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2011 Taxact

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2011 Taxact

2011 taxact 6. 2011 taxact   Tax Treaty Benefits Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: Purpose of Tax Treaties Common Benefits Competent Authority AssistanceAdditional filing. 2011 taxact Obtaining Copies of Tax Treaties Topics - This chapter discusses: Some common tax treaty benefits, How to get help in certain situations, and How to get copies of tax treaties. 2011 taxact Useful Items - You may want to see: Publication 597 Information on the United States—Canada Income Tax Treaty 901 U. 2011 taxact S. 2011 taxact Tax Treaties See chapter 7 for information about getting these publications. 2011 taxact Purpose of Tax Treaties The United States has tax treaties or conventions with many countries. 2011 taxact See Table 6-1 at the end of this chapter for a list of these countries. 2011 taxact Under these treaties and conventions, citizens and residents of the United States who are subject to taxes imposed by the foreign countries are entitled to certain credits, deductions, exemptions, and reductions in the rate of taxes of those foreign countries. 2011 taxact If a foreign country with which the United States has a treaty imposes a tax on you, you may be entitled to benefits under the treaty. 2011 taxact Treaty benefits generally are available to residents of the United States. 2011 taxact They generally are not available to U. 2011 taxact S. 2011 taxact citizens who do not reside in the United States. 2011 taxact However, certain treaty benefits and safeguards, such as the nondiscrimination provisions, are available to U. 2011 taxact S. 2011 taxact citizens residing in the treaty countries. 2011 taxact U. 2011 taxact S. 2011 taxact citizens residing in a foreign country also may be entitled to benefits under that country's tax treaties with third countries. 2011 taxact Certification of U. 2011 taxact S. 2011 taxact residency. 2011 taxact   Use Form 8802, Application for United States Residency Certification, to request certification of U. 2011 taxact S. 2011 taxact residency for purposes of claiming benefits under a tax treaty. 2011 taxact Certification can be requested for the current and any prior calendar years. 2011 taxact You should examine the specific treaty articles to find if you are entitled to a tax credit, tax exemption, reduced rate of tax, or other treaty benefit or safeguard. 2011 taxact Common Benefits Some common tax treaty benefits are explained below. 2011 taxact The credits, deductions, exemptions, reductions in rate, and other benefits provided by tax treaties are subject to conditions and various restrictions. 2011 taxact Benefits provided by certain treaties are not provided by others. 2011 taxact Personal service income. 2011 taxact If you are a U. 2011 taxact S. 2011 taxact resident who is in a treaty country for a limited number of days in the tax year and you meet certain other requirements, the payment you receive for personal services performed in that country may be exempt from that country's income tax. 2011 taxact Professors and teachers. 2011 taxact If you are a U. 2011 taxact S. 2011 taxact resident, the payment you receive for the first 2 or 3 years that you are teaching or doing research in a treaty country may be exempt from that country's income tax. 2011 taxact Students, trainees, and apprentices. 2011 taxact If you are a U. 2011 taxact S. 2011 taxact resident, amounts you receive from the United States for study, research, or business, professional and technical training may be exempt from a treaty country's income tax. 2011 taxact Some treaties exempt grants, allowances, and awards received from governmental and certain nonprofit organizations. 2011 taxact Also, under certain circumstances, a limited amount of pay received by students, trainees, and apprentices may be exempt from the income tax of many treaty countries. 2011 taxact Pensions and annuities. 2011 taxact If you are a U. 2011 taxact S. 2011 taxact resident, nongovernment pensions and annuities you receive may be exempt from the income tax of treaty countries. 2011 taxact Most treaties contain separate provisions for exempting government pensions and annuities from treaty country income tax, and some treaties provide exemption from the treaty country's income tax for social security payments. 2011 taxact Investment income. 2011 taxact If you are a U. 2011 taxact S. 2011 taxact resident, investment income, such as interest and dividends, that you receive from sources in a treaty country may be exempt from that country's income tax or taxed at a reduced rate. 2011 taxact Several treaties provide exemption for capital gains (other than from sales of real property in most cases) if specified requirements are met. 2011 taxact Tax credit provisions. 2011 taxact If you are a U. 2011 taxact S. 2011 taxact resident who receives income from or owns capital in a foreign country, you may be taxed on that income or capital by both the United States and the treaty country. 2011 taxact Most treaties allow you to take a credit against or deduction from the treaty country's taxes based on the U. 2011 taxact S. 2011 taxact tax on the income. 2011 taxact Nondiscrimination provisions. 2011 taxact Most U. 2011 taxact S. 2011 taxact tax treaties provide that the treaty country cannot discriminate by imposing more burdensome taxes on U. 2011 taxact S. 2011 taxact citizens who are residents of the treaty country than it imposes on its own citizens in the same circumstances. 2011 taxact Saving clauses. 2011 taxact U. 2011 taxact S. 2011 taxact treaties contain saving clauses that provide that the treaties do not affect the U. 2011 taxact S. 2011 taxact taxation of its own citizens and residents. 2011 taxact As a result, U. 2011 taxact S. 2011 taxact citizens and residents generally cannot use the treaty to reduce their U. 2011 taxact S. 2011 taxact tax liability. 2011 taxact However, most treaties provide exceptions to saving clauses that allow certain provisions of the treaty to be claimed by U. 2011 taxact S. 2011 taxact citizens or residents. 2011 taxact It is important that you examine the applicable saving clause to determine if an exception applies. 2011 taxact More information on treaties. 2011 taxact   Publication 901 contains an explanation of treaty provisions that apply to amounts received by teachers, students, workers, and government employees and pensioners who are alien nonresidents or residents of the United States. 2011 taxact Since treaty provisions generally are reciprocal, you usually can substitute “United States” for the name of the treaty country whenever it appears, and vice versa when “U. 2011 taxact S. 2011 taxact ” appears in the treaty exemption discussions in Publication 901. 2011 taxact   Publication 597 contains an explanation of a number of frequently-used provisions of the United States–Canada income tax treaty. 2011 taxact Competent Authority Assistance If you are a U. 2011 taxact S. 2011 taxact citizen or resident alien, you can request assistance from the U. 2011 taxact S. 2011 taxact competent authority if you think that the actions of the United States, a treaty country, or both, cause or will cause a tax situation not intended by the treaty between the two countries. 2011 taxact You should read any treaty articles, including the mutual agreement procedure article, that apply in your situation. 2011 taxact The U. 2011 taxact S. 2011 taxact competent authority cannot consider requests involving countries with which the United States does not have a tax treaty. 2011 taxact Effect of request for assistance. 2011 taxact   If your request provides a basis for competent authority assistance, the U. 2011 taxact S. 2011 taxact competent authority generally will consult with the treaty country competent authority on how to resolve the situation. 2011 taxact How to make your request. 2011 taxact   It is important that you make your request for competent authority consideration as soon as either of the following occurs. 2011 taxact You are denied treaty benefits. 2011 taxact Actions taken by both the United States and the foreign country result in double taxation or will result in taxation not intended by the treaty. 2011 taxact   In addition to making a request for assistance, you should take steps so that any agreement reached by the competent authorities is not barred by administrative, legal, or procedural barriers. 2011 taxact Some of the steps you should consider taking include the following. 2011 taxact Filing a protective claim for credit or refund of U. 2011 taxact S. 2011 taxact taxes. 2011 taxact Delaying the expiration of any period of limitations on the making of a refund or other tax adjustment. 2011 taxact Avoiding the lapse or termination of your right to appeal any tax determination. 2011 taxact Complying with all applicable procedures for invoking competent authority consideration. 2011 taxact Contesting an adjustment or seeking an appropriate correlative adjustment with respect to the U. 2011 taxact S. 2011 taxact or treaty country tax. 2011 taxact Taxpayers can consult with the U. 2011 taxact S. 2011 taxact competent authority to determine whether they need to take protective steps and when any required steps need to be taken. 2011 taxact   The request should contain all essential items of information, including the following items. 2011 taxact A reference to the treaty and the treaty provisions on which the request is based. 2011 taxact The years and amounts involved in both U. 2011 taxact S. 2011 taxact dollars and foreign currency. 2011 taxact A brief description of the issues for which competent authority assistance is requested. 2011 taxact   A complete listing of the information that must be included with the request can be found in Revenue Procedure 2006-54, or its successor. 2011 taxact Revenue Procedure 2006-54 is available at www. 2011 taxact irs. 2011 taxact gov/irb/2006-49_IRB/ar13. 2011 taxact html. 2011 taxact   Also, see Notice 2013-78, which provides proposed updates to the procedures for requesting U. 2011 taxact S. 2011 taxact competent authority assistance under tax treaties. 2011 taxact As noted, Revenue Procedure 2006-54 will be superseded by a revenue procedure to be published in the future. 2011 taxact    Your request for competent authority consideration should be addressed to:   Deputy Commissioner (International) Large Business and International Division Internal Revenue Service 1111 Constitution Avenue, NW Routing M4-365 Washington, DC 20224 Attn: TAIT Additional filing. 2011 taxact   In the case of U. 2011 taxact S. 2011 taxact - initiated adjustments, you also must file a copy of the request with the IRS office where your case is pending. 