Contributions over $250? Send a letter!

Gomez v. Commissioner just came down from the federal Tax Court, and it reinforces something you should absolutely be on top of as a charity... if you receive a contribution over $250, send a letter to your donors stating so. If not, the contribution is technically not deductible and if the donor's audited, they run a substantial risk of ending up in the same (losing) boat as the taxpayer in this case... more from the Nonprofit Law Prof blog here.

Hate church loses tax case

I try to be objective here on the blog, but I really can't do that with Westminster Baptist Church... I won't bother repeating their beliefs, but most of you have heard of their act. This week, they lost a tax case regarding exemption of their van used to drive to and fro. The nonprofit law prof blog raises a good point that this may not necessarily have been a good ruling from a pure tax law standpoint. If we replaced the petitioner with another group, would many of us feel ok about the ruling?

Are churches different from other charities?

The ongoing saga of Sen. Grassley's investigation into megachurches, including Kenneth Copeland Ministries, brought this response from KCM in a press release:

However, the Church respectfully disagrees with Senator Grassley’s position that churches are no different from any other tax-exempt organization. Any government inquiry into the affairs of a church raises serious constitutional issues that must be carefully balanced against the government’s need to evaluate the effectiveness of the laws of the land. To ensure its constitutional rights are not unnecessarily infringed upon, the Church firmly believes that it must be given the protections from disclosure afforded by the federal tax laws and the benefit of the processes and procedures that apply to inquires of churches made by the IRS.

When I have taught tax exempt law concepts in seminars and conferences, I have found that some in the secular charitable world find the unofficial distinctions and preferences often afforded to religious entities as unfair and unjust. I'm not sure I totally agree with that (there are a host of reasons why churches and religious institutions should be held to different standards than groups like Nature Conservency or even small community charities). I think it's an interesting discussion however - what do you think? Should churches and religious institutions be treated differently by the IRS and tax law?

Update... today's Des Moines Register... did Sen. Grassley lose his delegate spot at the GOP convention because he's pursuing churches?

National taxpayer advocate to IRS: Speed it up!

The Chronicle of Philanthropy reports that Nina Olson, the national taxpayer advocate, has noted an improvement in the Internal Revenue Service's processing of exemption applications, but still sees room for improvement. As anyone who has applied for exemption recognition recently can attest, she's absolutely right. The process needs to improve - ten years ago the process was measured in months (even weeks if you were lucky). Now, the length of your wait can last over a year under some circumstances...