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2011 Tax Brackets

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2011 tax brackets 3. 2011 tax brackets   Section 501(c)(3) Organizations Table of Contents IntroductionChild care organizations. 2011 tax brackets Topics - This chapter discusses: Useful Items - You may want to see: Contributions to 501(c)(3) OrganizationsCertain annuity contracts. 2011 tax brackets Certain contracts held by a charitable remainder trust. 2011 tax brackets Excise Taxes. 2011 tax brackets Indoor tanning services. 2011 tax brackets Application for Recognition of ExemptionPolitical activity. 2011 tax brackets Private delivery service. 2011 tax brackets Amendments to organizing documents required. 2011 tax brackets How to show reasonable action and good faith. 2011 tax brackets Not acting reasonably and in good faith. 2011 tax brackets Prejudicing the interest of the Government. 2011 tax brackets Procedure for requesting extension. 2011 tax brackets More information. 2011 tax brackets 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 tax brackets Grass roots expenditures. 2011 tax brackets Lobbying nontaxable amount. 2011 tax brackets Grass roots nontaxable amount. 2011 tax brackets Organization that no longer qualifies. 2011 tax brackets Tax on organization. 2011 tax brackets Tax on managers. 2011 tax brackets Taxes on organizations. 2011 tax brackets Taxes on managers. 2011 tax brackets Political expenditures. 2011 tax brackets Correction of expenditure. 2011 tax brackets 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 tax brackets Religious. 2011 tax brackets Charitable. 2011 tax brackets Scientific. 2011 tax brackets Testing for public safety. 2011 tax brackets Literary. 2011 tax brackets Educational. 2011 tax brackets 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 tax brackets The prevention of cruelty to children or animals. 2011 tax brackets To qualify, the organization must be a corporation, community chest, fund, articles of association, or foundation. 2011 tax brackets A trust is a fund or foundation and will qualify. 2011 tax brackets However, an individual or a partnership will not qualify. 2011 tax brackets Examples. 2011 tax brackets   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 tax brackets Child care organizations. 2011 tax brackets   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 tax brackets Instrumentalities. 2011 tax brackets   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 tax brackets Examples of a qualifying instrumentality might include state schools, universities, or hospitals. 2011 tax brackets However, if an organization is an integral part of the local government or possesses governmental powers, it does not qualify for exemption. 2011 tax brackets A state or municipality itself does not qualify for exemption. 2011 tax brackets 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 tax brackets 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 tax brackets 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 tax brackets Fundraising events. 2011 tax brackets   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 tax brackets 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 tax brackets   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 tax brackets 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 tax brackets 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 tax brackets See Disclosure of Quid Pro Quo Contributions in chapter 2. 2011 tax brackets Exemption application not filed. 2011 tax brackets   Donors cannot deduct any charitable contribution to an organization that is required to apply for recognition of exemption but has not done so. 2011 tax brackets Separate fund—contributions that are deductible. 2011 tax brackets   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 tax brackets   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 tax brackets 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 tax brackets Personal benefit contracts. 2011 tax brackets   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 tax brackets   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 tax brackets Certain annuity contracts. 2011 tax brackets   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 tax brackets Certain contracts held by a charitable remainder trust. 2011 tax brackets   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 tax brackets Excise tax. 2011 tax brackets   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 tax brackets The excise tax does not apply if all of the direct and indirect beneficiaries under the contract are organizations. 2011 tax brackets Excise Taxes. 2011 tax brackets   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 tax brackets 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 tax brackets Indoor tanning services. 2011 tax brackets   If your organization provides an indoor tanning bed service, the ACA imposed a 10% excise tax on services provided after June 30, 2010. 2011 tax brackets For more information, go to IRS. 2011 tax brackets gov and select Affordable Care Act Tax Provisions. 2011 tax brackets 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 tax brackets 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 tax brackets See the organization headings that follow for specific information your organization may need to provide. 2011 tax brackets Form 1023. 2011 tax brackets   Your organization must file its application for recognition of exemption on Form 1023. 2011 tax brackets See chapter 1 and the instructions accompanying Form 1023 for the procedures to follow in applying. 2011 tax brackets Some organizations are not required to file Form 1023. 2011 tax brackets See Organizations Not Required To File Form 1023, later. 2011 tax brackets    Additional information to help you complete your application can be found online. 2011 tax brackets 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 tax brackets See Exemption Requirements - Section 501(c)(3) Organizations. 2011 tax brackets   Form 1023 and accompanying statements must show that all of the following are true. 2011 tax brackets The organization is organized exclusively for, and will be operated exclusively for, one or more of the purposes (religious, charitable, etc. 2011 tax brackets ) specified in the introduction to this chapter. 2011 tax brackets No part of the organization's net earnings will inure to the benefit of private shareholders or individuals. 2011 tax brackets 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 tax brackets 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 tax brackets See Political activity, next, and Lobbying Expenditures , near the end of this chapter. 2011 tax brackets Political activity. 2011 tax brackets   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 tax brackets Such participation or intervention includes the publishing or distributing of statements. 2011 tax brackets   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 tax brackets 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 tax brackets Effective date of exemption. 2011 tax brackets   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 tax brackets 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 tax brackets 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 tax brackets Otherwise, exemption will be recognized only from the date of receipt. 2011 tax brackets The date of receipt is the date of the U. 2011 tax brackets S. 2011 tax brackets 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 tax brackets Private delivery service. 2011 tax brackets   If a private delivery service designated by the IRS, rather than the U. 2011 tax brackets S. 2011 tax brackets Postal Service, is used to deliver the application, the date of receipt is the date recorded or marked by the private delivery service. 2011 tax brackets The following private delivery services have been designated by the IRS. 2011 tax brackets DHL Express (DHL): DHL “Same Day” Service. 2011 tax brackets Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First. 2011 tax brackets United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. 2011 tax brackets M. 2011 tax brackets , UPS Worldwide Express Plus, and UPS Worldwide Express. 2011 tax brackets Amendments to organizing documents required. 2011 tax brackets   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 tax brackets 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 tax brackets Extensions of time for filing. 2011 tax brackets   There are two ways organizations seeking exemption can receive an extension of time for filing Form 1023. 2011 tax brackets Automatic 12-month extension. 2011 tax brackets 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 tax brackets To get this extension, an organization must add the following statement at the top of its application: “Filed Pursuant to Section 301. 2011 tax brackets 9100-2. 2011 tax brackets ” Discretionary extensions. 2011 tax brackets 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 tax brackets How to show reasonable action and good faith. 2011 tax brackets   An organization acted reasonably and showed good faith if at least one of the following is true. 2011 tax brackets The organization requests relief before its failure to file is discovered by the IRS. 2011 tax brackets The organization failed to file because of intervening events beyond its control. 2011 tax brackets 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 tax brackets The organization reasonably relied upon the written advice of the IRS. 2011 tax brackets 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 tax brackets 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 tax brackets Not acting reasonably and in good faith. 2011 tax brackets   An organization has not acted reasonably and in good faith under the following circumstances. 2011 tax brackets 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 tax brackets It was informed of the requirement to file and related tax consequences, but chose not to file. 2011 tax brackets It uses hindsight in requesting relief. 2011 tax brackets 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 tax brackets Prejudicing the interest of the Government. 2011 tax brackets   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 tax brackets 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 tax brackets 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 tax brackets 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 tax brackets Procedure for requesting extension. 2011 tax brackets   To request a discretionary extension, an organization must submit (to the IRS address shown on Form 1023 and Notice 1382) the following. 2011 tax brackets A statement showing the date Form 1023 was required to have been filed and the date it was actually filed. 2011 tax brackets Any documents relevant to the application. 2011 tax brackets An affidavit describing in detail the events that led to the failure to apply and to the discovery of that failure. 2011 tax brackets 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 tax brackets 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 tax brackets ” 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 tax brackets This includes the organization's return preparer, and any accountant or attorney, knowledgeable in tax matters, who advised the taxpayer on the application. 2011 tax brackets The affidavits must describe the engagement and responsibilities of the individual and the advice that he or she provided. 2011 tax brackets 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 tax brackets ” 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 tax brackets 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 tax brackets The organization, if requested, has to submit copies of its tax returns, and copies of the returns of other affected taxpayers. 