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Electronic
Filing of 990s:
Beginning in 2007 (for tax year
2006), tax-exempt organizations with total assets of over $10 million
will be required to file their Form 990s
electronically. Private foundations will also be required to file
Form 990-PF electronically, regardless of size or assets.
Click here
to view a summary of the IRS ruling.
Tax-exempt organizations can file their information returns for tax year
2004 electronically via a free web service launched recently by the
National Center for Charitable Statistics
(NCCS)
which also permits attachments
to be filed electronically.
Foundations
May Contribute to Charities That Lobby:
In a December 9, 2004
Letter Ruling
the IRS clarified that private foundations may give grants to charities
that lobby, provided that:
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No part of the grant is earmarked for
lobbying;
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The
foundation obtains a proposed budget signed by an officer of the
public charity showing that the amount of the grant, together with
other grants by the same foundation for the same project and year,
does not exceed the amount budgeted, for the year of the grant, by the
public charity for activities of the project that are not lobbying;
and
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The
private foundation has no reason to doubt the budget's accuracy.
Vehicle Donations:
On October 22, 2004,
President Bush signed the "American Jobs Creation Act" of 2004 (the
"Act"). This Act contains several provisions affecting charitable
organizations, but by far the most significant of these provisions
relates to new rules on vehicle donations.
Under the old rules, a person donating a
car, boat, RV or aircraft to a charity was able to take a charitable
deduction equal to the fair market value of the donated property.
Donors who claimed charitable deductions in excess of $5,000 had to
obtain qualified appraisals.
Under the new rules, the charitable
deduction for contribution of a vehicle (including cars, boats, RVs and
planes for which the claimed value is over $5,000; excluding inventory
property) that is resold by the organization is limited beginning in
2005 to the gross proceeds received by the charity upon resale.
This means that if a charity sells a
vehicle at auction or through a bulk sale, where the price the charity
receives is below “Blue Book” value, the donor’s deduction will also be
below Blue Book value. Also, under the new rules the donor will not
know the amount of his/her deduction until the charity sells the
vehicle.
The Act also imposes new
substantiation requirements on charities for contributions of
vehicles where the claimed value exceeds $5,000. Deductions are not
allowed unless the donor substantiates the donation with a
"contemporaneous written acknowledgement" from the charity (meaning the
charity must provide it within 30 days of the vehicle sale) stating:
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the donor's name and social security
number;
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the
vehicle identification number;
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that
the vehicle was sold by the charity in an arm’s length transaction
between unrelated parties;
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the gross sale proceeds, and
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that the donor's deduction cannot
exceed the sales proceeds.
Penalties will apply to charities that
knowingly furnish false or fraudulent acknowledgements. Charities will
be required to provide the IRS with the information contained in the
acknowledgement.
Different rules apply if the charity
uses the vehicle rather than sells it, or if the charity materially
improves the vehicle before sale. In those cases a donor should be able
to claim a deduction equal to the fair market value of the vehicle at
the time of gift to the charity or resale.
Other provisions of the Act include
restrictions on the deductibility of patents and other intellectual
property, and modifications on rules for reporting non-cash charitable
contributions.
For more information about the Act,
please contact the Partnership.
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