What’s Happening at the IRS? A Few Observations for 2017

A fun thing about practicing law is to observe changes to governmental agencies.  The last few years at the IRS’ EO Division- the section of the federal government responsible for overseeing tax-exempt organizations- has been quite a rollercoaster. The IRS’ EO Division came under intense congressional and public scrutiny in 2013, under allegations that the agency intentionally discriminated against conservative, pro-life, and pro-Israel organizations.

The scandal’s effect on the IRS’ EO Division was monumental.  The Service today is different on so many levels from 2013.  Moreover, 2017 brings a new sheriff to 1600 Pennsylvania, and the IRS is certain to undergo further changes under Trump’s administration.   How have these changes impacted nonprofits, and what’s in store for 2017?  Here are some selected observations on audits, the Form 1023-EZ, and what might be ahead for the IRS under President Trump’s administration. 

Getting Started: Factoring State Nonprofit Law into Corporate Development

Nonprofit corporations are creatures of state law for corporate status and operations, while also subject to federal law for tax-exempt purposes.  Under which state law should a nonprofit incorporate, and what other state corporate requirements should be considered?  The following questions and answers provide guidance in both areas for nonprofit leaders seeking successful development, compliance with related IRS tax-exemption aspects, and long-term organizational vitality.

What, More Politics?: Proposed Free Speech Fairness Act Aims to Modify the Nonprofit Ban

Public charities described under Section 501(c)(3) of the Internal Revenue Code (“Code”) that wish to engage in politically related speech must consider several important questions:

  • May Section 501(c)(3) organizations engage in political campaign activity at all? 
  • Just what is “political campaign activity”? 
  • Who or what determines whether speech is political?

Since 1954, 501(c)(3) organizations have been prohibited from engaging in certain politically-related speech, with the possible penalty of the loss of tax-exempt status.  This has been historically problematic, since what constitutes political speech can be hard to determine, and the IRS uses a vague “facts and circumstances” test in its assessments.  However,  Congress is considering a newly proposed law that would make it permissible for c(3)s to engage in limited politically-related speech. 

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