2011 taxact If the request is filed after the matter has been designated for litigation or while a suit contesting your relevant tax liability is pending in a United States court, a copy of the request, with a separate statement attached identifying the court where the suit is pending and the docket number of the action, also must be filed with the: Office of Associate Chief Counsel (International) Internal Revenue Service 1111 Constitution Avenue, NW Washington, DC 20224 Additional details on the procedures for requesting competent authority assistance are included in Revenue Procedure 2006-54, or its successor. 2011 taxact Obtaining Copies of Tax Treaties Table 6-1 lists those countries with which the United States has income tax treaties. 2011 taxact This table is updated through October 31, 2013. 2011 taxact You can get complete information about treaty provisions from the taxing authority in the country from which you receive income or from the treaty itself. 2011 taxact You can obtain the text of most U. 2011 taxact S. 2011 taxact treaties at IRS. 2011 taxact gov. 2011 taxact You also can request the text of treaties from the Department of Treasury at the following address. 2011 taxact Department of Treasury Office of Business and Public Liaison Rm. 2011 taxact 3411 1500 Pennsylvania Avenue, NW  Washington, DC 20220 If you have questions about a treaty and you are in the United States, Puerto Rico, or the U. 2011 taxact S. 2011 taxact Virgin Islands, you can call the IRS at 1-800-829-1040. 2011 taxact Table 6–1. 2011 taxact List of Tax Treaties (Updated through October 31, 2013) Country Official Text  Symbol1 General  Effective Date Citation Applicable Treasury Explanations  or Treasury Decision (T. 2011 taxact D. 2011 taxact ) Australia TIAS 10773 Dec. 2011 taxact 1, 1983 1986-2 C. 2011 taxact B. 2011 taxact 220 1986-2 C. 2011 taxact B. 2011 taxact 246 Protocol TIAS Jan. 2011 taxact 1, 2004     Austria TIAS Jan. 2011 taxact 1, 1999     Bangladesh TIAS Jan. 2011 taxact 1, 2007     Barbados TIAS 11090 Jan. 2011 taxact 1, 1984 1991-2 C. 2011 taxact B. 2011 taxact 436 1991-2 C. 2011 taxact B. 2011 taxact 466 Protocol TIAS Jan. 2011 taxact 1, 2005     Belgium TIAS Jan. 2011 taxact 1, 2008     Bulgaria TIAS Jan. 2011 taxact 1, 2009     Canada2 TIAS 11087 Jan. 2011 taxact 1, 1985 1986-2 C. 2011 taxact B. 2011 taxact 258 1987-2 C. 2011 taxact B. 2011 taxact 298 Protocol TIAS Jan. 2011 taxact 1, 2009     China, People's Republic of TIAS 12065 Jan. 2011 taxact 1, 1987 1988-1 C. 2011 taxact B. 2011 taxact 414 1988-1 C. 2011 taxact B. 2011 taxact 447 Commonwealth of Independent States3 TIAS 8225 Jan. 2011 taxact 1, 1976 1976-2 C. 2011 taxact B. 2011 taxact 463 1976-2 C. 2011 taxact B. 2011 taxact 475 Cyprus TIAS 10965 Jan. 2011 taxact 1, 1986 1989-2 C. 2011 taxact B. 2011 taxact 280 1989-2 C. 2011 taxact B. 2011 taxact 314 Czech Republic TIAS Jan. 2011 taxact 1, 1993     Denmark TIAS Jan. 2011 taxact 1, 2001     Protocol TIAS Jan. 2011 taxact 1, 2008     Egypt TIAS 10149 Jan. 2011 taxact 1, 1982 1982-1 C. 2011 taxact B. 2011 taxact 219 1982-1 C. 2011 taxact B. 2011 taxact 243 Estonia TIAS Jan. 2011 taxact 1, 2000     Finland TIAS 12101 Jan. 2011 taxact 1, 1991     Protocol TIAS Jan. 2011 taxact 1, 2008     France TIAS Jan. 2011 taxact 1, 1996     Protocol TIAS Jan. 2011 taxact 1, 2009     Germany TIAS Jan. 2011 taxact 1, 1990     Protocol TIAS Jan. 2011 taxact 1, 2008     Greece TIAS 2902 Jan. 2011 taxact 1, 1953 1958-2 C. 2011 taxact B. 2011 taxact 1054 T. 2011 taxact D. 2011 taxact 6109, 1954-2 C. 2011 taxact B. 2011 taxact 638 Hungary TIAS 9560 Jan. 2011 taxact 1, 1980 1980-1 C. 2011 taxact B. 2011 taxact 333 1980-1 C. 2011 taxact B. 2011 taxact 354 Iceland TIAS 8151 Jan. 2011 taxact 1, 2009     India TIAS Jan. 2011 taxact 1, 1991     Indonesia TIAS 11593 Jan. 2011 taxact 1, 1990     Ireland TIAS Jan. 2011 taxact 1, 1998     Israel TIAS Jan. 2011 taxact 1, 1995     Italy TIAS Jan. 2011 taxact 1, 2010     Jamaica TIAS 10207 Jan. 2011 taxact 1, 1982 1982-1 C. 2011 taxact B. 2011 taxact 257 1982-1 C. 2011 taxact B. 2011 taxact 291 Japan TIAS Jan. 2011 taxact 1, 2005     Kazakhstan TIAS Jan. 2011 taxact 1, 1996     Korea, South TIAS 9506 Jan. 2011 taxact 1, 1980 1979-2 C. 2011 taxact B. 2011 taxact 435 1979-2 C. 2011 taxact B. 2011 taxact 458 Latvia TIAS Jan. 2011 taxact 1, 2000     Lithuania TIAS Jan. 2011 taxact 1, 2000     Luxembourg TIAS Jan. 2011 taxact 1, 2001     Malta TIAS Jan. 2011 taxact 1, 2011     Mexico TIAS Jan. 2011 taxact 1,1994     Protocol TIAS Jan. 2011 taxact 1, 2004               Table 6–1 (continued). 2011 taxact Country Official Text  Symbol1 General  Effective Date Citation Applicable Treasury Explanations  or Treasury Decision (T. 2011 taxact D. 2011 taxact ) Morocco TIAS 10195 Jan. 2011 taxact 1, 1981 1982-2 C. 2011 taxact B. 2011 taxact 405 1982-2 C. 2011 taxact B. 2011 taxact 427 Netherlands TIAS Jan. 2011 taxact 1, 1994     Protocol TIAS Jan. 2011 taxact 1, 2005     New Zealand TIAS 10772 Nov. 2011 taxact 2, 1983 1990-2 C. 2011 taxact B. 2011 taxact 274 1990-2 C. 2011 taxact B. 2011 taxact 303 Protocol TIAS Jan. 2011 taxact 1, 2011     Norway TIAS 7474 Jan. 2011 taxact 1, 1971 1973-1 C. 2011 taxact B. 2011 taxact 669 1973-1 C. 2011 taxact B. 2011 taxact 693 Protocol TIAS 10205 Jan. 2011 taxact 1, 1982 1982-2 C. 2011 taxact B. 2011 taxact 440 1982-2 C. 2011 taxact B. 2011 taxact 454 Pakistan TIAS 4232 Jan. 2011 taxact 1, 1959 1960-2 C. 2011 taxact B. 2011 taxact 646 T. 2011 taxact D. 2011 taxact 6431, 1960-1 C. 2011 taxact B. 2011 taxact 755 Philippines TIAS 10417 Jan. 2011 taxact 1, 1983 1984-2 C. 2011 taxact B. 2011 taxact 384 1984-2 C. 2011 taxact B. 2011 taxact 412 Poland TIAS 8486 Jan. 2011 taxact 1, 1974 1977-1 C. 2011 taxact B. 2011 taxact 416 1977-1 C. 2011 taxact B. 2011 taxact 427 Portugal TIAS Jan. 2011 taxact 1, 1996     Romania TIAS 8228 Jan. 2011 taxact 1, 1974 1976-2 C. 2011 taxact B. 2011 taxact 492 1976-2 C. 2011 taxact B. 2011 taxact 504 Russia TIAS Jan. 2011 taxact 1, 1994     Slovak Republic TIAS Jan. 2011 taxact 1, 1993     Slovenia TIAS Jan. 2011 taxact 1, 2002     South Africa TIAS Jan. 2011 taxact 1, 1998     Spain TIAS Jan. 2011 taxact 1, 1991     Sri Lanka TIAS Jan. 2011 taxact 1, 2004     Sweden TIAS Jan. 2011 taxact 1, 1996     Protocol TIAS Jan. 2011 taxact 1, 2007     Switzerland TIAS Jan. 2011 taxact 1, 1998     Thailand TIAS Jan. 2011 taxact 1, 1998     Trinidad and Tobago TIAS 7047 Jan. 2011 taxact 1, 1970 1971-2 C. 2011 taxact B. 2011 taxact 479   Tunisia TIAS Jan. 2011 taxact 1, 1990     Turkey TIAS Jan. 2011 taxact 1, 1998     Ukraine TIAS Jan. 2011 taxact 1, 2001     United Kingdom TIAS Jan. 2011 taxact 1, 2004     Venezuela TIAS Jan. 2011 taxact 1, 2000      1(TIAS) — Treaties and Other International Act Series. 2011 taxact  2Information on the treaty can be found in Publication 597, Information on the United States—Canada Income Tax Treaty. 2011 taxact 3The U. 2011 taxact S. 2011 taxact -U. 2011 taxact S. 2011 taxact S. 2011 taxact R. 2011 taxact income tax treaty applies to the countries of Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan. 2011 taxact Prev  Up 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A-Z Index of U.S. Government Departments and Agencies

The 2011 Taxact

2011 taxact 3. 2011 taxact   Section 501(c)(3) Organizations Table of Contents IntroductionChild care organizations. 2011 taxact Topics - This chapter discusses: Useful Items - You may want to see: Contributions to 501(c)(3) OrganizationsCertain annuity contracts. 2011 taxact Certain contracts held by a charitable remainder trust. 2011 taxact Excise Taxes. 2011 taxact Indoor tanning services. 2011 taxact Application for Recognition of ExemptionPolitical activity. 2011 taxact Private delivery service. 2011 taxact Amendments to organizing documents required. 2011 taxact How to show reasonable action and good faith. 2011 taxact Not acting reasonably and in good faith. 2011 taxact Prejudicing the interest of the Government. 2011 taxact Procedure for requesting extension. 2011 taxact More information. 2011 taxact Organizations Not Required To File Form 1023 Articles of OrganizationOrganizational Test Dedication and Distribution of Assets Educational Organizations and Private SchoolsEducational Organizations Private Schools Organizations Providing InsuranceCharitable Risk Pools Other Section 501(c)(3) OrganizationsCharitable Organizations Religious Organizations Scientific Organizations Literary Organizations Amateur Athletic Organizations Prevention of Cruelty to Children or Animals Private Foundations and Public CharitiesPrivate Foundations Public Charities Private Operating Foundations Lobbying ExpendituresLobbying expenditures. 2011 taxact Grass roots expenditures. 2011 taxact Lobbying nontaxable amount. 2011 taxact Grass roots nontaxable amount. 2011 taxact Organization that no longer qualifies. 2011 taxact Tax on organization. 2011 taxact Tax on managers. 2011 taxact Taxes on organizations. 2011 taxact Taxes on managers. 2011 taxact Political expenditures. 2011 taxact Correction of expenditure. 2011 taxact Introduction An organization may qualify for exemption from federal income tax if it is organized and operated exclusively for one or more of the following purposes. 2011 taxact Religious. 2011 taxact Charitable. 2011 taxact Scientific. 2011 taxact Testing for public safety. 2011 taxact Literary. 2011 taxact Educational. 2011 taxact Fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment; however, see Amateur Athletic Organizations , later in this chapter). 2011 taxact The prevention of cruelty to children or animals. 2011 taxact To qualify, the organization must be a corporation, community chest, fund, articles of association, or foundation. 2011 taxact A trust is a fund or foundation and will qualify. 2011 taxact However, an individual or a partnership will not qualify. 2011 taxact Examples. 2011 taxact   Qualifying organizations include: Nonprofit old-age homes, Parent-teacher associations, Charitable hospitals or other charitable organizations, Alumni associations, Schools, Chapters of the Red Cross, Boys' or Girls' Clubs, and Churches. 2011 taxact Child care organizations. 2011 taxact   The term educational purposes includes providing for care of children away from their homes if substantially all the care provided is to enable individuals (the parents) to be gainfully employed and the services are available to the general public. 2011 taxact Instrumentalities. 2011 taxact   A state or municipal instrumentality may qualify under section 501(c)(3) if it is organized as a separate entity from the governmental unit that created it and if it otherwise meets the organizational and operational tests of section 501(c)(3). 2011 taxact Examples of a qualifying instrumentality might include state schools, universities, or hospitals. 