EO Update March 19, 2010
Issue Number: 2010-7
Inside This Issue
- Chile Earthquake Designated a Qualified Disaster
- IRS Announces Relief For Certain Charitable Trusts
- IRS Issues 2009 Data Book
- Beware of 2010 Dirty Dozen
1. Chile Earthquake Designated a Qualified Disaster
The IRS has announced that the Chile earthquake that occurred in February 2010 has been designated a qualified disaster for federal tax purposes. Notice 2010-26 allows recipients of qualified disaster relief payments to exclude those payments from income tax. Also, the Notice allows employer-sponsored private foundations to assist victims in areas affected by the earthquake in Chile without affecting their tax-exempt status.
Organizations described in section 501(c)(3), especially employer sponsored private foundations, should refer to Publication 3833, Disaster Relief, Providing Assistance Through Charitable Organizations and other disaster relief resources for charities and contributors on IRS.gov for additional information.
2. IRS Provides Relief to Certain Charitable Trusts
The IRS announced procedures that a charitable trust may follow to:
- terminate its private foundation status by showing that it continuously operated as a Type III supporting organization pursuant to provisions of the Pension Protection Act of 2006 (PPA) even though it erroneously filed a Form 990-PF for its first taxable year after 2007; and
- obtain a refund of 4940 tax paid for the 2008 tax year.
3. IRS Issues 2009 Data Book
The Internal Revenue Service has released the 2009 IRS Data Book, an annual snapshot of agency activities for the fiscal year. According to this year's report, there are more than 1.2 million charities and foundations registered with the IRS. The book provides statistical information about various exempt organization activities including applications for exempt status processed, the approved tax-exempt organizations, and technical guidance items issued.
4. Beware of 2010 Dirty Dozen
The IRS recently issued its 2010 "dirty dozen" list of tax scams, including the misuse of charitable organizations. Abuses include arrangements to improperly shield income or assets from taxation and attempts by donors to maintain control over donated assets or income from donated property. The IRS also continues to investigate various schemes involving the donation of non-cash assets, including situations where several organizations claim the full value for both the receipt and distribution of the same non-cash contribution.