Adrienne Newsom

Simplified Process to Get Calfornia Tax Exempt Status

Adrienne Newsom — 2008-05-30T12:44:29+01:00

Assembly Bill (AB) 897 (effective January 1, 2008) simplifies and expedites the process for many organizations seeking California tax-exempt status. Organizations that possess a federal determination letter under IRC 501(c)(3) can request California affirmation of tax exemption from the California Franchise Tax Board (FTB).

FTB created Form 3500A (Affirmation of Internal Revenue Code 501(c)(3)) for organizations affected by the new law. Those seeking state tax-exempt status based on their federal tax-exempt status will complete this new form, and attach it as a cover sheet along with all the pages of the federal determination letter.

AB 897 only applies to organizations that have obtained their federal exemption letter under IRC Section 501(c)(3). It does not release organizations from fulfilling California's exemption law requirements. Organizations that do not fulfill California's requirements, will not receive affirmation of federal tax-exemption.

AB 897 does not change any of California's filing requirements for FTB Form 199, California Exempt Organization Annual Information Return; FTB Form 109, California Exempt Organization Business Income Tax Return; or FTB Form 100, Corporation Tax Return.

Don't Throw Away Your Tax-Exempt Status

Adrienne Newsom — 2008-05-05T17:02:37+01:00

Small tax-exempt organizations have a new filing requirement. It’s short, easy and electronic – it’s the new e-Postcard.

If you are a tax-exempt organization that normally has annual gross receipts of $25,000 or less and does not have to file Form 990 or 990-EZ, you must file the e-Postcard. The e-Postcard is due by the 15th day of the fifth month after the close of your tax year. So if your organization operates on a calendar year, the e-Postcard is due by May 15 of the following year.

What happens if you don’t file? You risk losing your tax-exempt status!

If you think this new filing requirement may apply to your organization, go to www.irs.gov/eo for complete details and while you’re there sign up for Exempt Organization’s free email newsletter, EO Update, to receive up-to-date information posted on the charity pages of irs.gov.

New Filing Requirement For Small Tax-Exempt Organizations

Adrienne Newsom — 2008-01-02T00:00:00+01:00

Beginning in 2008, small tax-exempt organizations risk losing their tax-exempt status if they do not file an annual electronic notice (e-Postcard). Small tax-exempt organizations that previously were not required to file Form 990 may be required to file an annual electronic notice, Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations not Required To File Form 990 or 990-EZ. This filing requirement applies to tax periods beginning after December 31, 2006.

The e-Postcard is due by the 15th day of the fifth month after the close of the organization's tax year. For example, if your tax period ends on December 31, 2007, the e-Postcard is due May 15, 2008. The IRS will revoke the tax-exempt status of any organization that fails to file the e-Postcard for three consecutive years.

For more information about which organizations need to comply and to learn more about the e-Postcard, visit the IRS website at:

http://www.irs.gov/charities/index.html

IRS targets “welfare” trusts sold to small businesses and professional corporations

Adrienne Newsom — 2007-11-09T15:12:21+01:00

The Internal Revenue Service has issued two notices and a revenue ruling identifying as “listed transactions” certain trust arrangements being sold to small businesses and professional corporations as welfare benefit funds.

IRS Notice 2007-83 warns business owners about certain abusive trust arrangements which claim to be welfare benefit funds and involve cash value life insurance policies. These arrangements are being promoted to and used by taxpayers to provide cash and other property to the owners of the business on a tax-favored basis.

IRS Notice 2007-84 describes certain welfare benefit funds that seem to provide post-retirement medical and life insurance benefits to employees on a nondiscriminatory basis, but in fact primarily benefit owners and key employees of the business.

The IRS has notified employers that it intends to challenge such trust arrangements, and may impose penalties on persons involved in the trust arrangements and persons who promote them.

Rev. Rul. 2007-65 targets promoted arrangements under which the fund trustee purchases cash value life insurance policies on the lives of the employees who are owners and/or key employees of the business, while purchasing term insurance polices on the lives of other employees covered under the plan. The idea is that the plan will be terminated with the cash value policies being distributed to the owners or key employees with very little distribution to other employees. Promoters claim the insurance premiums are currently deductible by the business, and the distributed insurance policies are virtually tax-free to the owners.