2011 tax brackets   A request for this relief in connection with an application for exemption does not require payment of an additional user fee. 2011 tax brackets Also, a request for relief under the automatic 12-month extension does not require payment of a user fee. 2011 tax brackets More information. 2011 tax brackets   For more information about these procedures, see Regulations sections 301. 2011 tax brackets 9100-1, 301. 2011 tax brackets 9100-2, 301. 2011 tax brackets 9100-3, Revenue Procedure 2013-4, section 6. 2011 tax brackets 04, 2013-1 I. 2011 tax brackets R. 2011 tax brackets B. 2011 tax brackets 126, and Revenue Procedure 2013-8, 2013-1 I. 2011 tax brackets R. 2011 tax brackets B. 2011 tax brackets 237. 2011 tax brackets See Revenue Procedure 2013-4 and Revenue Procedure 2013-8. 2011 tax brackets Notification from the IRS. 2011 tax brackets   Organizations filing Form 1023 and satisfying all requirements of section 501(c)(3) will be notified of their exempt status in writing. 2011 tax brackets Organizations Not Required To File Form 1023 Some organizations are not required to file Form 1023. 2011 tax brackets 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 tax brackets Any organization (other than a private foundation) normally having annual gross receipts of not more than $5,000 (see Gross receipts test, later). 2011 tax brackets These organizations are exempt automatically if they meet the requirements of section 501(c)(3). 2011 tax brackets Filing Form 1023 to establish exemption. 2011 tax brackets   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 tax brackets By establishing its exemption, potential contributors are assured by the IRS that contributions will be deductible. 2011 tax brackets 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 tax brackets Private foundations. 2011 tax brackets   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 tax brackets Gross receipts test. 2011 tax brackets   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 tax brackets   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 tax brackets 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 tax brackets The organization must file Form 1023 within 90 days after the end of its second tax year. 2011 tax brackets   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 tax brackets 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 tax brackets Example. 2011 tax brackets   An organization is organized and operated exclusively for charitable purposes and is not a private foundation. 2011 tax brackets It was incorporated on January 1, 2009, and files returns on a calendar-year basis. 2011 tax brackets It did not file a Form 1023. 2011 tax brackets 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 tax brackets Therefore, it did not have to file Form 1023 and is exempt for those years. 2011 tax brackets However, for 2010, 2011, and 2012 the total gross receipts were $15,900. 2011 tax brackets Therefore, the organization must file Form 1023 within 90 days after the end of its 2012 tax year. 2011 tax brackets 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 tax brackets The organization, however, will not lose its exempt status for the tax years ending before January 1, 2012. 2011 tax brackets   The IRS will consider applying the Commissioner's discretionary authority to extend the time for filing Form 1023. 2011 tax brackets See the procedures for this extension discussed earlier. 2011 tax brackets Articles of Organization Your organization must include a conformed copy of its articles of organization with the application for recognition of exemption. 2011 tax brackets This may be its trust instrument, corporate charter, articles of association, or any other written instrument by which it is created. 2011 tax brackets 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 tax brackets These conditions for exemption are referred to as the organizational test. 2011 tax brackets Section 501(c)(3) is the provision of law that grants exemption to the organizations described in this chapter. 2011 tax brackets 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 tax brackets 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 tax brackets Moreover, the organizational test is not satisfied by statements of your organization's officers that you intend to operate only for exempt purposes. 2011 tax brackets Also, the test is not satisfied by the fact that your actual operations are for exempt purposes. 2011 tax brackets In interpreting an organization's articles, the law of the state where the organization was created is controlling. 2011 tax brackets 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 tax brackets The following are examples illustrating the organizational test. 2011 tax brackets Example 1. 2011 tax brackets Articles of organization state that an organization is formed exclusively for literary and scientific purposes within the meaning of section 501(c)(3). 2011 tax brackets These articles appropriately limit the organization's purposes. 2011 tax brackets The organization meets the organizational test. 2011 tax brackets Example 2. 2011 tax brackets An organization, by the terms of its articles, is formed to engage in research without any further description or limitation. 2011 tax brackets The organization will not be properly limited as to its purposes since all research is not scientific. 2011 tax brackets The organization does not meet the organizational test. 2011 tax brackets Example 3. 2011 tax brackets 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 tax brackets The organization meets the organizational test. 2011 tax brackets Example 4. 2011 tax brackets 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 tax brackets Example 5. 2011 tax brackets 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 tax brackets 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 tax brackets Example 6. 2011 tax brackets 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 tax brackets Such purposes are vague and may be accomplished other than in an exempt manner. 2011 tax brackets Example 7. 2011 tax brackets A stated purpose to operate a hospital does not meet the organizational test since it is not necessarily charitable. 2011 tax brackets A hospital may or may not be exempt depending on the manner in which it is operated. 2011 tax brackets Example 8. 2011 tax brackets 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 tax brackets Dedication and Distribution of Assets Assets of an organization must be permanently dedicated to an exempt purpose. 2011 tax brackets 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 tax brackets If the assets could be distributed to members or private individuals or for any other purpose, the organizational test is not met. 2011 tax brackets Dedication. 2011 tax brackets   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 tax brackets 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 tax brackets Distribution. 2011 tax brackets   Revenue Procedure 82-2, 1982-1 C. 2011 tax brackets B. 2011 tax brackets 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 tax brackets The procedure also provides a sample of an acceptable dissolution provision for organizations required to have one. 2011 tax brackets   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 tax brackets 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 tax brackets Sample articles of organization. 2011 tax brackets   See sample articles of organization in the Appendix in the back of this publication. 2011 tax brackets 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 tax brackets 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 tax brackets You must submit a copy of the pertinent contracts, agreements, publications, programs, etc. 2011 tax brackets 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 tax brackets See also Private Schools , discussed later. 2011 tax brackets 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 tax brackets Advocacy of a position. 2011 tax brackets   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 tax brackets The mere presentation of unsupported opinion is not educational. 2011 tax brackets Method not educational. 2011 tax brackets   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 tax brackets The following factors may indicate that the method is not educational. 2011 tax brackets The presentation of viewpoints unsupported by facts is a significant part of the organization's communications. 2011 tax brackets The facts that purport to support the viewpoint are distorted. 2011 tax brackets 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 tax brackets 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 tax brackets   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 tax brackets Qualifying organizations. 2011 tax brackets   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 tax brackets College book stores, cafeterias, restaurants, etc. 2011 tax brackets   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 tax brackets Alumni association. 2011 tax brackets   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 tax brackets 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 tax brackets Athletic organization. 2011 tax brackets   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 tax brackets If it is not so engaged, your organization may be exempt as a social club described in chapter 4. 2011 tax brackets 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 tax brackets If your organization is not exempt as an educational organization, see Amateur Athletic Organizations , later in this chapter. 2011 tax brackets 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 tax brackets The racial composition of the student body, and of the faculty and administrative staff, as of the current academic year. 2011 tax brackets (This information also must be projected, so far as may be feasible, for the next academic year. 2011 tax brackets ) 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 tax brackets A list of the school's incorporators, founders, board members, and donors of land or buildings, whether individuals or organizations. 2011 tax brackets 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 tax brackets The public school district and county in which the school is located. 2011 tax brackets How to determine racial composition. 2011 tax brackets   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 tax brackets Nevertheless, a statement of the method by which the racial composition was determined must be supplied. 2011 tax brackets The identity of individual students or members of the faculty and administrative staff should not be included with this information. 2011 tax brackets   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 tax brackets 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 tax brackets Also, the school must circulate information that clearly states the school's admission policies. 2011 tax brackets 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 tax brackets The IRS considers discrimination on the basis of race to include discrimination on the basis of color or national or ethnic origin. 2011 tax brackets 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 tax brackets 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 tax brackets 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 tax brackets 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 tax brackets Policy statement. 2011 tax brackets   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 tax brackets 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 tax brackets Publicity requirement. 2011 tax brackets   The school must make its racially nondiscriminatory policy known to all segments of the general community served by the school. 