2011 taxact However, if an organization is an integral part of the local government or possesses governmental powers, it does not qualify for exemption. 2011 taxact A state or municipality itself does not qualify for exemption. 2011 taxact Topics - This chapter discusses: Contributions to 501(c)(3) organizations, Applications for recognition of exemption, Articles of Organization, Educational organizations and private schools, Organizations providing insurance, Other section 501(c)(3) organizations, Private foundations and public charities, and Lobbying expenditures. 2011 taxact Useful Items - You may want to see: Forms (and Instructions) 1023 Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code See chapter 6 for information about getting publications and forms. 2011 taxact Contributions to 501(c)(3) Organizations Contributions to domestic organizations described in this chapter, except organizations testing for public safety, are deductible as charitable contributions on the donor's federal income tax return. 2011 taxact Fundraising events. 2011 taxact   If the donor receives something of value in return for the contribution, a common occurrence with fundraising efforts, part or all of the contribution may not be deductible. 2011 taxact This may apply to fundraising activities such as charity balls, bazaars, banquets, auctions, concerts, athletic events, and solicitations for membership or contributions when merchandise or benefits are given in return for payment of a specified minimum contribution. 2011 taxact   If the donor receives or expects to receive goods or services in return for a contribution to your organization, the donor cannot deduct any part of the contribution unless the donor intends to, and does, make a payment greater than the fair market value of the goods or services. 2011 taxact If a deduction is allowed, the donor can deduct only the part of the contribution, if any, that is more than the fair market value of the goods or services received. 2011 taxact You should determine in advance the fair market value of any goods or services to be given to contributors and tell them, when you publicize the fundraising event or solicit their contributions, how much is deductible and how much is for the goods or services. 2011 taxact See Disclosure of Quid Pro Quo Contributions in chapter 2. 2011 taxact Exemption application not filed. 2011 taxact   Donors cannot deduct any charitable contribution to an organization that is required to apply for recognition of exemption but has not done so. 2011 taxact Separate fund—contributions that are deductible. 2011 taxact   An organization that is exempt from federal income tax other than as an organization described in section 501(c)(3) can, if it desires, establish a fund, separate and apart from its other funds, exclusively for religious, charitable, scientific, literary, or educational purposes, fostering national or international amateur sports competition, or for the prevention of cruelty to children or animals. 2011 taxact   If the fund is organized and operated exclusively for these purposes, it may qualify for exemption as an organization described in section 501(c)(3), and contributions made to it will be deductible as provided by section 170. 2011 taxact A fund with these characteristics must be organized in such a manner as to prohibit the use of its funds upon dissolution, or otherwise, for the general purposes of the organization creating it. 2011 taxact Personal benefit contracts. 2011 taxact   Generally, charitable deductions will not be allowed for a transfer to, or for the use of, a section 501(c)(3) or (c)(4) organization if in connection with the transfer: The organization directly or indirectly pays, or previously paid, a premium on a personal benefit contract for the transferor, or There is an understanding or expectation that anyone will directly or indirectly pay a premium on a personal benefit contract for the transferor. 2011 taxact   A personal benefit contract with respect to the transferor is any life insurance, annuity, or endowment contract, if any direct or indirect beneficiary under the contract is the transferor, any member of the transferor's family, or any other person designated by the transferor. 2011 taxact Certain annuity contracts. 2011 taxact   If an organization incurs an obligation to pay a charitable gift annuity, and the organization purchases an annuity contract to fund the obligation, individuals receiving payments under the charitable gift annuity will not be treated as indirect beneficiaries if the organization owns all of the incidents of ownership under the contract, is entitled to all payments under the contract, and the timing and amount of the payments are substantially the same as the timing and amount of payments to each person under the obligation (as such obligation is in effect at the time of the transfer). 2011 taxact Certain contracts held by a charitable remainder trust. 2011 taxact   An individual will not be considered an indirect beneficiary under a life insurance, annuity, or endowment contract held by a charitable remainder annuity trust or a charitable remainder unitrust solely by reason of being entitled to the payment if the trust owns all of the incidents of ownership under the contract, and the trust is entitled to all payments under the contract. 2011 taxact Excise tax. 2011 taxact   If the premiums are paid in connection with a transfer for which a deduction is not allowable under the deduction denial rule, without regard to when the transfer to the charitable organization was made, an excise tax will be applied that is equal to the amount of the premiums paid by the organization on any life insurance, annuity, or endowment contract. 2011 taxact The excise tax does not apply if all of the direct and indirect beneficiaries under the contract are organizations. 2011 taxact Excise Taxes. 2011 taxact   A charitable organization liable for excise taxes must file Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code. 2011 taxact Generally, the due date for filing Form 4720 occurs on the fifteenth day of the fifth month following the close of the organization's tax year. 2011 taxact Indoor tanning services. 2011 taxact   If your organization provides an indoor tanning bed service, the ACA imposed a 10% excise tax on services provided after June 30, 2010. 2011 taxact For more information, go to IRS. 2011 taxact gov and select Affordable Care Act Tax Provisions. 2011 taxact Application for Recognition of Exemption This discussion describes certain information to be provided upon application for recognition of exemption by all organizations created for any of the purposes described earlier in this chapter. 2011 taxact For example, the application must include a conformed copy of the organization's articles of incorporation, as discussed under Articles of Organization , later in this chapter. 2011 taxact See the organization headings that follow for specific information your organization may need to provide. 2011 taxact Form 1023. 2011 taxact   Your organization must file its application for recognition of exemption on Form 1023. 2011 taxact See chapter 1 and the instructions accompanying Form 1023 for the procedures to follow in applying. 2011 taxact Some organizations are not required to file Form 1023. 2011 taxact See Organizations Not Required To File Form 1023, later. 2011 taxact    Additional information to help you complete your application can be found online. 2011 taxact Go to Exemption Requirement – Section 501(c)(3) Organizations and select the link at the bottom of the Web page for step by step help with the application process. 2011 taxact See Exemption Requirements - Section 501(c)(3) Organizations. 2011 taxact   Form 1023 and accompanying statements must show that all of the following are true. 2011 taxact The organization is organized exclusively for, and will be operated exclusively for, one or more of the purposes (religious, charitable, etc. 2011 taxact ) specified in the introduction to this chapter. 2011 taxact No part of the organization's net earnings will inure to the benefit of private shareholders or individuals. 2011 taxact You must establish that your organization will not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. 2011 taxact The organization will not, as a substantial part of its activities, attempt to influence legislation (unless it elects to come under the provisions allowing certain lobbying expenditures) or participate to any extent in a political campaign for or against any candidate for public office. 2011 taxact See Political activity, next, and Lobbying Expenditures , near the end of this chapter. 2011 taxact Political activity. 2011 taxact   If any of the activities (whether or not substantial) of your organization consist of participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for public office, your organization will not qualify for tax-exempt status under section 501(c)(3). 2011 taxact Such participation or intervention includes the publishing or distributing of statements. 2011 taxact   Whether your organization is participating or intervening, directly or indirectly, in any political campaign on behalf of (or in opposition to) any candidate for public office depends upon all of the facts and circumstances of each case. 2011 taxact Certain voter education activities or public forums conducted in a nonpartisan manner may not be prohibited political activity under section 501(c)(3), while other so-called voter education activities may be prohibited. 2011 taxact Effective date of exemption. 2011 taxact   Most organizations described in this chapter that were organized after October 9, 1969, will not be treated as tax exempt unless they apply for recognition of exemption by filing Form 1023. 2011 taxact These organizations will not be treated as tax exempt for any period before they file Form 1023, unless they file the form within 27 months from the end of the month in which they were organized. 2011 taxact If the organization files the application within this 27-month period, the organization's exemption will be recognized retroactively to the date it was organized. 2011 taxact Otherwise, exemption will be recognized only from the date of receipt. 2011 taxact The date of receipt is the date of the U. 2011 taxact S. 2011 taxact postmark on the cover in which an exemption application is mailed or, if no postmark appears on the cover, the date the application is stamped as received by the IRS. 2011 taxact Private delivery service. 2011 taxact   If a private delivery service designated by the IRS, rather than the U. 2011 taxact S. 2011 taxact Postal Service, is used to deliver the application, the date of receipt is the date recorded or marked by the private delivery service. 2011 taxact The following private delivery services have been designated by the IRS. 2011 taxact DHL Express (DHL): DHL “Same Day” Service. 