Not-for-Profit Enews Update: Some of the Latest Guidance for Tax Exempt Organizations from the Courts and IRS

by Bob Moreland, CPA - Tax Manager

June 19, 2014

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Our first item of interest calls into question certain benefits extended to religious organizations by the Internal Revenue Service.

Court Dismisses Atheist Group's Complaint Against IRS

The American Atheists, Inc.'s complaint that the Internal Revenue Service allegedly provided unconstitutional preferential treatment to tax-exempt churches and religious organizations was dismissed due to lack of standing. Although the group claimed that injuries it suffered from the IRS's practice gave it standing to pursue the suit, that claim was merely speculative and was called into question by the fact that the corporation never actually sought religious organization or church status for itself.

View the Opinion of the United States District Court by clicking here

Our second item of interest relates to some long awaited guidance regarding the new regulations for tax exempt hospitals.

IRS Aims for Final Charitable Hospital Regulations by Year-End

Preston Quesenberry, senior technical reviewer (exempt organizations), IRS Office of Associate Chief Counsel (Tax-Exempt and Government Entities), said that the IRS hopes to release final regulations on the requirements of section 501(r) for tax-exempt hospitals by the end of the year during his presentation at a conference sponsored by Georgetown Law on April 25.

The final regulations appear as an action item on the third-quarter update to the 2013-2014 priority guidance plan. Currently exempt hospitals may rely on previously released proposed regulations (REG-106499-12 , REG-130266-11 ) until the final regulations are published.

Finally, the IRS provides some guidance to the parents that want to raise funds for their boys and girls of summer.

Youth Club Ball Group Denied Tax-Exempt Status

The IRS denied tax-exempt status to a group organized to help young girls and boys afford the fees and equipment necessary to play club ball, finding that the group operated for the nonexempt purpose of raising funds for a for-profit entity, which fails the operational test for exemption described under section 501(c)(3).

View the full IRS final determination letter by clicking here


If you have any questions regarding the article above or any other issue affecting your not-for-profit organization please contact your Blue & Co. advisor or e-mail us at or call us at 800-717-BLUE.