2011 tax brackets 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 tax brackets To satisfy this requirement, the school must use one of the following two methods. 2011 tax brackets Method one. 2011 tax brackets   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 tax brackets 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 tax brackets 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 tax brackets If this method is used, the notice must meet the following printing requirements. 2011 tax brackets It must appear in a section of the newspaper likely to be read by prospective students and their families. 2011 tax brackets It must occupy at least 3 column inches. 2011 tax brackets It must have its title printed in at least 12 point bold face type. 2011 tax brackets It must have the remaining text printed in at least 8 point type. 2011 tax brackets 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 tax brackets 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 tax brackets   Method two. 2011 tax brackets   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 tax brackets 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 tax brackets 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 tax brackets 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 tax brackets 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 tax brackets Exceptions. 2011 tax brackets   The publicity requirements will not apply in the following situations. 2011 tax brackets 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 tax brackets 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 tax brackets 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 tax brackets 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 tax brackets   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 tax brackets 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 tax brackets   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 tax brackets 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 tax brackets   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 tax brackets The IRS believes that these publicity requirements are the most effective methods to make known a school's racially nondiscriminatory policy. 2011 tax brackets In this regard, it is each school's responsibility to determine whether either of the exceptions applies. 2011 tax brackets 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 tax brackets 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 tax brackets Facilities and programs. 2011 tax brackets   A school must be able to show that all of its programs and facilities are operated in a racially nondiscriminatory manner. 2011 tax brackets Scholarship and loan programs. 2011 tax brackets   As a general rule, all scholarship or other comparable benefits obtainable at the school must be offered on a racially nondiscriminatory basis. 2011 tax brackets This must be known throughout the general community being served by the school and should be referred to in its publicity. 2011 tax brackets 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 tax brackets Certification. 2011 tax brackets   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 tax brackets   Failure to comply with the guidelines ordinarily will result in the proposed revocation of the exempt status of a school. 2011 tax brackets Recordkeeping requirements. 2011 tax brackets 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 tax brackets Records indicating the racial composition of the student body, faculty, and administrative staff for each academic year. 2011 tax brackets Records sufficient to document that scholarship and other financial assistance is awarded on a racially nondiscriminatory basis. 2011 tax brackets Copies of all materials used by or on behalf of the school to solicit contributions. 2011 tax brackets Copies of all brochures, catalogs, and advertising dealing with student admissions, programs, and scholarships. 2011 tax brackets (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 tax brackets ) 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 tax brackets 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 tax brackets 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 tax brackets Similarly, the IRS does not require a school to keep records prohibited under state or federal law. 2011 tax brackets Exceptions. 2011 tax brackets   The school does not have to independently maintain these records for IRS use if both of the following are true. 2011 tax brackets 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 tax brackets The school maintains copies of these reports from which this information is readily obtainable. 2011 tax brackets 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 tax brackets Failure to maintain records. 2011 tax brackets   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 tax brackets 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 tax brackets 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 tax brackets 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 tax brackets 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 tax brackets 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 tax brackets 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 tax brackets The rest of this section contains a description of the information to be provided by certain specific organizations. 2011 tax brackets This information is in addition to the required inclusions described in chapter 1, and other statements requested on Form 1023. 2011 tax brackets Each of the following organizations must submit the information described. 2011 tax brackets Charitable organization supporting education. 2011 tax brackets   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 tax brackets Scholarships. 2011 tax brackets   If the organization awards or plans to award scholarships, complete Schedule H of Form 1023. 2011 tax brackets Also, submit the following: Criteria used for selecting recipients, including the rules of eligibility. 2011 tax brackets How and by whom the recipients are or will be selected. 2011 tax brackets If awards are or will be made directly to individuals, whether information is required assuring that the student remains in school. 2011 tax brackets 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 tax brackets A copy of the scholarship application form and any brochures or literature describing the scholarship program. 2011 tax brackets Hospital. 2011 tax brackets   If you are organized to operate a charitable hospital, complete and attach Section I of Schedule C, Form 1023. 2011 tax brackets   If your hospital was transferred to you from proprietary ownership, complete and attach Schedule G of Form 1023. 2011 tax brackets 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 tax brackets Submit also an appraisal showing the fair rental value of the rented space. 2011 tax brackets Clinic. 2011 tax brackets   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 tax brackets Home for the aged. 2011 tax brackets   If you are organized to operate a home for the aged, complete and attach Schedule F of Form 1023 and required attachments. 2011 tax brackets Community nursing bureau. 2011 tax brackets   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 tax brackets Organization providing loans. 2011 tax brackets   If you make, or will make, loans for charitable and educational purposes, submit the following information. 2011 tax brackets An explanation of the circumstances under which such loans are, or will be, made. 2011 tax brackets Criteria for selection, including the rules of eligibility. 2011 tax brackets How and by whom the recipients are or will be selected. 2011 tax brackets Manner of repayment of the loan. 2011 tax brackets Security required, if any. 2011 tax brackets Interest charged, if any, and when payable. 2011 tax brackets Copies in duplicate of the loan application and any brochures or literature describing the loan program. 2011 tax brackets Public-interest law firms. 2011 tax brackets   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 tax brackets How the litigation can reasonably be said to be representative of a broad public interest rather than a private one. 2011 tax brackets Whether the organization will accept fees for its services. 2011 tax brackets A description of the cases litigated or to be litigated and how they benefit the public generally. 2011 tax brackets 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 tax brackets 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 tax brackets 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 tax brackets Acceptance of attorneys' fees. 2011 tax brackets   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 tax brackets Upon undertaking a representation, the organization cannot withdraw from the case because the litigant is unable to pay the fee. 2011 tax brackets   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 tax brackets All fee awards must be paid to the organization and not to its individual staff attorneys. 2011 tax brackets Instead, a public-interest law firm can reasonably compensate its staff attorneys, but only on a straight salary basis. 2011 tax brackets 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 tax brackets   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 tax brackets   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 tax brackets Religious Organizations To determine whether an organization meets the religious purposes test of section 501(c)(3), the IRS maintains two basic guidelines. 2011 tax brackets That the particular religious beliefs of the organization are truly and sincerely held. 2011 tax brackets 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 tax brackets 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 tax brackets 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 tax brackets Churches. 2011 tax brackets   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 tax brackets 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 tax brackets   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 tax brackets Because beliefs and practices vary so widely, there is no single definition of the word church for tax purposes. 2011 tax brackets The IRS considers the facts and circumstances of each organization applying for church status. 2011 tax brackets Convention or association of churches. 2011 tax brackets   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 tax brackets Integrated auxiliaries. 2011 tax brackets   An organization is an integrated auxiliary of a church if all the following are true. 2011 tax brackets The organization is described both in sections 501(c)(3) and 509(a)(1), 509(a)(2), or 509(a)(3). 2011 tax brackets It is affiliated with a church or a convention or association of churches. 2011 tax brackets It is internally supported. 2011 tax brackets An organization is internally supported unless both of the following are true. 2011 tax brackets 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 tax brackets 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 tax brackets Special rule. 2011 tax brackets   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 tax brackets   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 tax brackets   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 tax brackets Scientific Organizations You must show that your organization's research will be carried on in the public interest. 2011 tax brackets 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 tax brackets Aiding in the scientific education of college or university students. 2011 tax brackets Obtaining scientific information that is published in a treatise, thesis, trade publication, or in any other form th
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Understanding your CP11A Notice

