Wednesday, April 13, 2022

IRS on Crowdfunding, Suspension of Delinquent Notices, Private Foundation Info, and Religious and Apostolic Associations

IRS-SymbolEven with the much-reported backlog at the IRS, the Service is still issuing informal guidance and other information in a variety of areas. Notable recent pronouncements include:

  • Crowdfunding Taxation and Reporting: In Fact Sheet FS-2022-20, the IRS says the following about taxation of crowdfunding proceeds:

If a crowdfunding organizer solicits contributions on behalf of others, distributions of the money raised to the organizer may not be includible in the organizer's gross income if the organizer further distributes the money raised to those for whom the crowdfunding campaign was organized.

If crowdfunding contributions are made as a result of the contributors' detached and disinterested generosity, and without the contributors receiving or expecting to receive anything in return, the amounts may be gifts and therefore may not be includible in the gross income of those for whom the campaign was organized. Contributions to crowdfunding campaigns are not necessarily a result of detached and disinterested generosity, and therefore may not be gifts. Additionally, contributions to crowdfunding campaigns by an employer to, or for the benefit of, an employee are generally includible in the employee's gross income.

In the same fact sheet, the IRS also notes that crowdfunding platforms "may be required to report distributions of money raised if the amount distributed meets certain reporting thresholds by filing Form 1099-K" (now generally $600, see Form 1099-K instructions). But it also notes recent legislation clarifies that no such reporting is required "if the contributors to the crowdfunding campaign do not receive goods or services for their contributions".

  • Suspension of Delinquent Notices: The IRS announced in March that it is suspending the issuance of several notices generally mailed to tax-exempt or government entities relating to delinquent returns. These include notices relating to Form 990/990-EZ/990-N, Form 99o-PF, Form 990-T, Form 5227, and form 1120-POL.
  • Private Foundation Revised Guidance & Updated Data: The IRS issued two revised technical guides relating to private foundations: Publication 5616 (relating to self-dealing under IRC section 4941), and Publication 5590 (relating to taxable expenditures under IRC section 4945). It also released microdata and tables with Tax Year 2018 data on private foundations, now available at the Statistics of Income private foundation webpage.
  • Religious and Apostolic Associations: Finally, the IRS also issued a revised technical guide relating to religious and apostolic associations tax exempt under IRC section 501(d), Publication 5627.

Lloyd Mayer

https://lawprofessors.typepad.com/nonprofit/2022/04/irs-on-crowdfunding-suspension-of-delinquent-notices-and-private-foundation-info.html

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