2011 taxact Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First. 2011 taxact United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. 2011 taxact M. 2011 taxact , UPS Worldwide Express Plus, and UPS Worldwide Express. 2011 taxact Amendments to organizing documents required. 2011 taxact   If an organization is required to alter its activities or to make substantive amendments to its organizing document, the ruling or determination letter recognizing its exempt status will be effective as of the date the changes are made. 2011 taxact If only a nonsubstantive amendment is made, exempt status will be effective as of the date it was organized, if the application was filed within the 15-month period, or the date the application was filed. 2011 taxact Extensions of time for filing. 2011 taxact   There are two ways organizations seeking exemption can receive an extension of time for filing Form 1023. 2011 taxact Automatic 12-month extension. 2011 taxact Organizations will receive an automatic 12-month extension if they file an application for recognition of exemption with the IRS within 12 months of the original deadline. 2011 taxact To get this extension, an organization must add the following statement at the top of its application: “Filed Pursuant to Section 301. 2011 taxact 9100-2. 2011 taxact ” Discretionary extensions. 2011 taxact An organization that fails to file a Form 1023 within the extended 12-month period will be granted an extension to file if it submits evidence (including affidavits) to establish that: It acted reasonably and in good faith, and Granting a discretionary extension will not prejudice the interests of the government. 2011 taxact How to show reasonable action and good faith. 2011 taxact   An organization acted reasonably and showed good faith if at least one of the following is true. 2011 taxact The organization requests relief before its failure to file is discovered by the IRS. 2011 taxact The organization failed to file because of intervening events beyond its control. 2011 taxact The organization exercised reasonable diligence (taking into account the complexity of the return or issue and the organization's experience in these matters) but was not aware of the filing requirement. 2011 taxact The organization reasonably relied upon the written advice of the IRS. 2011 taxact The organization reasonably relied upon the advice of a qualified tax professional who failed to file or advise the organization to file Form 1023. 2011 taxact An organization cannot rely on the advice of a tax professional if it knows or should know that he or she is not competent to render advice on filing exemption applications or is not aware of all the relevant facts. 2011 taxact Not acting reasonably and in good faith. 2011 taxact   An organization has not acted reasonably and in good faith under the following circumstances. 2011 taxact It seeks to change a return position for which an accuracy-related penalty has been or could be imposed at the time the relief is requested. 2011 taxact It was informed of the requirement to file and related tax consequences, but chose not to file. 2011 taxact It uses hindsight in requesting relief. 2011 taxact The IRS will not ordinarily grant an extension if specific facts have changed since the due date that makes filing an application advantageous to an organization. 2011 taxact Prejudicing the interest of the Government. 2011 taxact   Prejudice to the interest of the Government results if granting an extension of time to file to an organization results in a lower total tax liability for the years to which the filing applies than would have been the case if the organization had filed on time. 2011 taxact Before granting an extension, the IRS can require the organization requesting it to submit a statement from an independent auditor certifying that no prejudice will result if the extension is granted. 2011 taxact The interests of the Government are ordinarily prejudiced if the tax year in which the application should have been filed (or any tax year that would have been affected had the filing been timely) are closed by the statute of limitations before relief is granted. 2011 taxact The IRS can condition a grant of relief on the organization providing the IRS with a statement from an independent auditor certifying that the interests of the Government are not prejudiced. 2011 taxact Procedure for requesting extension. 2011 taxact   To request a discretionary extension, an organization must submit (to the IRS address shown on Form 1023 and Notice 1382) the following. 2011 taxact A statement showing the date Form 1023 was required to have been filed and the date it was actually filed. 2011 taxact Any documents relevant to the application. 2011 taxact An affidavit describing in detail the events that led to the failure to apply and to the discovery of that failure. 2011 taxact If the organization relied on a tax professional's advice, the affidavit must describe the engagement and responsibilities of the professional and the extent to which the organization relied on him or her. 2011 taxact This affidavit must be accompanied by a dated declaration, signed by an individual who has personal knowledge of the facts and circumstances, who is authorized to act for the organization, which states, “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. 2011 taxact ” Detailed affidavits from individuals having knowledge or information about the events that led to the failure to make the application and to the discovery of that failure. 2011 taxact This includes the organization's return preparer, and any accountant or attorney, knowledgeable in tax matters, who advised the taxpayer on the application. 2011 taxact The affidavits must describe the engagement and responsibilities of the individual and the advice that he or she provided. 2011 taxact These affidavits must include the name, current address, and taxpayer identification number of the individual, and be accompanied by a dated declaration, signed by the individual, which states: “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. 2011 taxact ” The organization must state whether the returns for the tax year in which the application should have been filed or any tax years that would have been affected by the application had it been timely made are being examined by the IRS, an appeals office, or a federal court. 2011 taxact The organization must notify the IRS office considering the request for relief if the IRS starts an examination of any such return while the organization's request for relief is pending. 2011 taxact The organization, if requested, has to submit copies of its tax returns, and copies of the returns of other affected taxpayers. 2011 taxact   A request for this relief in connection with an application for exemption does not require payment of an additional user fee. 2011 taxact Also, a request for relief under the automatic 12-month extension does not require payment of a user fee. 2011 taxact More information. 2011 taxact   For more information about these procedures, see Regulations sections 301. 2011 taxact 9100-1, 301. 2011 taxact 9100-2, 301. 2011 taxact 9100-3, Revenue Procedure 2013-4, section 6. 2011 taxact 04, 2013-1 I. 2011 taxact R. 2011 taxact B. 2011 taxact 126, and Revenue Procedure 2013-8, 2013-1 I. 2011 taxact R. 2011 taxact B. 2011 taxact 237. 2011 taxact See Revenue Procedure 2013-4 and Revenue Procedure 2013-8. 2011 taxact Notification from the IRS. 2011 taxact   Organizations filing Form 1023 and satisfying all requirements of section 501(c)(3) will be notified of their exempt status in writing. 2011 taxact Organizations Not Required To File Form 1023 Some organizations are not required to file Form 1023. 2011 taxact These include: Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men's or women's organization, religious school, mission society, or youth group. 2011 taxact Any organization (other than a private foundation) normally having annual gross receipts of not more than $5,000 (see Gross receipts test, later). 2011 taxact These organizations are exempt automatically if they meet the requirements of section 501(c)(3). 2011 taxact Filing Form 1023 to establish exemption. 2011 taxact   If the organization wants to establish its exemption with the IRS and receive a ruling or determination letter recognizing its exempt status, it should file Form 1023. 2011 taxact By establishing its exemption, potential contributors are assured by the IRS that contributions will be deductible. 2011 taxact A subordinate organization (other than a private foundation) covered by a group exemption letter does not have to submit a Form 1023 for itself. 2011 taxact Private foundations. 2011 taxact   See Private Foundations and Public Charities, later in this chapter, for more information about the additional notice required from an organization in order for it not to be presumed to be a private foundation and for the additional information required from a private foundation claiming to be an operating foundation. 2011 taxact Gross receipts test. 2011 taxact   For purposes of the gross receipts test, an organization normally does not have more than $5,000 annually in gross receipts if: During its first tax year the organization received gross receipts of $7,500 or less, During its first 2 years the organization had a total of $12,000 or less in gross receipts, and In the case of an organization that has been in existence for at least 3 years, the total gross receipts received by the organization during the immediately preceding 2 years, plus the current year, are $15,000 or less. 2011 taxact   An organization with gross receipts more than the amounts in the gross receipts test, unless otherwise exempt from filing Form 1023, must file a Form 1023 within 90 days after the end of the period in which the amounts are exceeded. 2011 taxact For example, an organization's gross receipts for its first tax year were less than $7,500, but at the end of its second tax year its gross receipts for the 2-year period were more than $12,000. 2011 taxact The organization must file Form 1023 within 90 days after the end of its second tax year. 2011 taxact   If the organization had existed for at least 3 tax years and had met the gross receipts test for all prior tax years but fails to meet the requirement for the current tax year, its tax-exempt status for the prior years will not be lost even if Form 1023 is not filed within 90 days after the close of the current tax year. 2011 taxact However, the organization will not be treated as a section 501(c)(3) organization for the period beginning with the current tax year and ending with the filing of Form 1023. 2011 taxact Example. 2011 taxact   An organization is organized and operated exclusively for charitable purposes and is not a private foundation. 