The IRS’s recent Rev. Proc. 2018-5 included a number of updates and changes to the procedures for the IRS’ issuing of determination letters for exempt organizations pursuant to a filed Form 1023 or 1023-EZ Application for Recognition of Tax Exemption. Among the most significant and impactful changes are those related to the User Fees and to the questions asked on the streamlined Form 1023-EZ.
When a nonprofit provides assistance instead of or alongside the government, does that qualify as “charitable activity” under Section 501(c)(3)? Think disaster assistance, affordable housing, parks and recreation facilities, drug and alcohol recovery programs, and other health care services. The answer is seemingly obvious: yes, that all counts as charity – and rightfully so. But is it enough that a nonprofit only lessens a government burden, but does not otherwise provide charity, to qualify for Section 501(c)(3) status? And just what does “lessening a government burden” mean within this IRS context?
Exempt organizations have a lot of digesting and analysis to do when it comes to tax reform. You’ll need to fully understand both the direct and indirect impacts of the provisions as well as how to prepare — quickly, in many cases — to minimize (or amplify) the impact.