We made changes to your return because we believe there's a miscalculation involving your Earned Income Credit. You owe money on your taxes as a result of these changes.

Tax publications you may find useful

How to get help

Calling the toll free number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do

  • Read your notice carefully ― it will explain why you owe money on your taxes.
  • Pay the amount owed by the date on the notice's payment coupon.
  • Make payment arrangements if you can't pay the full amount you owe.
  • Contact us within 60 days of the date of your notice if you disagree with the change we made.
  • Correct the copy of your tax return that you kept for your records.

You may want to...


Answers to Common Questions

How can I find out what caused my tax return to change?
Please contact us at the number listed on your notice for specific information concerning your tax return.

What should I do if I disagree with the changes you made?
If you disagree, contact us at the toll free number listed on the top right corner of your notice.

If you contact us in writing within 60 days of the date of this notice, we'll reverse the change we made to your account. However, if you're unable to provide us additional information that justifies the reversal and we believe the reversal is in error, we'll forward your case for audit. This step gives you formal appeal rights, including the right to appeal our decision in court before you have to pay the additional tax. After we forward your case, the audit staff will contact you within five to six weeks to fully explain the audit process and your rights. If you don’t contact us within the 60-day period, you'll lose your right to appeal our decision before payment of tax.

If you don't contact us within 60 days, the change won’t be reversed and you must pay the additional tax. You may then file a claim for refund. You must submit the claim within three years of the date you filed the tax return, or within two years of the date of your last payment for this tax.

What happens if I can’t pay the full amount I owe?
You can arrange to make a payment plan with us if you can’t pay the full amount you owe.

Am I charged interest on the money I owe?
Not if you pay the full amount you owe by the date on the payment coupon. However interest accrues on the unpaid balance after that date.

Will I receive a penalty if I can't pay the full amount?
Yes, you will receive a late payment penalty. You can contact us at the number given on your notice at 1-800-829-0922 if you're unable to pay the full amount shown in your specific notice because of circumstances beyond your control. Contact us by the due date of your payment and, depending on your situation, we may be able to remove the penalty.

What's the difference between the "Child Tax Credit" and the "Additional Child Tax Credit?" Can I qualify for both?
The Child Tax Credit is for people who have a qualifying child and meet the eligibility requirements. The maximum amount you can claim is $1000 for each qualifying child. The Additional Child Tax Credit is for eligible individuals who receive less than the full amount of Child Tax Credit. You may qualify for both the Child Tax Credit and the Additional Child Tax Credit. For more information, see:

How do I claim an Additional Child Tax Credit?
You can claim the credit by completing a Form 1040 Schedule 8812, Child Tax Credit and attaching it to your income tax return.

My child is turning 18 this year. Can I still get the Additional Child Tax Credit?
No. Your child must be under age 17 at the end of 2009 to qualify for both the Child Tax Credit and the Additional Child Tax Credit.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Use the EITC Assistant on our website to help you complete your Schedule EIC, Earned Income Credit and claim your Earned Income Credit.

If you have any dependent children, remember to check out if you are eligible to claim the Child Tax Credit and the Additional Child Tax Credit the next time you file your income tax return. Instructions for claiming the Child Tax Credit are found in the Form 1040 Instruction booklet. Use Form 1040 Schedule 8812, Child Tax Credit to claim the Additional Child Tax Credit, if you are eligible.

