Alston & Bird Tax Blog

Exempt Organization

Splitting the Difference: IRS Applies Exempt Organization Excise Tax to Split-Dollar Life Insurance Policies

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Our Federal Tax Group delves into proposed Treasury regulations addressing exempt organizations’ below-market loans used to pay for split-dollar life insurance premiums. Split-dollar life insurance loans became even more beneficial after the TCJA added a new excise tax on exempt organizations under Section 4960Imputed income from below-market split-dollar life insurance loans must be included in Section 4960 calculationImputed income can be avoided by charging interest at the historically low applicable federal rate Read the full advisory here. To learn more about our exempt organization [...]Read more

What is the best way for a tax-exempt organization to engage in lobbying?

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Tax-exempt organizations under § 501(c)(3) of the Internal Revenue Code face strict rules about regulating lobbying activities.  Breaking these rules can result in severe consequences such as loss of tax-exempt status and excise tax penalties.  For those § 501(c)(3) organizations that wish to expand their operations to encompass lobbying activities, two primary options exist.

Create and Operate an Affiliated § 501(c)(4) organization

Unlike § 501(c)(3) organizations, § 501(c)(4) organizations may engage in unlimited lobbying activities with the caveat that the § 501(c)(4)’s primary [...]Read more

Exempt Status Revocations Rising

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Tax Notes Today did not publish a letter ruling revoking exempt status before 2004, when two were published: one was a home owner’s association and one was a charity with unspecified purposes. In 2005 the number jumped to 41; these included insurance companies, recreational clubs, and charities. The number was the same in 2006 and the categories expanded to debt management charities and a public housing charity. In 2007 the number jumped to 83, with at least one revocation due to political activities.
 
The number of revocations was 221 in 2008. Many were due to reporting failures. [...]Read more