2011 taxact It was incorporated on January 1, 2009, and files returns on a calendar-year basis. 2011 taxact It did not file a Form 1023. 2011 taxact The organization's gross receipts during the years 2009 through 2012 were as follows: 2009 $3,600 2010 2,900 2011 400 2012 12,600   The organization's total gross receipts for 2009, 2010, and 2011 were $6,900. 2011 taxact Therefore, it did not have to file Form 1023 and is exempt for those years. 2011 taxact However, for 2010, 2011, and 2012 the total gross receipts were $15,900. 2011 taxact Therefore, the organization must file Form 1023 within 90 days after the end of its 2012 tax year. 2011 taxact If it does not file within this time period, it will not be exempt under section 501(c)(3) for the period beginning with tax year 2012 ending when the Form 1023 is received by the IRS. 2011 taxact The organization, however, will not lose its exempt status for the tax years ending before January 1, 2012. 2011 taxact   The IRS will consider applying the Commissioner's discretionary authority to extend the time for filing Form 1023. 2011 taxact See the procedures for this extension discussed earlier. 2011 taxact Articles of Organization Your organization must include a conformed copy of its articles of organization with the application for recognition of exemption. 2011 taxact This may be its trust instrument, corporate charter, articles of association, or any other written instrument by which it is created. 2011 taxact Organizational Test The articles of organization must limit the organization's purposes to one or more of those described at the beginning of this chapter and must not expressly empower it to engage, other than as an insubstantial part of its activities, in activities that do not further one or more of those purposes. 2011 taxact These conditions for exemption are referred to as the organizational test. 2011 taxact Section 501(c)(3) is the provision of law that grants exemption to the organizations described in this chapter. 2011 taxact Therefore, the organizational test may be met if the purposes stated in the articles of organization are limited in some way by reference to section 501(c)(3). 2011 taxact The requirement that your organization's purposes and powers must be limited by the articles of organization is not satisfied if the limit is contained only in the bylaws or other rules or regulations. 2011 taxact Moreover, the organizational test is not satisfied by statements of your organization's officers that you intend to operate only for exempt purposes. 2011 taxact Also, the test is not satisfied by the fact that your actual operations are for exempt purposes. 2011 taxact In interpreting an organization's articles, the law of the state where the organization was created is controlling. 2011 taxact If an organization contends that the terms of its articles have a different meaning under state law than their generally accepted meaning, such meaning must be established by a clear and convincing reference to relevant court decisions, opinions of the state attorney general, or other appropriate state authorities. 2011 taxact The following are examples illustrating the organizational test. 2011 taxact Example 1. 2011 taxact Articles of organization state that an organization is formed exclusively for literary and scientific purposes within the meaning of section 501(c)(3). 2011 taxact These articles appropriately limit the organization's purposes. 2011 taxact The organization meets the organizational test. 2011 taxact Example 2. 2011 taxact An organization, by the terms of its articles, is formed to engage in research without any further description or limitation. 2011 taxact The organization will not be properly limited as to its purposes since all research is not scientific. 2011 taxact The organization does not meet the organizational test. 2011 taxact Example 3. 2011 taxact An organization's articles state that its purpose is to receive contributions and pay them over to organizations that are described in section 501(c)(3) and exempt from taxation under section 501(a). 2011 taxact The organization meets the organizational test. 2011 taxact Example 4. 2011 taxact If a stated purpose in the articles is the conduct of a school of adult education and its manner of operation is described in detail, such a purpose will be satisfactorily limited. 2011 taxact Example 5. 2011 taxact If the articles state the organization is formed for charitable purposes, without any further description, such language ordinarily will be sufficient since the term charitable has a generally accepted legal meaning. 2011 taxact On the other hand, if the purposes are stated to be charitable, philanthropic, and benevolent, the organizational requirement will not be met since the terms philanthropic and benevolent have no generally accepted legal meaning and, therefore, the stated purposes may, under the laws of the state, permit activities that are broader than those intended by the exemption law. 2011 taxact Example 6. 2011 taxact If the articles state an organization is formed to promote American ideals, or to foster the best interests of the people, or to further the common welfare and well-being of the community, without any limitation or provision restricting such purposes to accomplishment only in a charitable manner, the purposes will not be sufficiently limited. 2011 taxact Such purposes are vague and may be accomplished other than in an exempt manner. 2011 taxact Example 7. 2011 taxact A stated purpose to operate a hospital does not meet the organizational test since it is not necessarily charitable. 2011 taxact A hospital may or may not be exempt depending on the manner in which it is operated. 2011 taxact Example 8. 2011 taxact An organization that is expressly empowered by its articles to carry on social activities will not be sufficiently limited as to its power, even if its articles state that it is organized and will be operated exclusively for charitable purposes. 2011 taxact Dedication and Distribution of Assets Assets of an organization must be permanently dedicated to an exempt purpose. 2011 taxact This means that should an organization dissolve, its assets must be distributed for an exempt purpose described in this chapter, or to the Federal Government or to a state or local government for a public purpose. 2011 taxact If the assets could be distributed to members or private individuals or for any other purpose, the organizational test is not met. 2011 taxact Dedication. 2011 taxact   To establish that your organization's assets will be permanently dedicated to an exempt purpose, the articles of organization should contain a provision ensuring their distribution for an exempt purpose in the event of dissolution. 2011 taxact Although reliance can be placed upon state law to establish permanent dedication of assets for exempt purposes, your organization's application probably can be processed much more rapidly if its articles of organization include a provision ensuring permanent dedication of assets for exempt purposes. 2011 taxact Distribution. 2011 taxact   Revenue Procedure 82-2, 1982-1 C. 2011 taxact B. 2011 taxact 367, identifies the states and circumstances in which the IRS will not require an express provision for the distribution of assets upon dissolution in the articles of organization. 2011 taxact The procedure also provides a sample of an acceptable dissolution provision for organizations required to have one. 2011 taxact   If a named beneficiary is to be the distributee, it must be one that would qualify and would be exempt within the meaning of section 501(c)(3) at the time the dissolution takes place. 2011 taxact Since the named beneficiary at the time of dissolution may not be qualified, may not be in existence, or may be unwilling or unable to accept the assets of the dissolving organization, a provision should be made for distribution of the assets for one or more of the purposes specified in this chapter in the event of any such contingency. 2011 taxact Sample articles of organization. 2011 taxact   See sample articles of organization in the Appendix in the back of this publication. 2011 taxact Educational Organizations and Private Schools If your organization wants to obtain recognition of exemption as an educational organization, you must submit complete information as to how your organization carries on or plans to carry on its educational activities, such as by conducting a school, by panels, discussions, lectures, forums, radio and television programs, or through various cultural media such as museums, symphony orchestras, or art exhibits. 2011 taxact In each instance, you must explain by whom and where these activities are or will be conducted and the amount of admission fees, if any. 2011 taxact You must submit a copy of the pertinent contracts, agreements, publications, programs, etc. 2011 taxact If you are organized to conduct a school, you must submit full information regarding your tuition charges, number of faculty members, number of full-time and part-time students enrolled, courses of study and degrees conferred, together with a copy of your school catalog. 2011 taxact See also Private Schools , discussed later. 2011 taxact Educational Organizations The term educational relates to: The instruction or training of individuals for the purpose of improving or developing their capabilities, or The instruction of the public on subjects useful to individuals and beneficial to the community. 2011 taxact Advocacy of a position. 2011 taxact   Advocacy of a particular position or viewpoint may be educational if there is a sufficiently full and fair exposition of pertinent facts to permit an individual or the public to form an independent opinion or conclusion. 2011 taxact The mere presentation of unsupported opinion is not educational. 2011 taxact Method not educational. 2011 taxact   The method used by an organization to develop and present its views is a factor in determining if an organization qualifies as educational within the meaning of section 501(c)(3). 2011 taxact The following factors may indicate that the method is not educational. 2011 taxact The presentation of viewpoints unsupported by facts is a significant part of the organization's communications. 2011 taxact The facts that purport to support the viewpoint are distorted. 2011 taxact The organization's presentations make substantial use of inflammatory and disparaging terms and express conclusions more on the basis of emotion than of objective evaluations. 2011 taxact The approach used is not aimed at developing an understanding on the part of the audience because it does not consider their background or training. 2011 taxact   Exceptional circumstances, however, may exist where an organization's advocacy may be educational even if one or more of the factors listed above are present. 