Yet another court ruling has been issued on a somewhat obscure regulatory requirement that highlights the tension between significant First Amendment rights and the state’s power to threaten them. The context is the power of the States’ Attorneys General, in regulating Section 501(c)(3) charitable organizations, to obtain otherwise confidential major donor information as disclosed on IRS Form 990 Schedule B. The case is Americans for Prosperity Foundation v. Becerra, previously Americans for Prosperity Foundation v. Harris, in which a three-judge panel of the federal Ninth Circuit Court of Appeals recently reversed a District Court Judge’s judgment that such requirement was unconstitutional as applied to the litigants’ specific circumstances. The Court’s ruling demonstrates a fundamental difference in perspective as to the government’s role in the face of compelling First Amendment free speech and freedom of association rights.
Has your nonprofit ever engaged in joint activities with a business, perhaps with resulting revenues? Such arrangements are increasingly common for many Section 501(c)(3) organizations. A key legal requirement is that the tax-exempt organization maintain control of the project, so that its charitable resources will be “exclusively” used in furtherance of tax-exempt purposes, as required by the Internal Revenue Code. What does “control” mean for IRS purposes, and what happens to resulting revenues? Careful planning is essential to answering these questions for optimal tax compliance.
Does your nonprofit owe income tax on multiple “silos” of unrelated business taxable income (UBTI)? This has been a difficult question for many tax-exempt organizations to answer due to the lack of guidance on what constitutes one unrelated trade or business, or one “silo.” On August 21, 2018, the Internal Revenue Service (“IRS”) issued Notice 2018-67 (“Notice”), providing interim guidance, and greatly needed clarity, on how to identify separate trades or businesses in connection with unrelated business income tax (“UBIT”) liability. This article provides six of the most notable take-aways from Notice 2018-67.