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Not For Profit/Exempt Organizations Blog

Elizabeth M. Mills

Elizabeth M. Mills is a Senior Counsel in the Chicago office and a member of the Health Care Department. Elizabeth's practice is focused both on health care organizations and tax exemption issues for not-for-profit organizations. She addresses regulatory and transactional issues for all types of health care providers, including hospitals, academic medical centers, large physician group practices, retirement facilities and health maintenance organizations. She advises these organizations as changes to their particular tax exemption standards are proposed, implemented, and litigated.In addition, Elizabeth assists tax-exempt organizations in addressing tax compliance and governance issues such as Form 990 reporting, executive compensation, payroll taxes, compliance with supporting organization and private foundation restrictions and use of tax-exempt bond-financed property. She represents organizations being audited by the IRS, new organizations obtaining tax exemption from the IRS, and existing organizations addressing changes in their activities or structure. She has worked extensively with joint ventures between tax-exempt and for-profit entities, the formation and restructuring of integrated health delivery systems, and the tax issues facing exempt organizations in captive insurance and group insurance.Elizabeth speaks and writes frequently on tax exemption matters, particularly for health organizations.

Posts by Elizabeth M. Mills

In Annual Procedure Update (Usually a Yawner), IRS Imposes 27-Month Deadline For Filing Exemption Applications For All Types of Exempt Organizations Seeking Retroactive Recognition of Exemption And Denies Retroactive Recognition of Exemption if Forms 990 Not Filed

By Elizabeth M. Mills on Posted in Formation, IRS Filings

The IRS continues to implement the “three years and you’re out” rule for Form 990 non-filers added by the Pension Protection Act of 2006 (the “PPA”).  That legislation amended Section 6033 of the Internal Revenue Code to provide that exempt organizations required to file a Form 990-series return (i.e., a Form 990, Form 990-EZ or… Continue Reading

The American Taxpayer Relief Act of 2012: Stealth Impact on Charities

By Elizabeth M. Mills on Posted in Charitable Giving

The American Taxpayer Relief Act of 2012 (“TRA”) (H.R. 8) passed by the Senate on January 1, 2013, passed by the House of Representatives early on January 2, 2013 and signed by President Obama, in large part addresses income and other tax rates without direct effect on tax-exempt organizations. Several provisions, however, will be of… Continue Reading

IRS Finally Confirms that Contributions to Single Member LLCs Owned by Charities Are Deductible

By Jacob I. Friedman and Elizabeth M. Mills on Posted in Charitable Giving, IRS Filings

On July 31, 2012, the IRS issued Notice 2012-52 (the “Notice”), providing long awaited confirmation that a charitable contribution to a limited liability company that is wholly owned by a charitable organization, and classified as a disregarded entity for U.S. federal income tax purposes (an “SMLLC”), will be treated as a contribution to a branch… Continue Reading

Proposed Regulations on Federal Income Tax Exemption for Hospitals

By Elizabeth M. Mills on Posted in Healthcare Organizations, IRS Filings

As previously reported, the Treasury Department released proposed regulations on June 22, 2012 interpreting and implementing specific requirements for hospitals to maintain their Section 501(c)(3) tax-exempt status under Section 501(r) of the Code.  Section 501(r) was enacted as part of the 2010 Health Care Reform Act (the “Act”).  The proposed regulations provide guidance for the… Continue Reading

New Proposed Regulations on Federal Income Tax Exemption for Hospitals

By Elizabeth M. Mills on Posted in IRS Filings

As we have previously reported, the 2010 Health Care Reform Act imposed new, specific requirements for hospitals to maintain their Section 501(c)(3) tax-exempt status.  On June 22, 2012, the Treasury Department released proposed regulations interpreting and implementing certain of these requirements.  Specifically, the proposed regulations provide guidance on the following requirements of Section 501(r):  required financial assistance… Continue Reading

Stealth Can Be Good: New Procedure Allows Governmental Entities to Relinquish Section 501(c)(3) Tax-exempt Status

By Elizabeth M. Mills on Posted in IRS Filings

A new provision which was slipped in to the annual announcement of procedures for exempt organization determinations and letter rulings provides a way for governmental entities to voluntarily terminate their Section 501(c)(3) status. This is important for governmental hospitals that otherwise could be faced with new exemption requirements and penalties.

Treasury Releases Long-Overdue Report on Supporting Organizations and Donor Advised Funds

By Elizabeth M. Mills on Posted in Charitable Giving

Along with making significant changes to the rules for supporting organizations (“SOs”) and donor advised funds (“DAFs”) in the Pension Protection Act of 2006 (the “PPA”), Congress directed that Treasury conduct a study on the organization and operation of SOs and DAFs. Congress gave Treasury one year after the enactment of the PPA to submit a report on the study. On December 5th, more than four years past the prescribed deadline, Treasury finally released its long-awaited report to Congress.

