Legislative Developments

Date01 May 2015
Published date01 May 2015
Bruce R. Hopkins’ Nonprofit Counsel DOI:10.1002/npc
Each article in the newsletter on a tax-exempt organizations law topic ends with a citation to the appropriate chapter(s) or
subchapter(s) in Hopkins, The Law of Tax-Exempt Organizations, Tenth Edition (Wiley 2011, 2014 cumulative supplement). This is
done to provide ready access to additional and background information concerning these articles. For example, underlying infor-
mation concerning the first article in this issue is available in Chapter 7 § 6(b) of the book, and thus the citation is referenced as
[7.6(b)]. Likewise, each article in the newsletter on a charitable giving law topic ends with a citation to the appropriate chapter(s)
or subchapter(s) in Hopkins, The Tax Law of Charitable Giving, Fifth Edition (Wiley 2014). For example, underlying information
concerning the fourth article in this issue is available in Chapter 9 § 7(a) of the book, and thus the citation is referenced as [9.7(a)].
This newsletter is a stand-alone publication. An inventory of articles in the newsletter since its inception in 1983, and a subject mat-
ter index, as well as an index of the court opinions, IRS revenue rulings and procedures, IRS technical advice memoranda, and IRS
private letter rulings discussed in the newsletter, are available at www.nonprofitlawcenter.com. For those who have the books, the
newsletter also provides monthly updates. Both books are annually supplemented. Questions may be sent to bhopkins@polsinelli.
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28. Contributions must be used for purposes consistent
with the donor’s intent, whether as described in the
relevant solicitation materials or as directed by the
29. A charitable organization must provide donors with
acknowledgments of charitable contributions, in
conformance with federal tax law requirements.
30. A charitable organization should adopt a clear and
appropriate gift acceptance policy.
31. A charitable organization should provide training
and supervision of the persons soliciting funds on its
behalf to ensure that they understand their respon-
sibilities and applicable federal, state, and local laws,
and do not employ techniques that are coercive,
intimidating, or intended to harass potential donors.
32. A charitable organization should not compensate
internal or external fundraisers based on a commis-
sion or a percentage of the amount raised.
33. A charitable organization should respect the privacy
of individual donors and, except where disclosure is
required by law, should not sell or otherwise make
available the names and contact information of
its donors without providing them an opportunity
at least once a year to opt out of the use of their
names. [5.6(f)]
The House Committee on Ways and Means, on March
25, approved eight items of legislation, including the Fair
Treatment for All Donations Act (H.R. 1104). This legisla-
tion would provide a gift tax exclusion for contributions
to tax-exempt social welfare organizations (IRC § 501(c)
(4) entities), labor organizations (IRC § 501(c)(5) entities),
and business leagues (IRC § 501(c)(6) entities).
Three other measures would revamp the process for
determining eligibility for exemption as a social welfare
organization (H.R. 1295), provide a right to an administra-
tive appeal for organizations initially denied recognition
of exemption (H.R. 1314), and prohibit IRS employees
from using personal email for business purposes (H.R.
1152). The other bills are the Death Tax Repeal Act (H.R.
1105), the Prevent Targeting at the IRS Act (H.R. 709),
the Taxpayer Bill of Rights (H.R. 1058), and the Taxpayer
Knowledge of IRS Investigations Act (H.R. 1026).
Legislation designed to improve the qualified prepaid
tuition program (IRC § 529) passed the House on Febru-
ary 25 (H.R. 529). One of the principal features of the
bill is that it would restore purchases of computer equip-
ment and costs of Internet access as expenses eligible for
withdrawal from the program’s savings accounts. Last
month’s issue reported approval of this measure by the
Ways and Means Committee. Companion legislation has
been introduced in the Senate (S. 335). [19.19]
A federal district court, on February 24, dismissed a
complaint filed by an organization claiming that its applica-
tion for recognition of tax exemption was improperly pro-
cessed, by Lois Lerner in particular and the IRS in general,
because of its political views (Freedom Path, Inc. v. Lerner
(N.D. Tex.)). One of the reasons for the dismissal was the
absence of the state’s personal jurisdiction over Ms. Lerner.
Quote of the Month: In connection with the contro-
versy over the extent of reliance on a determination
letter issued in response to the filing of a streamlined
application (Form 1023-EZ), Tamera Ripperda, director
of the Exempt Organizations Division, said: “If the relier
has information that leads them to believe that the appli-
cation is inaccurate or anything on an application was
falsely presented, then they can’t rely on the letter. But
if they have no knowledge of that, then they can rely on
the letter, whether it was an EZ applicant or was a long
form application” (Bloomberg BNA, Daily Tax Report,
March 26).

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