The due diligence process in considering a merger or affiliation is serious, but don’t let the lawyers use it to tell you why it shouldn’t be done. Lawyers are trained to tell you the risks. They will seldom provide the vision.
A charity that does not spend at least a portion of its time in advocacy work is probably not doing its job as well as it should.
Therefore, charities must understand the tax law definitions of "lobbying" and "legislation." There is a vast amount of advocacy that can be carried on without approaching tax limitations. Private foundations can support most of it, and preparing an application with foundation rules in mind can make it easier to get funded.
Tax law is not the only issue, however. Beware of federal and state lobbying registration requirements, with different definitions, and different reporting.
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Despite the political grandstanding that erupted after the disclosure that IRS determinations staff and attorneys had asked some improper questions of Tea Party and other potentially political organizations applying for 501(c)(4) social welfare exempt status, there has been no evidence that the IRS or the Obama Administration was targeting political foes.
When one reads the Treasury Inspector General’s Report, press reports of staff statements to the House Committee on Oversight and Government Reform, and comments of former IRS officials, one comes away with a vision of front line staff struggling to try to determine who can qualify as a (c)(4) organization when there is no clear definition to work with.
It isn’t as easy as it once was to claim a charitable contribution deduction for a gift to charity.
Because of perceived abuses by taxpayers claiming inflated deductions without adequate justification, Congress and the Internal Revenue Service have tightened the rules over the last several decades.
The rules apply to the taxpayers seeking the deduction. In most cases, they do not directly apply to the charities receiving the gifts and do not impose penalties on charities, but charities that want to assist their donors and receive additional gifts will want to be sure that the donors are in position to claim their deductions properly.
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The federal District Court for the Northern District of California (Charles R. Breyer) has issued a preliminary injunction ordering the removal of federalized National Guard troops from California.
U.S. Attorney General Pam Bondi has issued a Memorandum for all Federal Prosecutors, Law Enforcement Agencies and Department of Justice Grant-Making Components “implementing” President Trump’s National Security Presidential Memorandum-7 on Countering Domestic Terrorism and Organized Political Violence. It significantly expands the kind of thinking that can be considered in defining terrorism.
The federal District Court in Texas hearing the challenge to the constitutionality of the so-called “Johnson Amendment” that prohibits charities from participating in election campaigns has denied a request by Americans United for Separation of Church and State to intervene in the case.
You know your case is in trouble when the Court opens its opinion with “the old question: ‘Who you gonna believe, me or your lyin’ eyes?’”
Such was the problem for Lake Jordan Holdings, LLC, an organization that bought 165 acres of land in rural Elmore County, AL, for $583,000 in 2017 and a few months later granted a conservation easement on 157 acres, for which it claimed a $12,740,000 charitable contribution tax deduction on its tax return. It was “yet another in the depressingly long line of cash grabs dressed up in eleemosynary clothing,” the Tax Court said.
