Not For Profit/Exempt Organizations Blog

Category Archives: Not-for-Profit

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New Legislation Modernizes New York Not-For-Profit Corporation Law

On November 21, 2022, Governor Kathy Hochul signed into law new legislation, which amends certain provisions of the New York Not-For-Profit Corporation Law (the “N-PCL”).  The legislation, described in detail below, “modernizes provisions of law relating to members, directors and officers to align with current practices, streamline procedures and eliminate unnecessary regulatory burdens”[1], and is … Continue Reading

U.S. District Court Finds Mayo Clinic Qualifies as an “Educational Organization”; Awards $11.5M UBTI Refund

Introduction Tax-exempt organizations, while not generally subject to tax, are subject to tax on their “unrelated business taxable income” (“UBTI”).  One category of UBTI is debt-financed income; that is, a tax-exempt organization that borrows money directly or through a partnership and uses that money to make an investment is generally subject to tax on a … Continue Reading

IRS Releases Guidance on Requirements for Limited Liability Companies to Qualify as Tax-Exempt Entities

On October 21, 2021, the Internal Revenue Service (the “IRS”) released Notice 2021-56 (the “Notice”), which sets forth the additional requirements a limited liability company (“LLC”) must satisfy to obtain a determination letter recognizing its tax-exempt status under sections 501(a) and 501(c)(3) of the Internal Revenue Code.[1] The Notice also requests public comments by February … Continue Reading

Proskauer’s 26th Annual Trick or Treat Seminar

Proskauer’s 26th Annual Trick or Treat Seminar was held virtually on Friday, October 29th and discussed timely topics and best practices specifically tailored to the not-for-profit community. The seminar discussed: Workplace challenges: Mandatory vaccinations, HERO act and other considerations Tax proposals impacting nonprofit organizations Employee benefits update Amanda Nussbaum welcomed everyone and introduced the presenters.… Continue Reading

The Impact of Americans for Prosperity Foundation v. Bonta on Donor Disclosure Laws

On July 1, 2021, the Supreme Court struck down a California donor-disclosure law as facially unconstitutional in its decision in Americans for Prosperity Foundation v. Bonta.[1]  The law required nonprofits operating or soliciting contributions in California to disclose to the Attorney General of California information about all of its donors who contribute more than $5,000 … Continue Reading

10 Keys to Excise Tax on Executive Compensation Paid by Tax-Exempt Organizations

Proposed Regulations under Section 4960 of the Internal Revenue Code provide important guidance for tax-exempt organizations and their affiliates regarding an excise tax on certain executive compensation.  The U.S. Department of the Treasury (“Treasury”) and Internal Revenue Service (the “IRS”) are accepting comments until August 10, 2020.  (Throughout this post, “Sections” refer to sections of … Continue Reading

IRS Issues Final Regulations on Nonprofit Donor Disclosure Requirements

On May 26, the Internal Revenue Service (“IRS”) and the U.S. Department of the Treasury issued final regulations (the “Final Regulations”) relaxing nonprofit donor disclosure requirements under section 6033[1] of the Internal Revenue Code (the “Code”) for many non-charitable tax-exempt organizations. Stated generally, section 6033 requires organizations exempt from taxation under section 501(a) (including section … Continue Reading

Proposed Regulations on UBTI Provide Guidance to Tax-Exempt Organizations Making Fund Investments

On April 23, 2020, the Treasury Department and the Internal Revenue Service (the “IRS”) issued proposed regulations (the “Proposed Regulations”) under Section 512(a)(6) of the Internal Revenue Code (the “Code”).  Section 512(a)(6) was enacted as part of the 2017 Tax Cut and Jobs Act (the “TCJA”) and requires exempt organizations (including individual retirement accounts) to … Continue Reading

IRS Issues New Guidance for Virtual Currency Donations

The U.S. Internal Revenue Service (IRS) quietly added two new questions and answers regarding virtual currency donations to its answers to Frequently Asked Questions on Virtual Currency Transactions (FAQs) on December 26, 2019.  The two new answers address the responsibilities of charitable organizations when accepting donations of virtual currency, including cryptocurrency. For a discussion of … Continue Reading

IRS Provides Guidance on Unrelated Business Income Tax Refunds

On Friday, December 20, 2019, President Trump signed into law government funding legislation for the 2020 fiscal year that includes a provision repealing Section 512(a)(7), commonly referred to as the “parking tax,” with retroactive effect to the date of its enactment.[1]  Section 512(a)(7) was enacted pursuant to the 2017 U.S. tax legislation known as the … Continue Reading

Simplification of the Net Investment Income Tax for Private Foundations

On December 20, 2019, President Trump signed into law changes to the private foundation excise tax on net investment income under Section 4940 of the Internal Revenue Code.[1] For purposes of Section 4940, net investment income is the excess of gross income from interest, dividends, rents and royalties (“gross investment income”), plus capital gain net … Continue Reading

Repeal of Unrelated Business Income Tax on Qualified Transportation Fringe Benefits

Late on Friday, December 20, 2019, President Trump signed into law government funding legislation for the 2020 fiscal year that includes a provision repealing Section 512(a)(7), commonly referred to as the “parking tax.”[1] Section 512(a)(7) was enacted pursuant to the 2017 U.S. tax legislation known as the “Tax Cuts and Jobs Act.”  The provision required … Continue Reading

New York State Codifies the Johnson Amendment

On October 23, 2019, Governor Andrew M. Cuomo, signed legislation incorporating the federal Johnson Amendment into New York law. As previously described, the Johnson Amendment denies tax-exempt status under section 501(c)(3) of the Internal Revenue Code (the “Code”) to (and imposes excise taxes on) any organization that engages in political campaign activities. The new legislation amended … Continue Reading

Proskauer’s 24th Annual Trick or Treat Seminar

Proskauer’s 24th Annual Trick or Treat Seminar was held on Wednesday, October 31 and discussed timely topics and best practices specifically tailored to the not-for-profit community. The seminar discussed: Protect Yourself: A Practical Guide to Strategic Risk Management and Insurance How to Solicit a Donor in Fifteen Minutes: The Ultimate Cheat Sheet Compensation and Benefits … Continue Reading

Parsonage Exclusion Found by Seventh Circuit to Be Constitutional

On March 15, 2019, the U.S. Court of Appeals for the Seventh Circuit held in Gaylor v. Mnuchin that the tax exemption for “ministers of the gospel” (defined below) under Section 107(2) of the Internal Revenue Code (the “Code”) does not violate the Establishment Clause[1] of the First Amendment and, therefore, is constitutional, overruling the … Continue Reading

Five Excise Tax Tips For Tax-Exempt Employers

As we have previously discussed, the 2017 tax reform act created a new excise tax under section 4960 of the Internal Revenue Code that will affect many tax-exempt employers.  The tax is 21% of certain compensation and can be triggered if an employee receives more than $1 million of compensation or an employee receives certain … Continue Reading
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