Page Last Reviewed or Updated: 28-Mar-2014

The 2011 Tax Brackets

2011 tax brackets 2. 2011 tax brackets   Filing Requirements and Required Disclosures Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Annual Information ReturnsSupporting Organization Annual Information Return Unrelated Business Income Tax ReturnEstimated tax. 2011 tax brackets Employment Tax ReturnsException. 2011 tax brackets FUTA tax exception. 2011 tax brackets FICA tax exemption election. 2011 tax brackets Revoking the election. 2011 tax brackets Definitions. 2011 tax brackets Effect on employees. 2011 tax brackets Political Organization Income Tax ReturnExempt function. 2011 tax brackets Political organization taxable income. 2011 tax brackets Separate fund. 2011 tax brackets Failure to file. 2011 tax brackets Failure to pay on time. 2011 tax brackets Reporting Requirements for a Political OrganizationForm 8871 Form 8872 Donee Information ReturnCharitable deduction property. 2011 tax brackets Publicly traded securities. 2011 tax brackets Exceptions. 2011 tax brackets Form 8283. 2011 tax brackets Information Provided to DonorsDisclosure of Quid Pro Quo Contributions Acknowledgment of Charitable Contributions of $250 or More Acknowledgment of Vehicle Contribution Qualified Intellectual Property Report of Cash Received Public Inspection of Exemption Applications, Annual Returns, and Political Organization Reporting FormsAnnual Information Return Public Inspection of Exemption Application Political Organization Reporting Forms Required DisclosuresSolicitation of Nondeductible Contributions Sales of Information or Services Available Free From Government Dues Used for Lobbying or Political Activities Prohibited Tax Shelter Transactions Miscellaneous RulesOrganizational Changes and Exempt Status Introduction Most exempt organizations (including private foundations) must file various returns and reports at some time during (or following the close of) their accounting period. 2011 tax brackets Topics - This chapter discusses: Annual information returns Unrelated business income tax return Employment tax returns Political organization income tax return Reporting requirements for a political organization Donee information return Information provided to donors Report of cash received Public inspection of exemption applications, annual returns, and political organizations reporting forms Required disclosures Miscellaneous rules Useful Items - You may want to see: Publication 15 Circular E, Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits 598 Tax on Unrelated Business Income of Exempt Organizations Form (and Instructions) 941 Employer's Quarterly Federal Tax Return 990 Return of Organization Exempt From Income Tax 990-EZ Short Form Return of Organization Exempt From Income Tax Schedule A (Form 990 or 990-EZ) Public Charity Status and Public Support Schedule B (Form 990, 990-EZ, or 990-PF) Schedule of Contributors Schedule C (Form 990 or 990-EZ) Political Campaign and Lobbying Activities Schedule D (Form 990) Supplemental Financial Statements Schedule E (Form 990 or 990-EZ) Schools Schedule F (Form 990) Statement of Activities Outside the United States Schedule G (Form 990 or 990-EZ) Supplemental Information Regarding Fundraising or Gaming Activities Schedule H (Form 990) Hospitals Schedule I (Form 990) Grants and Other Assistance to Organizations, Governments, and Individuals in the United States Schedule J (Form 990) Compensation Information Schedule K (Form 990) Supplemental Information on Tax-Exempt Bonds Schedule L (Form 990 or 990-EZ) Transactions With Interested Persons Schedule M (Form 990) Noncash Contributions Schedule N (Form 990 or 990-EZ) Liquidation, Termination, Dissolution, or Significant Disposition of Assets Schedule O (Form 990 or 990-EZ) Supplemental Information to Form 990 Schedule R (Form 990) Related Organizations and Unrelated Partnerships 990-PF Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation 990-BL Information and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain Related Persons 990-T Exempt Organization Business Income Tax Return 990-W Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations 1120-POL U. 2011 tax brackets S. 2011 tax brackets Income Tax Return for Certain Political Organizations 4720 Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code 5768 Election/Revocation of Election by an Eligible Section 501(c)(3) Organization To Make Expenditures To Influence Legislation 6069 Return of Excise Tax on Excess Contributions to Black Lung Benefit Trust Under Section 4953 and Computation of Section 192 Deduction 7004 Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns 8274 Certification by Churches and Qualified Church-Controlled Organizations Electing Exemption from Employer Social Security and Medicare Taxes 8282 Donee Information Return 8300 Report of Cash Payments Over $10,000 Received in a Trade or Business 8453-X Political Organization Declaration for Electronic Filing of Notice of Section 527 Status 8822-B Change of Address-Business 8868 Application for Extension of Time to File an Exempt Organization Return 8870 Information Return for Transfers Associated with Certain Personal Benefits Contracts 8871 Political Organization Notice of Section 527 Status 8872 Political Organization Report of Contributions and Expenditures 8886-T Disclosure by Tax-Exempt Entity Regarding Prohibited Tax Shelter Transaction 8899 Notice of Income from Donated Intellectual Property 8940 Request for Miscellaneous Determination See chapter 6 for information about getting these publications and forms. 2011 tax brackets Annual Information Returns Every organization exempt from federal income tax under section 501(a) must file an Annual Exempt Organization Return except: A church, an interchurch organization of local units of a church, a convention or association of churches, An integrated auxiliary of a church, A church-affiliated organization that is exclusively engaged in managing funds or maintaining retirement programs, A school below college level affiliated with a church or operated by a religious order, Church-affiliated mission societies if more than half of their activities are conducted in, or are directed at persons in, foreign countries, An exclusively religious activity of any religious order, A state institution, the income of which is excluded from gross income under section 115, A corporation described in section 501(c)(1) that is organized under an Act of Congress, an instrumentality of the United States, and is exempt from Federal income taxes, A stock bonus, pension, or profit-sharing trust that qualifies under section 401 (required to file Form 5500, Annual Return/Report of Employee Benefit Plan), A religious or apostolic organization described in section 501(d) (required to file Form 1065, U. 2011 tax brackets S. 2011 tax brackets Return of Partnership Income), A governmental unit or an affiliate of a governmental unit that meets the requirements of Revenue Procedure 95-48, 1995-2 C. 2011 tax brackets B. 2011 tax brackets 418, www. 2011 tax brackets irs. 2011 tax brackets gov/pub/irs-tege/rp1995-48. 2011 tax brackets pdf, A private foundation described in section 501(c)(3) and exempt under section 501(a) (required to file Form 990-PF, Return of Private Foundation), A political organization that is a state or local committee of a political party, a political committee of a state or local candidate, a caucus or association of state or local officials, or required to report under the Federal Election Campaign Act of 1971 as a political committee, An exempt organization (other than a private foundation) that normally has annual gross receipts of $50,000 or less, or A foreign organization, or an organization located in a U. 2011 tax brackets S. 2011 tax brackets possession, that normally has annual gross receipts from sources within the United States of $50,000 or less. 2011 tax brackets Supporting Organization Annual Information Return For tax years ending after August 17, 2006, all section 509(a)(3) supporting organizations are required to file Form 990 or 990-EZ with the IRS regardless of the organization's gross receipts, unless it qualifies as one of the following: An integrated auxiliary of a church; The exclusively religious activities of a religious order; or An organization, the gross receipts of which are normally not more than $5,000, that supports a section 509(a)(3) religious order. 2011 tax brackets If the organization is described in item (3) above, then it must submit Form 990-N (e-Postcard) unless it voluntarily files Form 990 or 990-EZ. 2011 tax brackets On its annual information return, at Part I, Schedule A (Form 990 or 990-EZ) a supporting organization must: List the section 509(a)(3) organizations to which it provides support, Indicate whether it is a Type I, Type II, or Type III supporting organization, and Certify that the organization is not controlled directly or indirectly by disqualified persons (other than by foundation managers and other than one or more publicly supported organizations). 2011 tax brackets Annual Electronic Filing Requirement for Small Tax-Exempt Organizations Small tax-exempt organizations with annual gross receipts normally $50,000 or less must submit Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ, with the IRS each year, if they choose not to file a Form 990 or 990-EZ. 2011 tax brackets Form 990-N requires the following information: The organization's legal name, and mailing address; Any name under which it operates and does business; Its Internet website address (if any); Its taxpayer identification number; The name and address of a principal officer; Organization's annual tax period; Verification that the organization's annual gross receipts are normally $50,000 or less; and Notification if the organization has terminated. 2011 tax brackets Form 990-N is due by the 15th day of the fifth month after the close of the tax year. 2011 tax brackets For tax years beginning after December 31, 2006, any organization that fails to meet its annual reporting requirement for 3 consecutive years will automatically lose its tax-exempt status. 2011 tax brackets To regain its exempt status an organization will have to reapply for recognition as a tax-exempt organization. 2011 tax brackets Exceptions. 2011 tax brackets   This filing requirement does not apply to: Churches, their integrated auxiliaries, and conventions or associations of churches; Organizations that are included in a group return; Private foundations required to file Form 990-PF; and Section 509(a)(3) supporting organizations required to file Form 990 or Form 990-EZ. 2011 tax brackets Forms 990 and 990-EZ Exempt organizations, other than private foundations, must file their annual information returns on Form 990 or 990-EZ, unless excepted from filing or allowed to submit Form 990-N, described earlier. 