On the contrary, the IRS has ruled in Rev. Rul. 2007-65 that a business cannot deduct the cost of premiums paid through a welfare benefit plan for cash value life insurance on the lives of its employees. This holding applies whether the plan benefits are provided through a taxable trust, an exempt VEBA, or any other type of welfare benefit fund.

Some Owners Plan Ahead For Care Of Beloved Animals

Adrienne Newsom — 2007-10-03T13:20:41+01:00

Some might call hotel magnate Leona Helmsley nutty - or even cruel - because she set up a $12 million trust for her white Maltese, Trouble, while leaving nothing to two of her grandchildren.

But by including Trouble in her estate planning, Helmsley has set a good example for pet owners, who sometimes neglect to plan for their pet's care should they die or become ill or disabled

The death or illness of an owner is not a top reason that pets are surrendered to the Larimer Humane Society, said Dave Wintz, director of operations at the shelter. "I would say it is certainly not in our top 10 reasons, but it does happen," he said. In the past month, a couple of pets have come into the shelter when an owner died or became seriously ill, he said.

Wintz isn't taking any chances with his and his wife's three dogs. "We put my sister in our will for that, and we are giving her money to take care of them," he said.

Only one in four pet owners plans for the care of animals in the event of death or disability, said Kim Bressant-Kibwe, trusts and estates counsel with the American Society for Prevention of Cruelty to Animals, based in New York.

"The minute you take a pet into your home, you've got to consider the worst-case scenario," she said.

There are a couple different ways to provide for your pet’s care if you die.

Colorado statutes allow a pet owner to set up a trust in a pet’s name, said Amy Rosenberg, a Fort Collins attorney who does estate planning. “I do get questions about pet trusts. I have a lot of clients who set up trusts,” Rosenberg said.

Rosenberg said a lot of her clients opt instead to include their pets in their will, sometimes also leaving a sum of money to the caregiver.

“Usually it’s part of very straightforward, ordinary estate planning. People want to make sure that if pets survive them, they will go to a good home and whoever takes them isn’t financially burdened by caring for them.”

Pet caregivers can also be named as beneficiaries on your life insurance policy.

If none of your acquaintances agrees to care for a pet in the case of your death, rescue organizations might be willing to arrange for adoption, especially if you have a purebred dog, Kim Bressant-Kibwe said. The Larimer Humane Society also is available to take surrendered animals, Wintz said.

Even making informal arrangements for your pet’s care in the event of your illness or death is better than doing nothing, Bressant-Kibwe said. “The point is to reach out to people who know you and know your pet,” she said.

IRS Circular 230 Requirement

Adrienne Newsom — 2007-09-21T14:01:40+01:00

Law Office of Adrienne N. Newsom has implemented procedures to comply with Treasury Department rules relating to written tax advice. These rules became effective on June 21, 2005. Under these rules (IRS Circular 230), if anyone provides tax advice on which another can rely for purposes of avoiding tax penalties, that tax advice must be in the form of an opinion letter that satisfies rigorous factual and legal diligence standards. Any advice that fails to comply with this formal opinion requirement must include a disclaimer along the following lines:

"IRS Circular 230 disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any matters addressed herein."

Law Office of Adrienne N. Newsom does not offer tax advice nor do we provide opinion letters on tax matters. To comply with the requirements of IRS Circular 230, which seeks to limit taxpayers ability to rely on less formal advice for purposes of avoiding tax penalties, Law Office of Adrienne N. Newsom includes the above disclaimer on our communications.

Employment Litigation Gets Personal For Managers

Adrienne Newsom — 2007-08-16T00:00:00+01:00

“Employment law is getting personal. An increasing number of executives, managers and other company leaders are being sued personally for their work-related decisions. Labor and employment attorneys note that the increase in personal lawsuits has put upper management on edge, many fearing that every time they make a decision involving salary, leaves of absence or benefit issues, they could be sued. Recent court decisions have added to this fear.”
Tresa Baldas, National Law Journal, Law.com 8/16/07

A Safe Workplace Makes Good Business Sense

Adrienne Newsom — 2007-07-16T00:00:00+01:00

“In the United States, employers spend $170 billion every year in direct workers’ compensation costs. The more that we can help develop comprehensive safety and health programs, the more we can chip away at the $170 billion in costs. I say in my speeches and tell employers all the time that it’s clearly in their best interest to make their workplaces safe and healthy places to work. Above all, it’s our moral duty to ensure the health and safety of our workers, and it also makes good business and economic sense. One work-related fatality is one fatality too many.” Edwin G. Foulke Jr., assistant secretary of labor for OSHA, in an exclusive interview with SHRM Online (Society for Human Resource Management.)