2011 taxact Qualifying organizations. 2011 taxact   The following types of organizations may qualify as educational: An organization, such as a primary or secondary school, a college, or a professional or trade school, that has a regularly scheduled curriculum, a regular faculty, and a regularly enrolled student body in attendance at a place where the educational activities are regularly carried on, An organization whose activities consist of conducting public discussion groups, forums, panels, lectures, or other similar programs, An organization that presents a course of instruction by correspondence or through the use of television or radio, A museum, zoo, planetarium, symphony orchestra, or other similar organization, A nonprofit children's day-care center, and A credit counseling organization. 2011 taxact College book stores, cafeterias, restaurants, etc. 2011 taxact   These and other on-campus organizations should submit information to show that they are controlled by and operated for the convenience of the faculty and student body or by whom they are controlled and whom they serve. 2011 taxact Alumni association. 2011 taxact   An alumni association should establish that it is organized to promote the welfare of the university with which it is affiliated, is subject to the control of the university as to its policies and destination of funds, and is operated as an integral part of the university or is otherwise organized to promote the welfare of the college or university. 2011 taxact If your association does not have these characteristics, it may still be exempt as a social club if it meets the requirements described in chapter 4, under 501(c)(7) - Social and Recreation Clubs . 2011 taxact Athletic organization. 2011 taxact   This type of organization must submit evidence that it is engaged in activities such as directing and controlling interscholastic athletic competitions, conducting tournaments, and prescribing eligibility rules for contestants. 2011 taxact If it is not so engaged, your organization may be exempt as a social club described in chapter 4. 2011 taxact Raising funds to be used for travel and other activities to interview and persuade prospective students with outstanding athletic ability to attend a particular university does not show an exempt purpose. 2011 taxact If your organization is not exempt as an educational organization, see Amateur Athletic Organizations , later in this chapter. 2011 taxact Private Schools Every private school filing an application for recognition of tax-exempt status must supply the IRS (on Schedule B, Form 1023) with the following information. 2011 taxact The racial composition of the student body, and of the faculty and administrative staff, as of the current academic year. 2011 taxact (This information also must be projected, so far as may be feasible, for the next academic year. 2011 taxact ) The amount of scholarship and loan funds, if any, awarded to students enrolled and the racial composition of students who have received the awards. 2011 taxact A list of the school's incorporators, founders, board members, and donors of land or buildings, whether individuals or organizations. 2011 taxact A statement indicating whether any of the organizations described in item (3) above have an objective of maintaining segregated public or private school education at the time the application is filed and, if so, whether any of the individuals described in item (3) are officers or active members of those organizations at the time the application is filed. 2011 taxact The public school district and county in which the school is located. 2011 taxact How to determine racial composition. 2011 taxact   The racial composition of the student body, faculty, and administrative staff can be an estimate based on the best information readily available to the school, without requiring student applicants, students, faculty, or administrative staff to submit to the school information that the school otherwise does not require. 2011 taxact Nevertheless, a statement of the method by which the racial composition was determined must be supplied. 2011 taxact The identity of individual students or members of the faculty and administrative staff should not be included with this information. 2011 taxact   A school that is a state or municipal instrumentality (see Instrumentalities , near the beginning of this chapter), whether or not it qualifies for exemption under section 501(c)(3), is not considered to be a private school for purposes of the following discussion. 2011 taxact Racially Nondiscriminatory Policy To qualify as an organization exempt from federal income tax, a private school must include a statement in its charter, bylaws, or other governing instrument, or in a resolution of its governing body, that it has a racially nondiscriminatory policy as to students and that it does not discriminate against applicants and students on the basis of race, color, or national or ethnic origin. 2011 taxact Also, the school must circulate information that clearly states the school's admission policies. 2011 taxact A racially nondiscriminatory policy toward students means that the school admits the students of any race to all the rights, privileges, programs, and activities generally accorded or made available to students at that school and that the school does not discriminate on the basis of race in administering its educational policies, admission policies, scholarship and loan programs, and athletic and other school-administered programs. 2011 taxact The IRS considers discrimination on the basis of race to include discrimination on the basis of color or national or ethnic origin. 2011 taxact The existence of a racially discriminatory policy with respect to the employment of faculty and administrative staff is indicative of a racially discriminatory policy as to students. 2011 taxact Conversely, the absence of racial discrimination in the employment of faculty and administrative staff is indicative of a racially nondiscriminatory policy as to students. 2011 taxact A policy of a school that favors racial minority groups with respect to admissions, facilities and programs, and financial assistance is not discrimination on the basis of race when the purpose and effect of this policy is to promote establishing and maintaining the school's nondiscriminatory policy. 2011 taxact A school that selects students on the basis of membership in a religious denomination or unit is not discriminating if membership in the denomination or unit is open to all on a racially nondiscriminatory basis. 2011 taxact Policy statement. 2011 taxact   The school must include a statement of its racially nondiscriminatory policy in all its brochures and catalogs dealing with student admissions, programs, and scholarships. 2011 taxact Also, the school must include a reference to its racially nondiscriminatory policy in other written advertising that it uses to inform prospective students of its programs. 2011 taxact Publicity requirement. 2011 taxact   The school must make its racially nondiscriminatory policy known to all segments of the general community served by the school. 2011 taxact Selective communication of a racially nondiscriminatory policy that a school provides solely to leaders of racial groups will not be considered an effective means of communication to make the policy known to all segments of the community. 2011 taxact To satisfy this requirement, the school must use one of the following two methods. 2011 taxact Method one. 2011 taxact   The school can publish a notice of its racially nondiscriminatory policy in a newspaper of general circulation that serves all racial segments of the community. 2011 taxact Such publication must be repeated at least once annually during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. 2011 taxact When more than one community is served by a school, the school can publish the notice in those newspapers that are reasonably likely to be read by all racial segments in the communities that the school serves. 2011 taxact If this method is used, the notice must meet the following printing requirements. 2011 taxact It must appear in a section of the newspaper likely to be read by prospective students and their families. 2011 taxact It must occupy at least 3 column inches. 2011 taxact It must have its title printed in at least 12 point bold face type. 2011 taxact It must have the remaining text printed in at least 8 point type. 2011 taxact The following is an acceptable example of the notice:   NOTICE OF NONDISCRIMINATORY POLICY AS TO STUDENTS     The M School admits students of any race, color, national and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school. 2011 taxact It does not discriminate on the basis of race, color, national and ethnic origin in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs. 2011 taxact   Method two. 2011 taxact   The school can use the broadcast media to publicize its racially nondiscriminatory policy if this use makes the policy known to all segments of the general community the school serves. 2011 taxact If the school uses this method, it must provide documentation showing that the means by which this policy was communicated to all segments of the general community was reasonably expected to be effective. 2011 taxact In this case, appropriate documentation would include copies of the tapes or scripts used and records showing that there was an adequate number of announcements. 2011 taxact The documentation also would include proof that these announcements were made during hours when they were likely to be communicated to all segments of the general community, that they were long enough to convey the message clearly, and that they were broadcast on radio or television stations likely to be listened to by substantial numbers of members of all racial segments of the general community. 2011 taxact Announcements must be made during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. 2011 taxact Exceptions. 2011 taxact   The publicity requirements will not apply in the following situations. 2011 taxact First, if for the preceding 3 years the enrollment of a parochial or other church-related school consists of students at least 75% of whom are members of the sponsoring religious denomination or unit, the school can make known its racially nondiscriminatory policy in whatever newspapers or circulars the religious denomination or unit uses in the communities from which the students are drawn. 2011 taxact These newspapers and circulars can be distributed by a particular religious denomination or unit or by an association that represents a number of religious organizations of the same denomination. 