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Religious Tax Reclassification for Public Charities

Churches, synagogues, mosques, temples, and other houses of worship have long enjoyed Section 501(c)(3) public charity status, with resulting exemption from IRS Form 990 filings, availability of clergy housing allowances, and religious liberty protections. When, why, and how should other faith-based organizations affirmatively seek IRS reclassification as a “church” – or as an “association of churches” or “mission society” – with similar tax and other legal benefits? The following article addresses such questions extensively, including applicable tax considerations, corporate governance aspects, legal requirements for housing allowance, employment discrimination aspects, and other resulting implications. We hope this deep-dive guidance will help those who are interested in religious tax reclassification. This article was co-authored by W&O Partners Sally Wagenmaker, Ryan Oberly, and Paul Winters and was previously published in Thomson Reuters’ Taxation of Exempts Journal (Jan./Feb. 2022)

NONPROFIT LAW NEWSFEED

Gov. Youngkin Signs Bill Protecting Donor Privacy

The Roanoke Star ​In recent years, “cancel culture” has targeted many individuals, businesses, and organizations with the intention of silencing them into submission.

Lawsuit Challenges IN Law Restricting Charitable Bail Funds

Public News Service​ The state of Indiana is facing a lawsuit over a new law placing restrictions on charitable bail funds.

AG Racine Claws Back $750k in Misspent Nonprofit Funds from Trump Organization & Presidential Inaugural Committee

General Karl A. Racine today announced that the Trump Organization and Donald Trump’s Presidential Inaugural Committee (PIC) will be required to pay $750,000 to the District to resolve allegations that the PIC, the Trump International Hotel, and the Trump Organization illegally misused nonprofit funds to enrich the Trump family.

Former AME Zion Church leaders charged in $14-million fraud against California congregations

Los Angeles Times Two former leaders of the African Methodist Episcopal Zion Church in California are facing federal charges after authorities alleged they defrauded churches across the state out of $14 million.

Cryptocurrency-funded groups called DAOs are becoming charities - here are some issues to watch

The Conversation Cryptocurrency is becoming a more familiar way to pay for things.

One option is as part of a crowd, through a decentralized autonomous organization. In this relatively new kind of group, also called a DAO, decisions and choices are governed by holders of one kind of cryptocurrency token, such as ethereum or bitcoin. 

A controversial nonprofit for Capitol riot defendants makes changes after criticism

NPR The nonprofit Patriot Freedom Project became one of the most prominent groups supporting the "political prisoners" criminally charged in the Jan. 6, 2021 attack on the U.S. Capitol. Now - after facing criticism from some on the pro-Trump right, family members of defendants and experts in charity law - the controversial group has announced it is replacing members of its board of trustees and "revamping" its website.

New Bill Creates 2 New Types of Donor-Advised Funds

Think Advisor Legislation introduced Thursday by Reps. Chellie Pingree, D-Maine, and Tom Reed, R-N.Y., the Accelerating Charitable Efforts (ACE) Act, would “reform federal law to ensure funds donated to donor-advised funds (DAFs) are made available to working charities within a reasonable period of time and provide incentives to speed up donation timelines” by creating two new types of DAFs.Think Advisor Legislation introduced Thursday by Reps. Chellie Pingree, D-Maine, and Tom Reed, R-N.Y., the Accelerating Charitable Efforts (ACE) Act, would “reform federal law to ensure funds donated to donor-advised funds (DAFs) are made available to working charities within a reasonable period of time and provide incentives to speed up donation timelines” by creating two new types of DAFs.

Governor Murphy Signs Legislation Establishing the New Jersey Nonprofit Security Grant Program

State of New Jersey Governor Murphy today signed legislation (A-1663/S-1842) establishing the “New Jersey Nonprofit Security Grant Program”. The program follows a successful three-year pilot program managed by the New Jersey Office of Homeland Security and Preparedness (NJOHSP) which expired in 2020.

Minnesota Nonprofit under Federal Investigation for Alleged Misuse of Funds Meant to Feed Children

Kare 11 Unsealed FBI search warrants claim Feeding Our Future received "tens of millions of dollars" in federal funding to open community sites across the Twin Cities that provide meals to underprivileged children and adults. The FBI documents allege "almost none of this money was used to feed children." 

A tax break for charitable donations is slated to end soon — here’s how to use it before it disappears

MarketWatch As tornado victims in the south and Midwest dig out from the wreckage of the violent weekend storm, tax authorities and experts on nonprofits highlighted a valuable charitable deduction for small-dollar donors that’s slated to expire in a matter of weeks.

Gov. Youngkin Signs Bill Protecting Donor Privacy

The Roanoke Star ​In recent years, “cancel culture” has targeted many individuals, businesses, and organizations with the intention of silencing them into submission.

Lawsuit Challenges IN Law Restricting Charitable Bail Funds

Public News Service​ The state of Indiana is facing a lawsuit over a new law placing restrictions on charitable bail funds.