2011 tax brackets Generally, political organizations with gross receipts of $25,000 ($100,000 for a qualified state or local political organization (QSLPO)) or more for the tax year are required to file Form 990 or 990-EZ unless specifically excepted from filing the annual return. 2011 tax brackets The following political organizations are not required to file Form 990 or Form 990-EZ. 2011 tax brackets A state or local committee of a political party. 2011 tax brackets A political committee of a state or local candidate. 2011 tax brackets A caucus or association of state or local officials. 2011 tax brackets A political organization that is required to report as a political committee under the Federal Election Campaign Act. 2011 tax brackets A 501(c) organization that has expenditures for influencing or attempting to influence the selection, nomination, election, or appointment of any individual for a federal, state, or local public office. 2011 tax brackets Form 990-EZ. 2011 tax brackets   This is a shortened version of Form 990. 2011 tax brackets It is designed for use by small exempt organizations and nonexempt charitable trusts. 2011 tax brackets   Beginning in tax year 2010, an organization can file either Form 990 or 990-EZ if it meets the following: Its gross receipts during the year are less than $200,000. 2011 tax brackets Its total assets (line 25, column (B) of Form 990-EZ) at the end of the year are less than $500,000. 2011 tax brackets If your organization does not meet either of these conditions, you cannot file Form 990-EZ. 2011 tax brackets Instead you must file Form 990. 2011 tax brackets Group return. 2011 tax brackets   A group return on Form 990 may be filed by a central, parent, or like organization for two or more local organizations, none of which is a private foundation. 2011 tax brackets This return is in addition to the central organization's separate annual return if it must file a return. 2011 tax brackets It cannot be included in the group return. 2011 tax brackets See the instructions for Form 990 for the conditions under which this procedure may be used. 2011 tax brackets    In any year that an organization is properly included as a subordinate organization on a group return, it should not file its own Form 990. 2011 tax brackets Schedule A (Form 990 or 990-EZ). 2011 tax brackets   Organizations, other than private foundations, that are described in section 501(c)(3) and that are otherwise required to file Form 990 or 990-EZ must also complete Schedule A of that form. 2011 tax brackets Schedule B (Form 990, Form 990-EZ, or 990-PF). 2011 tax brackets   Organizations that file Form 990 or 990-EZ use this schedule to provide required information regarding their contributors. 2011 tax brackets Schedule O (Form 990). 2011 tax brackets   Organizations that file Form 990 must use this schedule to provide required additional information or if additional space is needed. 2011 tax brackets   Other schedules may be required to be filed with Form 990 or 990-EZ. 2011 tax brackets See the instructions for Form 990 or the instructions for Form 990-EZ for more information. 2011 tax brackets Report significant new or changed program services and changes to organizational documents. 2011 tax brackets    An organization should report new significant program services or significant changes in how it conducts program services, and significant changes to its organizational documents, on its Form 990 rather than in a letter to EO Determinations. 2011 tax brackets EO Determinations no longer issues letters confirming the tax-exempt status of organizations that report new services or significant changes, or changes to organizational documents. 2011 tax brackets See Miscellaneous Rules, Organization Changes and Exempt Status, later. 2011 tax brackets Form 990-PF All private foundations exempt under section 501(c)(3) must file Form 990-PF. 2011 tax brackets These organizations are discussed in chapter 3. 2011 tax brackets Electronic Filing You may be required to file Form 990, Form 990-EZ, or Form 990-PF, and related forms, schedules, and attachments electronically. 2011 tax brackets If an organization is required to file a return electronically but does not, the organization is considered to have not filed its return. 2011 tax brackets See Regulations section 301. 2011 tax brackets 6033-4 for more information. 2011 tax brackets The IRS may waive the requirement to file electronically in cases of undue hardship. 2011 tax brackets For information on filing a waiver, see Notice 2010-13, 2010-4 I. 2011 tax brackets R. 2011 tax brackets B. 2011 tax brackets 327, available at www. 2011 tax brackets irs. 2011 tax brackets gov/ir/2010-04_IRSB/ar14. 2011 tax brackets html. 2011 tax brackets Form 990. 2011 tax brackets   An organization is required to file Form 990 electronically if it files at least 250 returns during the calendar year and has total assets of $10 million or more at the end of the tax year. 2011 tax brackets Form 990-PF. 2011 tax brackets   An organization is required to file Form 990-PF electronically if it files at least 250 returns during the calendar year. 2011 tax brackets Due Date Forms 990, 990-EZ, or 990-PF must be filed by the 15th day of the fifth month after the end of your organization's accounting period. 2011 tax brackets Thus, for a calendar year taxpayer, Forms 990, 990-EZ, or 990-PF is due May 15 of the following year. 2011 tax brackets Extension of time to file. 2011 tax brackets   Use Form 8868 to request an automatic 3-month extension of time to file Forms 990, 990-EZ, or 990-PF and also to apply for an additional (not automatic) 3-month extension if needed. 2011 tax brackets   Do not apply for both the automatic 3-month extension and the additional 3-month extension at the same time. 2011 tax brackets For more information, see Form 8868 and its instructions. 2011 tax brackets   When filing Form 8868 for an automatic 3-month extension, neither a signature, nor an explanation is required. 2011 tax brackets However, when filing Form 8868 for an additional 3-month extension, both a signature and an explanation are required. 2011 tax brackets Application for exemption pending. 2011 tax brackets   An organization that claims to be exempt under section 501(a) but has not established its exempt status by the due date for filing an information return must complete and file Form 990, 990-EZ, 990–N or 990-PF (if it considers itself a private foundation), unless the organization is exempt from Form 990-series filing requirements. 2011 tax brackets If the organization's application is pending with the IRS, it must so indicate on Forms 990, 990-EZ, or 990-PF (whichever applies) by checking the application pending block at the top of page 1 of the return. 2011 tax brackets For more information on the filing requirements, see the Instructions for Forms 990, 990-EZ, and 990-PF. 2011 tax brackets State reporting requirements. 2011 tax brackets   Copies of Forms 990, 990-EZ, or 990-PF may be used to satisfy state reporting requirements. 2011 tax brackets See the instructions for those forms. 2011 tax brackets Form 8870. 2011 tax brackets   Organizations that filed a Form 990, 990-EZ, or 990-PF, and paid premiums or received transfers on certain life insurance, annuity, and endowment contracts (personal benefit contracts), must file Form 8870. 2011 tax brackets For more information, see Form 8870 and the instructions for that form. 2011 tax brackets Automatic Revocation If the organization fails to file a Form 990, 990-EZ, or 990-PF, or fails to submit a Form 990-N, as required, for 3 consecutive years, it will automatically lose its tax-exempt status by operation of law. 2011 tax brackets The list of organizations whose tax-exempt status has been automatically revoked is available on IRS. 2011 tax brackets gov. 2011 tax brackets This list (Auto-Revocation List) may be viewed and searched on Exempt Organizations Select Check. 2011 tax brackets The Auto-Revocation List includes each organization's name, Employer Identification Number (EIN) and last known address. 2011 tax brackets It also includes the effective date of the automatic revocation and the date it was posted to the list. 2011 tax brackets The IRS updates the list monthly to include additional organizations that lose their tax-exempt status. 2011 tax brackets Tax Effect of Loss of Tax-Exempt Status If your organization’s tax-exempt status is automatically revoked, you may be required to file one of the following federal income tax returns and pay any applicable income taxes: Form 1120, U. 2011 tax brackets S. 2011 tax brackets Corporation Income Tax Return, due by the 15th day of the 3rd month after the end of your organization’s tax year, or Form 1041, U. 2011 tax brackets S. 2011 tax brackets Income Tax Return for Estates and Trusts, due by the 15th day of the 4th month after the end of your organization’s tax year. 2011 tax brackets In addition, a section 501(c)(3) organization that loses its tax-exempt status cannot receive tax-deductible contributions and will not be identified in the IRS Business Master File extract as eligible to received tax-deductible contributions, or be included in Exempt Organizations Select Check (Pub 78 database). 2011 tax brackets An organization whose exemption was automatically revoked must apply for tax exemption in order to regain its tax exemption (even if it was not originally required to apply). 2011 tax brackets In some situations, an organization may be able to obtain exemption retroactive to its date of revocation. 2011 tax brackets For more information about automatic revocation, go to IRS. 2011 tax brackets gov and select Charities & Non-Profits and then select Revoked? Reinstated? Learn More. 2011 tax brackets Penalties Penalties for failure to file. 2011 tax brackets   Generally, an exempt organization that fails to file a required return must pay a penalty of $20 a day for each day the failure continues. 2011 tax brackets The same penalty will apply if the organization does not give all the information required on the return or does not give the correct information. 2011 tax brackets Maximum penalty. 2011 tax brackets   The maximum penalty for any one return is the smaller of $10,000 or 5% of the organization's gross receipts for the year. 2011 tax brackets Organization with gross receipts over $1 million. 2011 tax brackets   For an organization that has gross receipts of over $1 million for the year, the penalty is $100 a day up to a maximum of $50,000. 2011 tax brackets Managers. 