IRS Releases 2010 Schedule H and Grants Automatic Three-month Extension of Time to File

By Elizabeth M. Mills on Posted in Healthcare Organizations

 As we have previously reported, the Affordable Care Act (the "Act") included additional requirements for tax-exempt hospitals to maintain their tax-exempt status; these changes are effective for tax years starting after March 23, 2010, the enactment date of the Act.  　 These additional requirements included Form 990 reporting obligations for hospitals, which required some adjustments to Form 990… Continue Reading

Medical residents conclusively determined to be subject to FICA tax beginning April 15, 2005 under new U.S. Supreme Court decision

By Elizabeth M. Mills on Posted in Healthcare Organizations

In Mayo Foundation for Medical Education and Research v. United States , the U.S. Supreme Court upheld the validity of a Treasury Regulation that states that the student exception from FICA (Social Security and Medicare) tax does not apply to medical residents because they work at least 40 hours per week. Applying the deferential two-part standard… Continue Reading

IRS-Treasury Annual Priority Guidance Plan Released

By Elizabeth M. Mills on Posted in IRS Filings

Last week, the IRS and Treasury Department released their annual Priority Guidance Plan for the 2010-2011 federal fiscal year.  The 34-page plan is available here.  The IRS exempt organizations web page  identifies and lists eighteen items in the plan that affect exempt organizations.  Of the eighteen items, eleven were also included in last year’s plan… Continue Reading

Medical Resident FICA — Action on Individual Refund Claims

By Elizabeth M. Mills on Posted in Healthcare Organizations

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.

United States Supreme Court will Hear Medical Resident FICA Case

By Elizabeth M. Mills on Posted in Healthcare Organizations

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.
Last summer, the Eighth Circuit Court of Appeals held that this regulation was valid in the Mayo Foundation for Medical Research and Education and the University of Minnesota cases. These institutions petitioned the Supreme Court for certiorari. Yesterday, the United States Supreme Court granted the certiorari petition and will hear the appeal.

Some Not-for-Profit/Exempt Organizations May Have FBAR Filing Obligations

By Elizabeth M. Mills on Posted in IRS Filings

U.S. taxpayers, including not-for-profit/exempt organizations, with a financial interest in or signatory authority over a foreign financial account are generally required to file the Report of Foreign Bank and Financial Accounts, Form TD F 90-22.1 (FBAR) with the Department of the Treasury each June 30 if the aggregate value of all of the U.S. person’s foreign financial accounts exceeds $10,000 at any time during the year. Taxpayers must also report whether they have such interests on their tax returns (for example, Forms 1040, 1041, 1065, 1120, and 990).
Under new IRS guidance, persons who have only signatory authority over a foreign financial account for calendar year 2009 and previous years has been extended again to June 30, 2011. In addition, owners of foreign hedge funds and private equity funds do not have to file FBARs for calendar year 2009 and previous years. And, persons who are relieved of filing FBARs this year also do not have to report the interest on their own returns. Holders of foreign mutual funds, however, will need to file FBARs by June 30, 2010 for calendar year 2009 and previous years.

IRS to Honor Certain Medical Resident FICA Refund Claims

By Elizabeth M. Mills on Posted in Healthcare Organizations

The IRS has announced that it plans to honor certain medical resident FICA refund claims for periods before April 1, 2005, when new IRS regulations went into effect. The IRS’s brief announcement does not indicate the terms on which claims will be paid. Still, the IRS notes that verification of the claim amount will be required and interest will be paid.

Form 990 Makeover, Version 2.0

By Elizabeth M. Mills on Posted in IRS Filings

Even hard-core tax mavens don’t usually get excited when the IRS releases instructions for tax forms. An exception this year is the release of instructions for the 2009 Form 990, the form to be filed by tax-exempt organizations (other than private foundations) for calendar year 2009 and tax years starting in 2009.

With the New Form 990, Directors and Trustees Must Complete a Complicated Disclosure Form

By Elizabeth M. Mills on Posted in Governance, IRS Filings

The IRS completely redesigned Form 990, the Return of Organization Exempt from Income Tax, to be filed for calendar year 2008 and subsequent periods. This form is filed by most tax-exempt organizations and is open to public inspection. One stated purpose of the makeover was to increase transparency and disclosure of exempt organization operations, thereby improving governance and highlighting conflicts of interest and insider dealings. One major change in the form is that it requires extensive reporting concerning the organization’s governance and management policies, the independence of its board, and board members’ and key employees’ family and business relationships with each other and with the reporting organization.

Tax Exemption Changes Possible for Hospitals as Part of Health Reform

By Elizabeth M. Mills on Posted in Healthcare Organizations

Section 9007 of the health reform bill passed by the Senate on December 24, 2009 contains specific requirements for Section 501(c)(3) hospitals wishing to retain their tax exemption. This development is of interest to all exempt organizations, not just hospitals, because it is another example of Congressional action imposing specific standards on particular types of exempt organizations.

IRS Issues Audit Checklist for Exempt Organization Governance

By Elizabeth M. Mills on Posted in Governance

Over the past few years, the IRS has become increasingly interested in monitoring the governance practices of tax-exempt organizations, particularly public charities. This interest has been shown through public statements of IRS officials, the addition of questions about board makeup and policies to the Form 990, an explanation of why the IRS considers governance important, and the development of training materials on governance for IRS personnel. Not all members of the exempt organizations community agree that the IRS should focus on governance. However, the IRS rationale is that a well-governed organization is a tax-compliant organization.
The IRS has now developed and released a governance issues checklist (the Governance Check Sheet) to be completed in each audit of an exempt organization. The checklist provides a very specific roadmap for exempt organizations to compare their practices and policies with what the IRS wants to see and to make adjustments where necessary.