Session 1

Tax-Exempt Status
Jeopardizing 501(c)(3) Status

• Distinction between "tax-exempt" and "nonprofit"
• Major types of exempt organizations – charitable/educational/religious; public charity/private foundation; (c)(3) / (c)(4) / …
• Benefits of tax-exempt status – income tax exemption; possible exemption from state income, sales and property taxes; reduced postal rates offered to some
• Actions that jeopardize tax-exempt status – private benefit; inurement; more than an insubstantial amount of unrelated trade or business activity; substantial lobbying; political campaign activity
• Major categories of public charities – statutorily-defined (e.g., churches, schools); public support test

Session 2

Unrelated Business Income
Discussion of Gaming Activities

• Three parts of the UBI Test – (1) constitutes a trade or business; (2) regularly carried on; and (3) not substantially related to the organization’s exempt purpose
• Types of activities that commonly generate UBI for exempt organizations – advertising, gaming sale of merchandise and publications, rental income
• Common exceptions and modifications to UBI – activities conducted substantially by volunteers; activities conducted for the convenience of members, students, patients, officers or employees; sales of donated merchandise; distribution of "low cost" articles; convention and trade show activity; qualified sponsorship income; bingo income; exclusions (interest and dividends, royalties, certain rents from real properties, certain gains and losses); deductions (net operating loss, charitable contribution, $1,000 specific deduction)
• Identification and definition of "gaming activities"
• Form used to report UBI and pay the tax – Form 990-T, EO Business Income Tax Return (gross income of $1,000 or more in taxable year); Form 990-W, Estimated Tax on UBTI (estimated tax expected to be $500 or more)

Session 3

Employment Issues

• Main factors used to categorize a worker as either an employee or an independent contractor
• Identification of workers that are statutorily classified as employees and those that are statutorily classified as independent contractors
• Major employment tax forms and their uses for the typical small EO

Session 4

Recordkeeping
Form 990

• Identification of recordkeeping requirements
• Purpose – information return
• Entities that must file – annual gross receipts of $25,000 or more, but exceptions (e.g., churches); filing to start 3-year statute of limitations (box "k")
• Identification of what is reported on major sections
• Common errors – name of organization must match EIN, signature

Description of the Audit Process

• Common types of audits of EOs – correspondence examinations, office examinations, field examinations
• Types of records required by IRS auditor – governing documents, brochures and printed literature describing activities, Forms 990 for previous and subsequent years; minutes; books and records; auditor’s report; tax returns and related work papers; employment tax returns and related work papers

Session 5

Required Disclosures

• Public inspection rules applicable to 501(c)(3) organizations – Form 1023, Form 990 (but not Schedule B)
• Major substantiation rules for contributions – quid pro quo contributions where donor’s payment exceeds $75; donor’s requirement for written acknowledgement from charity for any single contribution of $250 or more in order to claim charitable deduction
• Other disclosure rules applicable to 501(c)(3) organizations