2011 tax brackets   If the organization is subject to this penalty, the IRS may specify a date by which the return or correct information must be supplied by the organization. 2011 tax brackets Failure to comply with this demand will result in a penalty imposed upon the manager of the organization, or upon any other person responsible for filing a correct return. 2011 tax brackets The penalty is $10 a day for each day that a return is not filed after the period given for filing. 2011 tax brackets The maximum penalty imposed on all persons with respect to any one return is $5,000. 2011 tax brackets Exception for reasonable cause. 2011 tax brackets   No penalty will be imposed if reasonable cause for failure to file timely can be shown. 2011 tax brackets Unrelated Business Income Tax Return Even though your organization is recognized as tax exempt, it still may be liable for tax on its unrelated business income. 2011 tax brackets Unrelated business income is income from a trade or business, regularly carried on, that is not substantially related to the charitable, educational, or other purpose that is the basis for the organization's exemption. 2011 tax brackets If your organization has $1,000 or more of unrelated business income, you must file Form 990-T in addition to your required annual information return. 2011 tax brackets Estimated tax. 2011 tax brackets   Quarterly estimated tax payments are due if your organization expects to owe $500 or more in tax including unrelated business income. 2011 tax brackets Use Form 990-W to figure your organization's estimated tax payments. 2011 tax brackets Travel tour programs. 2011 tax brackets   Travel tour activities that are a trade or business are an unrelated trade or business if the activities are not substantially related to the purpose to which tax exemption was granted to the organization. 2011 tax brackets   Whether travel tour activities conducted by an organization are substantially related to the organization's tax exempt purpose is determined by looking at all the relevant facts and circumstances, including, but not limited to, how a travel tour is developed, promoted, and operated. 2011 tax brackets Example. 2011 tax brackets ABC, a university alumni association, is tax exempt as an educational organization under section 501(c)(3). 2011 tax brackets As part of its activities, ABC operates a travel tour program. 2011 tax brackets The program is open to all current members of ABC and their guests. 2011 tax brackets ABC works with travel agents to schedule approximately ten tours annually to various destinations around the world. 2011 tax brackets Members of ABC pay $1,000 to XYZ Travel Agency to participate in a tour. 2011 tax brackets XYZ pays ABC a per person fee for each participant. 2011 tax brackets Although the literature advertising the tours encourages ABC members to continue their lifelong learning by joining the tours, and a faculty member of ABC's related university frequently joins the tour as a guest of the alumni association, none of the tours include any scheduled instruction or curriculum related to the destinations being visited. 2011 tax brackets The travel tours made available to ABC's members do not contribute importantly to the accomplishment of ABC's educational purpose. 2011 tax brackets Rather, ABC's program is designed to generate revenues for ABC by regularly offering its members travel services. 2011 tax brackets Therefore, ABC's tour program is an unrelated trade or business. 2011 tax brackets For additional information on unrelated business income, see Publication 598 and the Instructions for Form 990-T. 2011 tax brackets Employment Tax Returns Every employer, including an organization exempt from federal income tax, who pays wages to employees is responsible for withholding, depositing, paying, and reporting federal income tax, social security and Medicare (FICA) taxes, and federal unemployment tax (FUTA), unless that employer is specifically excepted by law from those requirements, or if the taxes clearly do not apply. 2011 tax brackets For more information, obtain a copy of Publication 15, which summarizes the responsibilities of an employer, Publication 15-A, Publication 15-B, and Form 941. 2011 tax brackets Small Business Health Care Tax Credit. 2011 tax brackets   If your small tax-exempt organization provides health care coverage for your workers you may qualify for the small business health care tax credit. 2011 tax brackets Go to IRS. 2011 tax brackets gov and select Affordable Care Act Tax Provisions for more details. 2011 tax brackets See Small Business Health Care Tax Credit at www. 2011 tax brackets irs. 2011 tax brackets gov/newsroom/article/0,,id=223666,00. 2011 tax brackets html. 2011 tax brackets Expanded Work Opportunity Tax Credit Available for Hiring Qualified Veterans. 2011 tax brackets   The VOW to Hire Heroes Act of 2011 made changes to the Work Opportunity Tax Credit (WOTC). 2011 tax brackets The Act added two new categories to the existing qualified veteran targeted group and made the WOTC available to certain tax-exempt employers as a credit against the employer's share of social security tax. 2011 tax brackets The Act allows employers to claim the WOTC for veterans certified as qualified veterans and who begin work before January 1, 2013. 2011 tax brackets This tax credit was extended through December 31, 2013, under the American Taxpayer Relief Act, passed on January 1, 2013. 2011 tax brackets   The credit can be as high as $6,240 for qualified tax-exempt organizations. 2011 tax brackets The amount of the credit depends on a number of factors, including the length of the veteran’s unemployment before hire, the number of hours the veteran works, and the veteran’s first-year wages. 2011 tax brackets The amount of the credit for qualified tax-exempt organizations may not exceed the organization's employer social security tax for the period for which the credit is claimed. 2011 tax brackets   All employers must obtain certification that an individual is a member of the targeted group, before the employer may claim the credit. 2011 tax brackets The process for certifying veterans for this credit is the same for all employers. 2011 tax brackets For more information, see Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit and the instructions to Form 8850. 2011 tax brackets Notice 2012-13, 2012-9 I. 2011 tax brackets R. 2011 tax brackets B. 2011 tax brackets 421, also provides additional guidance on submission Form 8850. 2011 tax brackets   Organizations described in section 501(c) and exempt from taxation under section 501(a) may claim the credit for qualified veterans who begin work on or after Nov. 2011 tax brackets 22, 2011, and before January 1, 2013. 2011 tax brackets After the required certification is secured, tax-exempt employers claim the credit against the employer social security tax by separately filing Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans, Form 5884-C. 2011 tax brackets File Form 5884-C after filing the related employment tax return for the employment tax period for which the credit is claimed. 2011 tax brackets It is recommended that qualified tax-exempt employers do not reduce their required deposits in anticipation of any credit as the forms are processed separately. 2011 tax brackets In addition to Form 5884-C and its instructions, tax-exempt employers should see Notice 2012-13 and the Frequently Asked Questions & Answers for more details for claiming the credit. 2011 tax brackets Trust fund recovery penalty. 2011 tax brackets   If any person required to collect, truthfully account for, and pay over any of these taxes willfully fails to satisfy any of these requirements or willfully tries in any way to evade or defeat any of them, that person will be subject to a penalty. 2011 tax brackets The penalty is equal to the tax evaded, not collected, or not accounted for and paid over. 2011 tax brackets The term person includes: An officer or employee of a corporation, or A member or employee of a partnership. 2011 tax brackets Exception. 2011 tax brackets   The penalty is not imposed on any unpaid volunteer director or member of a board of trustees of an exempt organization if the unpaid volunteer serves solely in an honorary capacity, does not participate in the day-to-day or financial operations of the organization, and does not have actual knowledge of the failure on which the penalty is imposed. 2011 tax brackets   This exception does not apply if it results in no one being liable for the penalty. 2011 tax brackets FICA and FUTA tax exceptions. 2011 tax brackets   Payments for services performed by a minister of a church in the exercise of the ministry, or a member of a religious order performing duties required by the order, are generally not subject to FICA or FUTA taxes. 2011 tax brackets FUTA tax exception. 2011 tax brackets   Payments for services performed by an employee of a religious, charitable, educational, or other organization described in section 501(c)(3) that are generally subject to FICA taxes if the payments are $100 or more for the year, are not subject to FUTA taxes. 2011 tax brackets FICA tax exemption election. 2011 tax brackets   Churches and qualified church-controlled organizations can elect exemption from employer FICA taxes by filing Form 8274. 2011 tax brackets   To elect the exemption, Form 8274 must be filed before the first date on which a quarterly employment tax return would otherwise be due from the electing organization. 2011 tax brackets The organization can make the election only if it is opposed for religious reasons to the payment of FICA taxes. 2011 tax brackets   The election applies to payments for services of current and future employees other than services performed in an unrelated trade or business. 2011 tax brackets Revoking the election. 2011 tax brackets   The election can be revoked by the IRS if the organization fails to file Form W-2, Wage and Tax Statement, for 2 years and fails to furnish certain information upon request by the IRS. 2011 tax brackets Such revocation will apply retroactively to the beginning of the 2-year period. 2011 tax brackets Definitions. 2011 tax brackets   For purposes of this election, the term church means a church, a convention or association of churches, or an elementary or secondary school that is controlled, operated, or principally supported by a church or by a convention or association of churches. 