Sunday, September 21, 2008

IRS Issues Report on 501(c)(3) Organizations' Compliance with Tax-Exempt Bond Financing Requirements

On September 11, 2008, the IRS released a report entitled: "Tax Exempt Bonds Compliance Check Questionnaire Initiative Interim Report on Charitable Financings: A Summary of Reported Data and Analysis." According to the IRS, this report presents the analysis and preliminary conclusions on the data collected during the Tax-Exempt Charitable Financings Compliance Check Questionnaire project, which sought to identify and measure the overall knowledge of 501(c)(3) exempt organizations of the post-issuance compliance and record retention requirements generally applicable to qualified 501(c)(3) bond issues for which they are a beneficiary. Steven T. Miller, Commissioner, Tax Exempt and Government Entities, says of the report: “I am pleased with the positive response we have received on this project, both in the high percentage of completed questionnaires and the interest of industry associations in the responses.” Here are the report's findings:

The compliance questionnaire addressed policies, practices, and recordkeeping of § 501(c)(3) organizations benefitting from tax-exempt financing in such key areas as use of proceeds and property, arbitrage, expenditures, and other filings and requirements.

Almost all (95%) of the responding § 501(c)(3) organizations reported that they had implemented written post-issuance compliance procedures or guidelines to ensure continued compliance with applicable federal tax requirements. However, a closer analysis of the narrative responses suggested that only 49% either had written specific procedures (16%) or implemented an ad hoc process (33%) to ensure effective monitoring of post-issuance compliance. Although this does not necessarily mean that one group or the other is more or less compliant with the tax exempt bond rules, our examination experience suggests that the adoption and consistent utilization of formal procedures and practices generally improves the likelihood of post-issuance compliance.

Almost all (89%) of the responding § 501(c)(3) organizations reported that they assigned a management official the primary responsibility of monitoring post issuance compliance. Moreover, a high percentage (89%) of the respondents reported that they provide some level of related training to these officials.

Almost all (97%) of the responding § 501(c)(3) organizations indicated that they maintained books and records necessary to substantiate compliance. However, some of the respondents indicated that they are not retaining certain types of required records on a consistent basis.

This Interim Report summarizes the data as reported to us. Other than review the narrative responses and supplemental information provided by the respondents, we have not independently tested or attempted to verify the accuracy or completeness of the responses.

To see the entire report, go to this website:


September 21, 2008 in Federal – Executive, Studies and Reports | Permalink | Comments (0) | TrackBack (0)

Treasury Issues 08-09 Priority Guidance Plan - Contains a Number of Exempt Organization-related Issues

On September 10, 2008, the U.S. Department of the Treasury issued its "2008-2009 Priority Guidance Plan." The plan includes a number of exempt organization related issues, including the following:

1. Guidance on a voluntary compliance program for exempt organizations.

2. Revenue procedure to modify Rev. Proc. 75-50 as to the publication requirement by a private school of its nondiscriminatory policy.

3. Proposed regulations under §§509 and 4943 regarding the new requirements for supporting organizations, as added by the Pension Protection Act of 2006.

4. Final regulations under §§4965, 6011, and 6033 on excise taxes on prohibited tax shelter transactions and related disclosure requirements. Proposed regulations were published on August 20, 2007.

5. Proposed regulations regarding the new excise taxes on donor advised funds, as added by the Pension Protection Act of 2006.

6. Regulations to implement Form 990 revisions. • PUBLISHED 09/09/2008 in FR as TD 9423.

7. Proposed regulations to update regulations under §6104(c) relating to disclosures to state charity agencies for changes made by the Pension Protection Act of 2006.

The Treasury describes its priority guidance plan document this way:

The 2008 – 2009 Priority Guidance Plan contains 314 projects to be completed over a twelve-month period, from July 2008 through June 2009. This year's plan will address a variety of issues, including recent legislation, conditions in the housing market, the current economic environment, and important international issues.

In addition to the items on this year's plan, the Appendix lists the more routine guidance that is published each year.

We intend to update and republish the Priority Guidance Plan during the plan year to reflect additional guidance that we intend to publish during the plan year. The periodic updates allow us flexibility throughout the plan year to consider comments received from taxpayers and tax practitioners relating to additional projects and to respond to developments arising during the plan year. For example, we updated the 2007 – 2008 Priority Guidance Plan to reflect the publication of guidance responding to current developments such as new legislation and changes in the economy.

For the entire plan see "Department of the Treasury 2008-2009 Priority Guidance Plan" located on the web at


September 21, 2008 in Federal – Executive, Studies and Reports | Permalink | Comments (0) | TrackBack (0)

Federal Prosecutors Try a Second Time For Convictions Against Former Holy Land Foundation Charity Leaders for Providing "Material Support" to Designated Terrorist Organization

On September 21, 2008, the Washington Post reported that the government will try yet again to successfully prosecute the former leaders of the Holy Land Foundation for rendering "material support" to terrorists, in violation of federal law.  Here is an excerpt from the article:

The government's largest terrorism financing case returned to a courtroom in Dallas this week as prosecutors once again try to secure criminal convictions against five men for allegedly raising more than $12 million in what investigators call "blood money" to support overseas suicide bombings.

The case against former leaders of the Holy Land Foundation, a Texas charity that authorities shuttered seven years ago because of its alleged links to the militant Palestinian group Hamas, comes nearly a year after a previous trial ended in disappointment for the government. Jurors acquitted one man outright on 31 charges and deadlocked on charges against the others. Senior U.S. District Judge A. Joe Fish declared a mistrial in October 2007.

The turbulent jury deliberations ignited debate about the strength of the government's evidence and its pursuit of financiers who back terrorist groups. In the years since the Sept. 11, 2001, attacks, authorities increasingly have accused suspects of providing "material support" to hostile groups, but the Justice Department's trial record in such cases has been mixed.

For the entire article, see "Terrorism Financing Case Gets 2nd Trial - U.S. Government Again Tries to Link Charity to Hamas" in the September 21, 2008, issue of the Washington Post.


September 21, 2008 in In the News, International | Permalink | Comments (0) | TrackBack (0)

Can There Ever be Too Many Churches?

On September 21, 2008, the New York Times reported that the number of tax-exempt churches in one local community has grown so extensively that residents are complaining about the negative implications for for tax-paying individuals and businesses in the area.  Here is an excerpt from the article:

What Roosevelt has in abundance, however, is churches. By one unofficial count, 68 houses of worship have taken root in this small community, which is a bit over a mile in width and in length and has a population of about 16,000.

This trend has produced concern among some community, business and political leaders that the concentration of churches is impeding business. Public officials say the situation leaves them in a quandary, acknowledging the right of churches to open here but lamenting the loss of potential tax revenue.

“It’s like a forbidden subject, but I wish to God I could find a way to stop churches from coming into this community,” said Wilhelmina Funderburke, chairwoman of the Roosevelt Community Revitalization Group, a nonprofit coalition of local organizations.

Some clergy members rebut the critics, praising the churches as providing a net benefit and noting that a number of congregations meet in rented quarters whose owners do pay taxes.

“There are a lot of churches all over the place — I don’t see anything so unique about Roosevelt,” said Elder Joseph M. Jones, pastor of Newbirth Christian Interfaith Church. He said he was insulted by the notion that churches hurt the tax base. “Churches have always served as the basis for social cohesion” in the community, he said. “They ought to get rid of the bars, not the churches.”

For the entire story, see "Tax-Exempt Churches a Target of Frustration" in the September 21, 2008, issue of the New York Times.


September 21, 2008 in Church and State, In the News | Permalink | Comments (0) | TrackBack (0)