Foreign Corrupt Practices Act

Treasury Issues Ramadan Alert

Posted on August 13, 2010 by Jacob I. Friedman

On August 11, 2010, the commencement of the observance of Ramadan, a charity alert was issued by the United States Treasury Department. Treasury acknowledged the importance of charitable giving during the month-long observance and used this opportunity to express concern about possible exploitation of all charities by terrorist organizations. The alert outlines steps for charities and donors to take in order to “guard against terrorist abuse.”

Tags: Charitable Giving, terrorism

IRS Offers Relief for Small Organizations that Failed to File Returns for Three Consecutive Years

Posted on July 27, 2010 by A. Nicole Spooner

Small not-for-profit organizations at risk of losing their tax exemption because of their failure to file the Form 990-N or Form 990-EZ for the 2007, 2008, and 2009 taxable years can preserve their status by filing these returns by October 15, 2010. The IRS announced yesterday a one-time relief program for these organizations that will give them a "pass" until October 15, 2010.

On July 26, 2010, the IRS also posted a list of the organizations at-risk of losing their tax-exempt status because, according to the IRS, they have not filed their returns for 2007, 2008, and 2009. Organizations should confirm whether or not they are listed on this list. And even if an organization does not appear on this list, it should still check its records and determine whether it is at risk of automatic revocation because of not satisfying annual filing requirements. In fact, the IRS acknowledges that the list may be incomplete and certain organizations at risk of automatic revocation may not be listed.

Tags: Form 990, IRS Filings

Getting Back to Basics: What Public Charities Should Know About Tax Exemption

Posted on July 19, 2010 by Alison M. Langlais

It is essential that all public charities understand the basic rules surrounding their exemption. Indeed, achieving tax-exempt status is only half the battle – once an organization has established that it is tax-exempt, it must set up the proper checks to ensure that it meets ongoing compliance obligations. Plainly, certain activities can jeopardize an organization’s tax-exempt status or subject it to penalties. Because the IRS revised its Compliance Guide for Public Charities and we are in such a highly regulatory environment, we thought it would be helpful to discuss some of the basic rules surrounding tax exemption.

Tags: Form 990, Formation, governance policy, private benefit, record keeping

Will it Take a Constitutional Miracle to Save the Parsonage Exclusion?

Posted on July 1, 2010 by Jacob I. Friedman

When we last blogged about the “seemingly innocuous five line tax benefit” in Section 107 of the Internal Revenue Code, a District Court judge in California was reviewing a complaint filed by the Freedom From Religion Foundation, a nonprofit membership organization challenging this 90 year old provision.

Over the years, there have been a number of challenges to the parsonage tax exemption based on church and state separation constitutional grounds. In 2002, the Ninth Circuit sua sponte in Warren v. Commissioner asked the taxpayer and the government to brief the constitutional issue. The Court also asked Professor Erwin Chemerinsky of the University of Southern California to write an amicus brief, which concluded that the provision was unconstitutional.

Tags: 107, Religious Organizations, clergy, parsonage exclusion

Some Pension Plans Must File FBARs by June 30, 2010

Posted on June 9, 2010 by Pamela A. Onufer and Amanda H. Nussbaum

The deadline for filing the Report of Foreign Bank and Financial Accounts, Form TDF 90-22.1, (FBAR) by U.S. persons that held a financial interest in a foreign financial account for calendar year 2009 if the aggregate value of all the U.S. person's foreign financial accounts exceeded $10,000 at any time during the year is almost here -- all FBAR filings must be received by the U.S. Department of Treasury on June 30, 2010 (not just postmarked by such date). There are no extensions and the failure to file an FBAR can result in significant penalties.

As discussed in our March, 2010 blog entry on the FBAR filing requirement, the term "financial interest" is defined very broadly. In the case of pension plans, it would include any employee benefit plan that maintains an investment in a foreign financial account and also applies to the institutional trustees or board of trustees of such plan. It may also apply to the individual members of the board of trustees of a plan or a plan sponsor. Accordingly, some individual trustees and plan sponsors may want to file the FBAR on a protective basis.

Tags: FBAR, IRS Filings, foreign financial accounts, pension plan

Could a New Quasi-Charitable For-Profit Be Emerging in the Tax Code?

Posted on June 4, 2010 by A. Nicole Spooner

A majority staff director for the Senate Finance Committee said in an April discussion on philanthropy in the 21st century that perhaps it might be time to consider the tax liability for an entity that is neither wholly charitable nor wholly for-profit. In fact, the director said that the Senate Finance Committee wrestled with the problem of a quasi-charitable entity in enacting the health care legislation, and said that the tax treatment of not-for-profit organizations might be revisited further in the tax reform context.

Tags: Formation, low-profit limited liabilty company

United States Supreme Court will Hear Medical Resident FICA Case

Posted on June 2, 2010 by Elizabeth M. Mills

Many health care and medical education institutions have claims pending with the IRS for refunds of the FICA (Social Security and Medicare) tax paid on wages for employed medical residents. The issue for these claims is whether the residents are “students,” and their wages accordingly exempt from FICA tax, for purposes of the student FICA exception in the Internal Revenue Code.

Tags: FICA, Healthcare Organizations, hospitals