Overview/Class #1
4 major purposes- name at least 2!
Must an organization meet all 14 factors of the 14 factor test to decide if an organization is a church?
No- seems to be that having the majority is ok.
Is training in athletic and physical fitness educational?
Yes
Education may consist in developing one's physical faculties
However, revenue rulings affirm that promoting sports for children is educational, while promotion and regulation of a sport for amateurs is not (Minnesota Chessman case)
Can a public interest law firm recieve fees from clients?
Per case rule- client fees paid may not exceed the actual costs incurred in the case
Total amount of attorney fees recieved from clients, awarded by a court, and awarded by a court because of the egregious behavior of the other side, may not exceed 50% of the total costs of the organization's legal function
To deduct a charitable contribution, do you need to itemize?
Generally yes- you can only itemize if your itemized deductions exceed the standard deduction amount
Organizations that do not need to file an IRS form to have preferred status (name at least 2)
Churches and their affiliated organizations
Organizations with annual gross receipts of $5,000 or less
Organizations covered by an IRS group ruling
Three required features to apply for exemption as religious organization
1. Organization's beliefs must be sincerely held
2. Beliefs must be comprehensive in nature providing an entire system of belief
3. Beliefs must address the fundamental mysteries and purposes of human existence.
4. Possible test for some courts- whether the beliefs are manifested in external forms- whether they are analogous to other religions.
Can an organization be educational even if it advocates a particular position? Why or why not?
An organization may be educational even though it advocates a particular position or viewpoint so long as it presents a sufficiently full and fair exposition of the pertinent facts as to permit an individual or the public to form an independent opinion or conclusion. An organization is not educational if its principal function is the mere presentation of unsupported opinion.
Is research funded by a state or federal agency automatically treated as for the public's benefit?
Yes
If an organization violates either of these two doctrines, it cannot qualify as a charity (name both!)
Illegality doctrine- organization cannot qualify as a charity if it promotes illegal activities (ex- encouraging protestors to block roads, paying illegal bribes and kickbacks to doctors)
Public Policy doctrine- organization cannot qualify as a charity if it violates a fundamental public policy- ex Bob Jones University case- charity status denied because school discriminated on basis of race
Filing requirements (including timeline) to become a public charity
Form 1023 or Form 1023-EZ- must be filed within 27 months from creation to have preferred status as of date of its creation.
If files after 27 months, if approved by the IRS, only becomes tax-exempt from date application is filed with the IRS
Second test besides the 14 part test that the Tax Court applies to determine if an organization is a church
Spiritual togetherness- church includes a body of believers or communicants that assemble regularly in order to worship
3 features of Treasury Regulations which can make the category broad
1. Does not restrict the subject matter being taught. Organization's activities cannot be contrary to public policy.
2. Does not require pure motives for those being educated- could be attending simply to learn how to make more money
3. Does not require that only poor people can be educated- instead a school for rich people could qualify
Can a corporate sponsor pay a scientific org to develop or improve a product?
Yes, but the research must still be for the public benefit. Research can be for the public benefit if the results are properly published and thereby made available to the public on a non-discriminatory basis.
Commerciality doctrine test
An organization will fail to qualify for 501(c)(3) status if it has a substantial non-exempt purposes regardless of its exempt purposes or activities
Taxpayer has the burden to prove they do not have a substantial non-exempt purpose
Benefits for public charities besides tax exempt status (name at least 3)
Exemption from state and local sales taxes on purchases related to their exempt purpose
Preferred mailing rates
Rule against perpetuities does not apply to charitable trusts
3 main reasons organizations want to qualify as a church
1. No need to file application for tax exempt status with the IRS
2. No need to file a detailed annual report with the IRS
3. Enjoying special procedural safeguards if audited by the IRS.
Definition of educational
Instruction or training of the individual for improving or developing their capabilities
Instruction of the public on subjects useful to the individual and beneficial to the community
Proper Publication requirements for a scientific organization
Must publish more information that is found in a patent application
Publication may be in a treatise, trade publication, or in any other form available to the public. Publication needs to disclose substantially all the information that would be useful to the interested public. Information needs to be published as promptly as possible without jeapordizing the patent rights
Who is an insider for private inurement purposes?
Includes the organization's officers, directors, founders, and anyone else who can control or influence the organization (and their family members and any entities they control).
Examples of tax-exempt organizations that CANNOT recieve tax deductible charitable contributions (name at least 3)
Labor unions, business leagues, country clubs, social welfare organizations
Explain why granting tax exempt status to religious organizations is constitutional
4 part methodology test- generally presence of any of four factors will indicate an organization is NOt educational, but in exceptional circumstances an organization can fail one of the tests and still qualify as educational
The presentation of a viewpoint unsupported by facts
The facts used to support the viewpoint are distorted
The organization's presentation makes substantial use of inflammatory or disparaging terms and expresses conclusions more on the basis of strong emotional feelings rather than an objective evaluation
The approach used in the presentation is not aimed at developing an understanding because it fails to consider the audience's background or training in the subject
Withdrawal rule for public interest law firms
Once a public interest law firm has taken a case, it cannot withdraw because the client cannot pay the fee to the same extent
Definition of a candidate for public office
A contestant for an elective office whether national, state, or local, including those seeking to be a judge even in a non-partisan election. You can be a candidate before you even register to run.