U.S. District Court Finds Mayo Clinic Qualifies as an “Educational Organization”; Awards $11.5M UBTI Refund
Proskauer | Not For Profit/Exempt Organizations Blog
by Richard M. Corn, Amanda H. Nussbaum, David Miller, Stuart Rosow and Carrie Slaton
3w ago
Introduction Tax-exempt organizations, while not generally subject to tax, are subject to tax on their “unrelated business taxable income” (“UBTI”).  One category of UBTI is debt-financed income; that is, a tax-exempt organization that borrows money directly or through a partnership and uses that money to make an investment is generally subject to tax on a portion of the income or gain from that investment.[1]  However, under section 514(c)(9),[2] “educational organizations” are not subject to tax on their debt-financed income from certain real estate investments. The Mayo Clinic in ..read more
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IRS Releases Guidance on Requirements for Limited Liability Companies to Qualify as Tax-Exempt Entities
Proskauer | Not For Profit/Exempt Organizations Blog
by Amanda H. Nussbaum, Stuart Rosow and Rita N. Halabi
1y ago
On October 21, 2021, the Internal Revenue Service (the “IRS”) released Notice 2021-56 (the “Notice”), which sets forth the additional requirements a limited liability company (“LLC”) must satisfy to obtain a determination letter recognizing its tax-exempt status under sections 501(a) and 501(c)(3) of the Internal Revenue Code.[1] The Notice also requests public comments by February 6, 2022 to assist the IRS and Department of the Treasury in determining whether further guidance is needed. Of particular interest are potential conflicts with state LLC statutes. For instance, the Notice requests c ..read more
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Proskauer’s 26th Annual Trick or Treat Seminar
Proskauer | Not For Profit/Exempt Organizations Blog
by Amanda H. Nussbaum, Jean Bertrand, Katrina McCann, David Miller and Jurate Schwartz
1y ago
Proskauer’s 26th Annual Trick or Treat Seminar was held virtually on Friday, October 29th and discussed timely topics and best practices specifically tailored to the not-for-profit community. The seminar discussed: Workplace challenges: Mandatory vaccinations, HERO act and other considerations Tax proposals impacting nonprofit organizations Employee benefits update Amanda Nussbaum welcomed everyone and introduced the presenters. Here are some key points from each presentation: Jurate Schwartz discussed workplace challenges created by the COVID-19 pandemic.  She first covered the forthco ..read more
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The Impact of Americans for Prosperity Foundation v. Bonta on Donor Disclosure Laws
Proskauer | Not For Profit/Exempt Organizations Blog
by Amanda H. Nussbaum, Richard M. Corn and Carrie Slaton
1y ago
On July 1, 2021, the Supreme Court struck down a California donor-disclosure law as facially unconstitutional in its decision in Americans for Prosperity Foundation v. Bonta.[1]  The law required nonprofits operating or soliciting contributions in California to disclose to the Attorney General of California information about all of its donors who contribute more than $5,000 each year (generally, through a requirement that nonprofits submit a copy of their Schedule Bs from their IRS Form 990s).[2]  The decision clarified the rules applicable to disclosure requirements with respect to ..read more
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Final Regulations on Executive Compensation Excise Tax (Section 4960) Carries Forward Most Concepts from Proposal
Proskauer | Not For Profit/Exempt Organizations Blog
by Amanda H. Nussbaum, James Huffman, Katrine Magas and Seth Safra
1y ago
On January 19, 2021 the Department of the Treasury (“Treasury”) and the Internal Revenue Service (“IRS”) published in the Federal Register Final Regulations (the “Final Regulations”) interpreting the excise tax under Section 4960 of the Internal Revenue Code on certain executive compensation paid by tax-exempt organizations. The Final Regulations maintain most of the concepts from the interim guidance (Notice 2019-09 (the “Notice”), discussed here and here, and Proposed Regulations (the “Proposed Regulations”), discussed here), with a few changes. The Final Regulations became effective January ..read more