2011 taxact If, however, the school advertises in newspapers of general circulation in the community or communities from which its students are drawn and the second exception (discussed next) does not apply to the school, then it must comply with either of the publicity requirements explained earlier. 2011 taxact Second, if a school customarily draws a substantial percentage of its students nationwide, worldwide, from a large geographic section or sections of the United States, or from local communities, and if the school follows a racially nondiscriminatory policy as to its students, the school may satisfy the publicity requirement by complying with the instructions explained earlier under Policy statement . 2011 taxact   The school can demonstrate that it follows a racially nondiscriminatory policy either by showing that it currently enrolls students of racial minority groups in meaningful numbers or, except for local community schools, when minority students are not enrolled in meaningful numbers, that its promotional activities and recruiting efforts in each geographic area were reasonably designed to inform students of all racial segments in the general communities within the area of the availability of the school. 2011 taxact The question as to whether a school demonstrates such a policy satisfactorily will be determined on the basis of the facts and circumstances of each case. 2011 taxact   The IRS recognizes that the failure by a school drawing its students from local communities to enroll racial minority group students may not necessarily indicate the absence of a racially nondiscriminatory policy when there are relatively few or no such students in these communities. 2011 taxact Actual enrollment is, however, a meaningful indication of a racially nondiscriminatory policy in a community in which a public school or schools became subject to a desegregation order of a federal court or are otherwise expressly obligated to implement a desegregation plan under the terms of any written contract or other commitment to which any federal agency was a party. 2011 taxact   The IRS encourages schools to satisfy the publicity requirement by using either of the methods described earlier, even though a school considers itself to be within one of the Exceptions. 2011 taxact The IRS believes that these publicity requirements are the most effective methods to make known a school's racially nondiscriminatory policy. 2011 taxact In this regard, it is each school's responsibility to determine whether either of the exceptions applies. 2011 taxact Such responsibility will prepare the school, if it is audited by the IRS, to demonstrate that the failure to publish its racially nondiscriminatory policy in accordance with either one of the publicity requirements was justified by one of the exceptions. 2011 taxact Also, a school must be prepared to demonstrate that it has publicly disavowed or repudiated any statements purported to have been made on its behalf (after November 6, 1975) that are contrary to its publicity of a racially nondiscriminatory policy as to students, to the extent that the school or its principal official was aware of these statements. 2011 taxact Facilities and programs. 2011 taxact   A school must be able to show that all of its programs and facilities are operated in a racially nondiscriminatory manner. 2011 taxact Scholarship and loan programs. 2011 taxact   As a general rule, all scholarship or other comparable benefits obtainable at the school must be offered on a racially nondiscriminatory basis. 2011 taxact This must be known throughout the general community being served by the school and should be referred to in its publicity. 2011 taxact Financial assistance programs, as well as scholarships and loans made under financial assistance programs, that favor members of one or more racial minority groups and that do not significantly detract from or are designed to promote a school's racially nondiscriminatory policy will not adversely affect the school's exempt status. 2011 taxact Certification. 2011 taxact   An individual authorized to take official action on behalf of a school that claims to be racially nondiscriminatory as to students must certify annually, under penalties of perjury, on Schedule E (Form 990 or 990-EZ) or Form 5578, Annual Certification of Racial Nondiscrimination for a Private School Exempt From Federal Income Tax, whichever applies, that to the best of his or her knowledge and belief the school has satisfied all requirements that apply, as previously explained. 2011 taxact   Failure to comply with the guidelines ordinarily will result in the proposed revocation of the exempt status of a school. 2011 taxact Recordkeeping requirements. 2011 taxact With certain exceptions, given later, each exempt private school must maintain the following records for a minimum period of 3 years, beginning with the year after the year of compilation or acquisition. 2011 taxact Records indicating the racial composition of the student body, faculty, and administrative staff for each academic year. 2011 taxact Records sufficient to document that scholarship and other financial assistance is awarded on a racially nondiscriminatory basis. 2011 taxact Copies of all materials used by or on behalf of the school to solicit contributions. 2011 taxact Copies of all brochures, catalogs, and advertising dealing with student admissions, programs, and scholarships. 2011 taxact (Schools advertising nationally or in a large geographic segment or segments of the United States need only maintain a record sufficient to indicate when and in what publications their advertisements were placed. 2011 taxact ) The racial composition of the student body, faculty, and administrative staff can be determined in the same manner as that described at the beginning of this section. 2011 taxact However, a school cannot discontinue maintaining a system of records that reflect the racial composition of its students, faculty, and administrative staff used on November 6, 1975, unless it substitutes a different system that compiles substantially the same information, without advance approval of the IRS. 2011 taxact The IRS does not require that a school release any personally identifiable records or personal information except in accordance with the requirements of the Family Educational Rights and Privacy Act of 1974. 2011 taxact Similarly, the IRS does not require a school to keep records prohibited under state or federal law. 2011 taxact Exceptions. 2011 taxact   The school does not have to independently maintain these records for IRS use if both of the following are true. 2011 taxact Substantially the same information has been included in a report or reports filed with an agency or agencies of federal, state, or local governments, and this information is current within 1 year. 2011 taxact The school maintains copies of these reports from which this information is readily obtainable. 2011 taxact If these reports do not include all of the information required, as discussed earlier, records providing such remaining information must be maintained by the school for IRS use. 2011 taxact Failure to maintain records. 2011 taxact   Failure to maintain or to produce the required records and information, upon proper request, will create a presumption that the organization has failed to comply with these guidelines. 2011 taxact Organizations Providing Insurance An organization described in sections 501(c)(3) or 501(c)(4) may be exempt from tax only if no substantial part of its activities consists of providing commercial-type insurance. 2011 taxact However, this rule does not apply to state-sponsored organizations described in sections 501(c)(26) or 501(c)(27), which are discussed in chapter 4, or to charitable risk pools, discussed next. 2011 taxact Charitable Risk Pools A charitable risk pool is treated as organized and operated exclusively for charitable purposes if it: Is organized and operated only to pool insurable risks of its members (not including risks related to medical malpractice) and to provide information to its members about loss control and risk management, Consists only of members that are section 501(c)(3) organizations exempt from tax under section 501(a), Is organized under state law authorizing this type of risk pooling, Is exempt from state income tax (or will be after qualifying as a section 501(c)(3) organization), Has obtained at least $1,000,000 in startup capital from nonmember charitable organizations, Is controlled by a board of directors elected by its members, and Is organized under documents requiring that: Each member be a section 501(c)(3) organization exempt from tax under section 501(a), Each member that receives a final determination that it no longer qualifies under section 501(c)(3) notify the pool immediately, and Each insurance policy issued by the pool provide that it will not cover events occurring after a final determination described in (b). 2011 taxact Other Section 501(c)(3) Organizations In addition to the information required for all organizations, as described earlier, you should include any other information described in this section. 2011 taxact Charitable Organizations If your organization is applying for recognition of exemption as a charitable organization, it must show that it is organized and operated for purposes that are beneficial to the public interest. 2011 taxact Some examples of this type of organization are those organized for: Relief of the poor, the distressed, or the underprivileged, Advancement of religion, Advancement of education or science, Erection or maintenance of public buildings, monuments, or works, Lessening the burdens of government, Lessening of neighborhood tensions, Elimination of prejudice and discrimination, Defense of human and civil rights secured by law, and Combating community deterioration and juvenile delinquency. 2011 taxact The rest of this section contains a description of the information to be provided by certain specific organizations. 2011 taxact This information is in addition to the required inclusions described in chapter 1, and other statements requested on Form 1023. 2011 taxact Each of the following organizations must submit the information described. 2011 taxact Charitable organization supporting education. 2011 taxact   Submit information showing how your organization supports education — for example, contributes to an existing educational institution, endows a professorial chair, contributes toward paying teachers' salaries, or contributes to an educational institution to enable it to carry on research. 2011 taxact Scholarships. 2011 taxact   If the organization awards or plans to award scholarships, complete Schedule H of Form 1023. 2011 taxact Also, submit the following: Criteria used for selecting recipients, including the rules of eligibility. 