Candle Burn Victim Can Sue Church For Punitive Damages

Adrienne Newsom — 2007-03-14T00:00:00+01:00

"A woman badly burned when church candles set her clothes on fire as she prayed in front of a statue of St. Jude can sue the Roman Catholic Archdiocese of Los Angeles for punitive damages, a judge ruled Wednesday. Josefina Martin suffered third-degree burns to her ankles, legs, back and arms on Oct. 16, 2005, after she stopped to pray in the courtyard of a Catholic Church in the San Fernando Valley. She filed suit last year, claiming negligence. She named as defendants the archdiocese, the archbishop of Los Angeles, Mary Immaculate Church of Pacoima and the maker of the skirt she wore to church." Associated Press, Mercury News 3/14/07

Deadliest, Safest States For Truck Crashes Listed

Adrienne Newsom — 2007-03-12T00:00:00+01:00

"More than 100 people a week are killed in large-truck crashes in this country, according to safety groups that called Monday for reducing how long big-rig drivers can work without rest. Wyoming, Arkansas and Oklahoma are the deadliest states for big truck crashes; Rhode Island, Massachusetts and Connecticut are the safest, according to The Truck Safety Coalition. It released state rankings, based on the number of fatalities per 100,000 residents during 2005, the most recent year with complete federal government figures." Associated Press, MSNBC.com 3/12/07
http://www.msnbc.msn.com/id/17582930/

IRS Electronic Filing Requirement

Adrienne Newsom — 2007-02-20T00:00:00+01:00

For tax years ending on or after December 31, 2006, the IRS electronic filing requirement applies to exempt organizations with $10 million or more in total assets ($100 million in 2005) if the organization files at least 250 returns in a calendar year, including income, excise, employment tax and information returns. Private foundations and charitable trusts that file at least 250 returns annually are required to file Forms 990-PF electronically regardless of their asset size.

According to the IRS, tax-exempt organizations that are required to file electronically but do not are deemed to have failed to file the return, even if a paper return is submitted. For organizations with gross receipts exceeding $1 million, the penalty for non-filing is $100 for each day the failure continues, up to a maximum of $50,000 per return. The penalty begins on the due date of the return. In addition, the person responsible for non-filing will be charged a penalty of $10 a day up to a maximum of $5,000, unless he or she shows that not complying was due to reasonable cause.

Organizations that are eligible to receive tax deductible contributions are listed in IRS Publication 78 (Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code of 1986. Organizations that fail to comply with the Form 990 filing requirements risk loss of listing in IRS Publication 78.

Additional Changes to Proposed Sexual Harassment Training Regulations

Adrienne Newsom — 2007-02-01T00:00:00+01:00

On January 30, 2007, the Office of Administrative Law (OAL) informed the Fair Employment & Housing Commission that it wanted changes to several of the Commission’s definitions used in its sexual harassment training regulations. The Commission will make the requested changes and adopt modified regulations at its next Commission meeting, set for February 27, 2007.

Once these modified regulations are adopted by the Commission, the Commission will submit the modified regulations to the public for a 15-day public comment period.

The Commission will consider these comments at its March 27, 2007 Commission meeting and resubmit its regulatory package to OAL. If approved, OAL then sends the regulations to the Secretary of State and after 30 days the regulations become effective.

Changes to Sexual Harassment Training Requirements

Adrienne Newsom — 2006-12-18T20:19:04+01:00

The California Fair Employment and Housing Commission had until December 16, 2006 to submit a regulatory package to the Office of Administrative Law (OAL) for review of the final proposed regulations clarifying mandatory sexual harassment training requirements. OAL then has 30 days to review and either approve the proposed regulatory package or disapprove and require further changes. If approved, OAL then sends the regulations to the Secretary of State and after 30 days the regulations become effective. Based on this timetable, the Commission anticipates its modifications to the sexual harassment training regulations will become effective February 1, 2007.