EO Update March 11, 2011
Issue Number: 2011-4
Inside This Issue
- Guidance on Requirements for Tax-Exempt 501(c)(29) Qualified Nonprofit Health Insurance Issuers
- Earthquake Relief for Japan
- Updated EO Forms Now Available on IRS.gov
- Nonmember Income and 501(c)(7) Social Clubs
- Tax Packages for Form 941, Other Business and EO Forms, Will Not Be Mailed
- IRS Employee Plans to Present Webinar on Retirement Plans for Small Businesses
1. Guidance on Requirements for Tax-Exempt 501(c)(29) Qualified Non-Profit Health Insurers
The Affordable Care Act requires the Department of Health and Human Services (HHS) to establish the Consumer Operated and Oriented Plan program (CO-OP program). It also provides for tax exemption under section 501(c)(29) for recipients of CO-OP grants and loans that meet additional requirements. IRS Notice 2011-23 outlines the requirements for tax exemption under section 501(c)(29) and solicits written comments regarding these requirements as well as the application process. Comments must be submitted by May 27, 2011. Additional information is available on our Guidance on Requirements for Tax-Exempt 501(c)(29) Qualified Nonprofit Health Insurance Issuers page.
An overview of the CO-OP program is available on the Department of Health and Human Services website.
2. Earthquake Relief for Japan
Many individuals, businesses and charitable organizations wish to provide assistance to the victims of Japan's recent earthquake. Consult Disaster Relief Resources for Charities and Donors on IRS.gov to get information about how to provide assistance to victims through a charitable organization.
Contributions to domestic tax-exempt, charitable organizations that provide assistance to individuals in foreign lands qualify as tax-deductible contributions for federal income tax purposes, provided that the U.S. organization has control and discretion over the use of funds. Donors should ensure that they make contributions to qualified charities. Use the Search for Charities function on IRS.gov to see if the charity you intend to support is a qualified charity listed in Pub. 78. Certain organizations, such as churches or governmental organizations, may be qualified to accept charitable contributions, even though they are not listed in Pub. 78.
3. Updated EO Forms Now Available on IRS.gov
Annual exempt organizations returns and instructions for Tax Year 2010 have now been finalized and are available on IRS.gov. The IRS has posted annual return forms and instructions, as well as a description of significant changes made for this filing season.
4. Nonmember Income and 501(c)(7) Social Clubs
Social clubs may be exempt from federal income taxation if they meet the requirements of section 501(c)(7) of the Internal Revenue Code. Although they are generally exempt from tax, social clubs are subject to tax on their unrelated business income -- generally all income from non-members. In addition to being taxed on unrelated income, a social club may lose its exempt status if it receives too much unrelated income. Use this new chart and other new web content on tax issues of social clubs to learn how nonmember/nontraditional income may affect the tax-exempt status of a social or recreational club under Code section 501(c)(7).
5. Tax Packages for Form 941, Other Business and EO Forms, Will Not Be Mailed
Employers will no longer get Form 941, Employer’s Quarterly Federal Tax Return and other business forms in the mail.
The IRS previously discontinued mailing tax packages to tax-exempt organizations required to file an annual Form 990, 990-EZ, 990-PF, 1120-POL, or 5227.
All IRS forms, schedules and related instructions are available on IRS.gov.
6. IRS Employee Plans to Present Webinar on Retirement Plans for Small Businesses
IRS Employee Plans Division will present a webinar for small businesses and tax professionals on easy, low-cost ways to start a small business retirement plan on April 7, 2011. Register and get more information now.