2011 taxact How and by whom the recipients are or will be selected. 2011 taxact If awards are or will be made directly to individuals, whether information is required assuring that the student remains in school. 2011 taxact If awards are or will be made to recipients of a particular class, for example, children of employees of a particular employer— Whether any preference is or will be accorded an applicant by reason of the parent's position, length of employment, or salary, Whether as a condition of the award the recipient must upon graduation accept employment with the company, and Whether the award will be continued even if the parent's employment ends. 2011 taxact A copy of the scholarship application form and any brochures or literature describing the scholarship program. 2011 taxact Hospital. 2011 taxact   If you are organized to operate a charitable hospital, complete and attach Section I of Schedule C, Form 1023. 2011 taxact   If your hospital was transferred to you from proprietary ownership, complete and attach Schedule G of Form 1023. 2011 taxact You must attach a list showing: The names of the active and courtesy staff members of the proprietary hospital, as well as the names of your medical staff members after the transfer to nonprofit ownership, and The names of any doctors who continued to lease office space in the hospital after its transfer to nonprofit ownership and the amount of rent paid. 2011 taxact Submit also an appraisal showing the fair rental value of the rented space. 2011 taxact Clinic. 2011 taxact   If you are organized to operate a clinic, attach a statement including: A description of the facilities and services, To whom the services are offered, such as the public at large or a specific group, How charges are determined, such as on a profit basis, to recover costs, or at less than cost, By whom administered and controlled, Whether any of the professional staff (that is, those who perform or will perform the clinical services) also serve or will serve in an administrative capacity, and How compensation paid the professional staff is or will be determined. 2011 taxact Home for the aged. 2011 taxact   If you are organized to operate a home for the aged, complete and attach Schedule F of Form 1023 and required attachments. 2011 taxact Community nursing bureau. 2011 taxact   If you provide a nursing register or community nursing bureau, provide information showing that your organization will be operated as a community project and will receive its primary support from public contributions to maintain a nonprofit register of qualified nursing personnel, including graduate nurses, unregistered nursing school graduates, licensed attendants and practical nurses for the benefit of hospitals, health agencies, doctors, and individuals. 2011 taxact Organization providing loans. 2011 taxact   If you make, or will make, loans for charitable and educational purposes, submit the following information. 2011 taxact An explanation of the circumstances under which such loans are, or will be, made. 2011 taxact Criteria for selection, including the rules of eligibility. 2011 taxact How and by whom the recipients are or will be selected. 2011 taxact Manner of repayment of the loan. 2011 taxact Security required, if any. 2011 taxact Interest charged, if any, and when payable. 2011 taxact Copies in duplicate of the loan application and any brochures or literature describing the loan program. 2011 taxact Public-interest law firms. 2011 taxact   If your organization was formed to litigate in the public interest (as opposed to providing legal services to the poor), such as in the area of protection of the environment, you should submit the following information. 2011 taxact How the litigation can reasonably be said to be representative of a broad public interest rather than a private one. 2011 taxact Whether the organization will accept fees for its services. 2011 taxact A description of the cases litigated or to be litigated and how they benefit the public generally. 2011 taxact Whether the policies and program of the organization are the responsibility of a board or committee representative of the public interest, which is neither controlled by employees or persons who litigate on behalf of the organization nor by any organization that is not itself an organization described in this chapter. 2011 taxact Whether the organization is operated, through sharing of office space or otherwise, in a way to create identification or confusion with a particular private law firm. 2011 taxact Whether there is an arrangement to provide, directly or indirectly, a deduction for the cost of litigation that is for the private benefit of the donor. 2011 taxact Acceptance of attorneys' fees. 2011 taxact   A nonprofit public-interest law firm can accept attorneys' fees in public-interest cases if the fees are paid directly by its clients and the fees are not more than the actual costs incurred in the case. 2011 taxact Upon undertaking a representation, the organization cannot withdraw from the case because the litigant is unable to pay the fee. 2011 taxact   Firms can accept fees awarded or approved by a court or an administrative agency and paid by an opposing party if the firms do not use the likelihood or probability of fee awards as a consideration in the selection of cases. 2011 taxact All fee awards must be paid to the organization and not to its individual staff attorneys. 2011 taxact Instead, a public-interest law firm can reasonably compensate its staff attorneys, but only on a straight salary basis. 2011 taxact Private attorneys, whose services are retained by the firm to assist it in particular cases, can be compensated by the firm, but only on a fixed fee or salary basis. 2011 taxact   The total amount of all attorneys' fees (court awarded and those received from clients) must not be more than 50% of the total cost of operations of the organization's legal functions, calculated over a 5-year period. 2011 taxact   If, in order to carry out its program, an organization violates applicable canons of ethics, disrupts the judicial system, or engages in any illegal action, the organization will jeopardize its exemption. 2011 taxact Religious Organizations To determine whether an organization meets the religious purposes test of section 501(c)(3), the IRS maintains two basic guidelines. 2011 taxact That the particular religious beliefs of the organization are truly and sincerely held. 2011 taxact That the practices and rituals associated with the organization's religious belief or creed are not illegal or contrary to clearly defined public policy. 2011 taxact Therefore, your group (or organization) may not qualify for treatment as an exempt religious organization for tax purposes if its actions, as contrasted with its beliefs, are contrary to well established and clearly defined public policy. 2011 taxact If there is a clear showing that the beliefs (or doctrines) are sincerely held by those professing them, the IRS will not question the religious nature of those beliefs. 2011 taxact Churches. 2011 taxact   Although a church, its integrated auxiliaries, or a convention or association of churches is not required to file Form 1023 to be exempt from federal income tax or to receive tax deductible contributions, the organization may find it advantageous to obtain recognition of exemption. 2011 taxact In this event, you should submit information showing that your organization is a church, synagogue, association or convention of churches, religious order, or religious organization that is an integral part of a church, and that it is engaged in carrying out the function of a church. 2011 taxact   In determining whether an admittedly religious organization is also a church, the IRS does not accept every assertion that the organization is a church. 2011 taxact Because beliefs and practices vary so widely, there is no single definition of the word church for tax purposes. 2011 taxact The IRS considers the facts and circumstances of each organization applying for church status. 2011 taxact Convention or association of churches. 2011 taxact   Any organization that is otherwise a convention or association of churches will not fail to qualify as a church merely because the membership of the organization includes individuals as well as churches or because the individuals have voting rights in the organization. 2011 taxact Integrated auxiliaries. 2011 taxact   An organization is an integrated auxiliary of a church if all the following are true. 2011 taxact The organization is described both in sections 501(c)(3) and 509(a)(1), 509(a)(2), or 509(a)(3). 2011 taxact It is affiliated with a church or a convention or association of churches. 2011 taxact It is internally supported. 2011 taxact An organization is internally supported unless both of the following are true. 2011 taxact It offers admissions, goods, services, or facilities for sale, other than on an incidental basis, to the general public (except goods, services, or facilities sold at a nominal charge or for a small part of the cost). 2011 taxact It normally gets more than 50% of its support from a combination of governmental sources, public solicitation of contributions, and receipts from the sale of admissions, goods, performance of services, or furnishing of facilities in activities that are not unrelated trades or businesses. 2011 taxact Special rule. 2011 taxact   Men's and women's organizations, seminaries, mission societies, and youth groups that satisfy (1) and (2) shown earlier are integrated auxiliaries of a church even if they are not internally supported. 2011 taxact   In order for an organization (including a church and religious organization) to qualify for tax exemption, no part of its net earnings can inure to any individual. 2011 taxact   Although an individual is entitled to a charitable deduction for contributions to a church, the assignment or similar transfer of compensation for personal services to a church generally does not relieve a taxpayer of federal income tax liability on the compensation, regardless of the motivation behind the transfer. 2011 taxact Scientific Organizations You must show that your organization's research will be carried on in the public interest. 2011 taxact Scientific research will be considered to be in the public interest if the results of the research (including any patents, copyrights, processes, or formulas) are made available to the public on a nondiscriminatory basis; if the research is performed for the United States or a state, county, or municipal government; or if the research is carried on for one of the following purposes. 2011 taxact Aiding in the scientific education of college or university students. 2011 taxact Obtaining scientific information that is published in a treatise, thesis, trade publication, or in any other form th