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10 Keys to Excise Tax on Executive Compensation Paid by Tax-Exempt Organizations
Proskauer | Not For Profit/Exempt Organizations Blog
by Seth Safra, Amanda H. Nussbaum, Katrine Magas and James Huffman
1y ago
Proposed Regulations under Section 4960 of the Internal Revenue Code provide important guidance for tax-exempt organizations and their affiliates regarding an excise tax on certain executive compensation.  The U.S. Department of the Treasury (“Treasury”) and Internal Revenue Service (the “IRS”) are accepting comments until August 10, 2020.  (Throughout this post, “Sections” refer to sections of the Internal Revenue Code.) As a refresher, Section 4960 was enacted as part of the 2017 Tax Cuts and Jobs Act (the “TCJA”).  Effective for taxable years beginning after December 31, 2017 ..read more
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IRS Issues Final Regulations on Nonprofit Donor Disclosure Requirements
Proskauer | Not For Profit/Exempt Organizations Blog
by Amanda H. Nussbaum and Elizabeth Johnston Wytock
1y ago
On May 26, the Internal Revenue Service (“IRS”) and the U.S. Department of the Treasury issued final regulations (the “Final Regulations”) relaxing nonprofit donor disclosure requirements under section 6033[1] of the Internal Revenue Code (the “Code”) for many non-charitable tax-exempt organizations. Stated generally, section 6033 requires organizations exempt from taxation under section 501(a) (including section 527 political organizations) to file an annual information return with the IRS, such as a Form 990, Form 990-EZ, or Form 990-N. Section 6033 and the regulations thereunder grant the I ..read more
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Proposed Regulations on UBTI Provide Guidance to Tax-Exempt Organizations Making Fund Investments
Proskauer | Not For Profit/Exempt Organizations Blog
by Jeremy Naylor, Amanda H. Nussbaum and Brianna Reed
1y ago
On April 23, 2020, the Treasury Department and the Internal Revenue Service (the “IRS”) issued proposed regulations (the “Proposed Regulations”) under Section 512(a)(6) of the Internal Revenue Code (the “Code”).  Section 512(a)(6) was enacted as part of the 2017 Tax Cut and Jobs Act (the “TCJA”) and requires exempt organizations (including individual retirement accounts) to calculate unrelated business taxable income (“UBTI”) separately with respect to each of their unrelated trades or businesses, thereby limiting the ability to use losses from one business to offset income or gain from a ..read more
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Proposed Regulations Provide Guidance to Exempt Organizations on Identifying Separate Unrelated Trade or Businesses
Proskauer | Not For Profit/Exempt Organizations Blog
by Stuart Rosow, Amanda H. Nussbaum, David Miller, Janicelynn Asamoto Park and Bowon Koh
1y ago
On April 23, the Treasury Department and the Internal Revenue Service (the “IRS”) issued helpful proposed regulations under section 512(a)(6) of the Internal Revenue Code (the “proposed regulations”).  Section 512(a)(6) was enacted as part of the 2017 Tax Cut and Jobs Act (the “TCJA”) and requires exempt organizations (including individual retirement accounts) to calculate unrelated business taxable income (“UBTI”) separately with respect to each of their unrelated trades or businesses, thereby limiting the ability to use losses from one business to offset income or gain from another.[1 ..read more
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The FFCRA and CARES Act: Key Provisions Affecting Nonprofit Organizations
Proskauer | Not For Profit/Exempt Organizations Blog
by Amanda H. Nussbaum, David Miller, Jean Bertrand, Bowon Koh and Sean Webb
1y ago
On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (“FFCRA”) (H.R. 6201), and on March 27, 2020, he signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) (H.R. 748). This alert summarizes certain loan and tax-related provisions of these new laws that are most relevant to nonprofit organizations. I. Sick and Family Leave Credits. Beginning April 1, 2020, nonprofit organizations with fewer than 500 employees are required to pay employees (i) their full wage, (up to $511/day or $5,110 total) if the employees are unabl ..read more
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