Group tax exemptions have long provided valuable benefits for many nonprofit organizations, allowing them to receive tax-exempt status through a central organization instead of applying directly to the IRS. Through its Notice 2020-36 issued this year, however, the IRS has proposed a new “Revenue Procedure” that could significantly limit and change this traditional administrative benefit for many nonprofits.
Freedom Path's Continued Journey: Challenging the IRS' Dubious "Facts and Circumstances" Political Test
When is a tax-exempt organization too political? Freedom Path is a nonprofit that has repeatedly sought to challenge the IRS’ multi-factor “facts and circumstances” test for deciding that question, particularly with respect to politically oriented educational issue advocacy. Throughout varying court challenges, Freedom Path has asserted that it is properly organized as a Section 501(c)(4) social welfare organization and entitled to engage in constitutional free speech activities that do not cross over the political line for such tax-exempt status. The IRS, on the other hand, has rejected such argument per its Revenue Ruling 2004-6, and has won so far. Who is right? Does IRS Revenue Ruling 2004-6 pass constitutional muster?
Most nonprofit organizations are required to annually file a Form 990 with the IRS. The filing is tied to the nonprofit’s fiscal year end and is due on the fifteenth day of the fifth month after the fiscal year ends. For organizations with calendar fiscal years, the filing deadline is May 15. For fiscal years ending June 30, the deadline is November 15. Under normal circumstances, nonprofits may seek a six-month extension for Form 990 filings by filing Form 8868. This year is not normal, to say the least.