Recent Developments for Exempt Organizations, Including 2011 Year in Review


Dow at 13,000 Edition

It is with a profound sense of tradition that we assemble and distribute a 2011 “Year in Review” in March, 2012, instead of simply tweeting what IRS Commissioner Shulman had for breakfast this morning. Some of the developments described herein are very recent, others not so much, but we hope you will find it helpful to pause for a moment, look back over the past 14 months, and anticipate new challenges ahead. As for the Dow, we remain firm in our prediction that it will continue to behave erratically.

IRS and Treasury Initiatives

IRS Exempt Organizations Division Announces Focus on Private Foundations, Unrelated Business Income, International Activities

Looking ahead, the IRS Exempt Organizations division recently released its annual work plan outlining activities it intends to focus on in 2012. In addition to continuing various general projects, the division’s activities will center around three main areas: implementing new legislation, incorporating data from the redesigned Form 990 into various compliance initiatives and continuing collaborative projects with other IRS divisions and external stakeholders. Some of the division’s specific activities will include:

• Examining a selection of the country’s largest private foundations, based on information reported on Form 990-PF;

• In anticipation of an upcoming project on unrelated business taxable income, looking at organizations that have reported unrelated business activities on Form 990 but have failed to file Form 990-T;

• Continuing to examine exempt organizations – and, in particular, large foundations – that operate overseas or own foreign bank accounts to ensure their activities are consistent with their exempt purposes;

• Continuing to develop guidance on the new section 501(r) requirements for tax-exempt hospitals;

• Analyzing data from the colleges and universities compliance questionnaire;

• Developing a questionnaire for holders of group exemptions that explores parent organizations’ compliance with the law;

• Identifying compliance issues commonly associated with disaster relief organizations and developing a plan to educate such organizations about the law; and

• Sending a questionnaire to 501(c)(4) social welfare organizations, 501(c)(5) labor and agricultural organizations and 501(c)(6) business leagues designed to assess whether they have classified themselves correctly under the Code and whether they are complying with the law.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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