2011 tax brackets   The term qualified church-controlled organization means any church-controlled section 501(c)(3) tax-exempt organization, other than an organization that both: Offers goods, services, or facilities for sale, other than on an incidental basis, to the general public at other than a nominal charge that is substantially less than the cost of providing such goods, services, or facilities, and Normally receives more than 25% of its support from the sum of governmental sources and receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities, in activities that are not unrelated trades or businesses. 2011 tax brackets Effect on employees. 2011 tax brackets   If a church or qualified church-controlled organization has made an election, payment for services performed for that church or organization, other than in an unrelated trade or business, will not be subject to FICA taxes. 2011 tax brackets However, the employee, unless otherwise exempt, will be subject to self-employment tax on the income. 2011 tax brackets The tax applies to income of $108. 2011 tax brackets 28 or more for the tax year from that church or organization, and no deductions for trade or business expenses are allowed against this self-employment income. 2011 tax brackets   Schedule SE (Form 1040), Self-Employment Tax, should be attached to the employee's income tax return. 2011 tax brackets Political Organization Income Tax Return Generally, a political organization is treated as an organization exempt from tax. 2011 tax brackets Certain political organizations, however, must file an annual income tax return, Form 1120-POL, U. 2011 tax brackets S. 2011 tax brackets Income Tax Return for Certain Political Organizations, for any year they have political organization taxable income in excess of the $100 specific deduction allowed under section 527. 2011 tax brackets A political organization that has $25,000 ($100,000 for a qualified state or local political organization) or more in gross receipts for the tax year must file Form 990 or Form 990-EZ (and Schedule B of the form), unless excepted. 2011 tax brackets See Forms 990 and 990-EZ , earlier. 2011 tax brackets Political organization. 2011 tax brackets   A political organization is a party, committee, association, fund, or other organization (whether or not incorporated) organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for an exempt function. 2011 tax brackets Exempt function. 2011 tax brackets   An exempt function means influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any federal, state, local public office or office in a political organization, or the election of the Presidential or Vice Presidential electors, whether or not such individual or electors are selected, nominated, elected, or appointed. 2011 tax brackets It also includes certain office expenses of a holder of public office or an office in a political organization. 2011 tax brackets Certain political organizations are required to notify the IRS that they are section 527 organizations. 2011 tax brackets These organizations must use Form 8871. 2011 tax brackets Some of these section 527 organizations must use Form 8872 to file periodic reports with the IRS disclosing their contributions and expenditures. 2011 tax brackets For a discussion on these forms, see Reporting Requirements for a Political Organization, later. 2011 tax brackets Political organization taxable income. 2011 tax brackets   Political organization taxable income is the excess of: Gross income for the tax year (excluding exempt function income) minus Deductions directly connected with the earning of gross income. 2011 tax brackets To figure taxable income, allow for a $100 specific deduction, but do not allow for the net operating loss deduction, the dividends-received deduction, and other special deductions for corporations. 2011 tax brackets Exempt organization not a political organization. 2011 tax brackets   An organization exempt under section 501(c) that spends any amount for an exempt function must file Form 1120-POL for any year which it has political taxable income. 2011 tax brackets These organizations must include in gross income the lesser of: The total amount of its exempt function expenditures, or The organization's net investment income. 2011 tax brackets Separate fund. 2011 tax brackets   A section 501(c) organization can set up a separate segregated fund that will be treated as an independent political organization. 2011 tax brackets The earnings and expenditures made by the separate fund will not be attributed to the section 501(c) organization. 2011 tax brackets Section 501(c)(3) organizations are precluded from, and may suffer loss of exemption for, engaging in any political campaign on behalf of, or in opposition to, any candidate for public office. 2011 tax brackets Due date. 2011 tax brackets   Form 1120-POL is due by the 15th day of the 3rd month after the end of the tax year. 2011 tax brackets Thus, for a calendar year taxpayer, Form 1120-POL is due on March 15 of the following year. 2011 tax brackets If any due date falls on a Saturday, Sunday, or legal holiday, the organization can file the return on the next business day. 2011 tax brackets    Form 1120-POL is not required of an exempt organization that makes expenditures for political purposes if its gross income does not exceed its directly connected deductions by more than $100 for the tax year. 2011 tax brackets Extension of time to file. 2011 tax brackets    Use Form 7004 to request an automatic 6-month extension of time to file Form 1120-POL. 2011 tax brackets The extension will be granted if you complete Form 7004 properly, make a proper estimate of the tax (if applicable), file Form 1120-POL by the due date, and pay any tax due. 2011 tax brackets Failure to file. 2011 tax brackets   A political organization that fails to file Form 1120-POL is subject to a penalty equal to 5% of the tax due for each month (or partial month) the return is late up to a maximum of 25% of the tax due, unless the organization shows the failure was due to reasonable cause. 2011 tax brackets For more information about filing Form 1120-POL, refer to the instructions accompanying the form. 2011 tax brackets Failure to pay on time. 2011 tax brackets   An organization that does not pay the tax when due generally may have to pay a penalty of 1/2 of 1% of the unpaid tax for each month or part of a month the tax is not paid, up to a maximum of 25% of the unpaid tax. 2011 tax brackets The penalty will not be imposed if the organization can show that the failure to pay on time was due to reasonable cause. 2011 tax brackets Reporting Requirements for a Political Organization Certain political organizations are required to notify the IRS that the organization is to be treated as a section 527 political organization. 2011 tax brackets The organization is also required to periodically report certain contributions received and expenditures made by the organization. 2011 tax brackets To notify the IRS of section 527 treatment, an organization must file Form 8871. 2011 tax brackets To report contributions and expenditures, certain tax-exempt political organizations must file Form 8872. 2011 tax brackets Form 8871 A political organization must electronically file Form 8871 to notify the IRS that it is to be treated as a section 527 organization. 2011 tax brackets However, an organization is not required to file Form 8871 if: It reasonably expects its annual gross receipts to always be less than $25,000. 2011 tax brackets It is a political committee required to report under the Federal Election Campaign Act of 1971 (FECA) (2 U. 2011 tax brackets S. 2011 tax brackets C. 2011 tax brackets 431(4)). 2011 tax brackets It is a state or local candidate committee. 2011 tax brackets It is a state or local committee of a political party. 2011 tax brackets It is a section 501(c) organization that has made an “exempt function expenditure. 2011 tax brackets ” All other political organizations are required to file Form 8871. 2011 tax brackets An organization must provide on Form 8871: Its name and address (including any business address, if different) and its electronic mailing address; Its purpose; The names and addresses of its officers, highly compensated employees, contact person, custodian of records, and members of its board of directors; The name and address of, and relationship to, any related entities (within the meaning of section 168(h)(4)); and Whether it intends to claim an exemption from filing Form 8872, Form 990, or Form 990-EZ. 2011 tax brackets Employer identification number. 2011 tax brackets   If your organization needs an EIN, you can apply for one: Online—Click on the Employer ID Numbers (EINs) link at www. 2011 tax brackets IRS. 2011 tax brackets gov/businesses/small. 2011 tax brackets By telephone at 1-800-829-4933 from 7:00 a. 2011 tax brackets m. 2011 tax brackets to 10:00 p. 2011 tax brackets m. 2011 tax brackets in the organization's local time zone. 2011 tax brackets By mailing or faxing Form SS-4. 2011 tax brackets   If you previously applied for an EIN and have not yet received it, or you are unsure whether you have an EIN, please call our toll-free customer account services number, 1-877-829-5500, for assistance. 2011 tax brackets Due dates. 2011 tax brackets   The initial Form 8871 must be filed within 24 hours of the date on which the organization was established. 2011 tax brackets If there is a material change, an amended Form 8871 must be filed within 30 days of the material change. 2011 tax brackets When the organization terminates its existence, it must file a final Form 8871 within 30 days of termination. 2011 tax brackets   If the due date falls on a Saturday, Sunday, or legal holiday, the organization can file on the next business day. 2011 tax brackets How to file. 2011 tax brackets   An organization must file Form 8871 electronically via the IRS Internet website at www. 2011 tax brackets IRS. 2011 tax brackets gov/polorgs (Keyword: political orgs). 2011 tax brackets Form 8453-X, Political Organization Declaration for Electronic Filing of Notice of Section 527 Status. 2011 tax brackets   After electronically submitting Form 8871, the political organization must print, sign, and mail Form 8453-X to the IRS. 2011 tax brackets Upon receipt of the Form 8453-X, the IRS will send the organization a username and password that must be used to file an amended or final Form 8871 or to electronically file Form 8872. 2011 tax brackets Penalties Failure to file. 2011 tax brackets   An organization that is required to file Form 8871, but fails to do so on a timely basis, will not be treated as a tax-exempt section 527 organization for any period before the date Form 8871 is filed. 2011 tax brackets Also, the taxable income of the organization for that period will include its exempt function income (including contributions received, membership dues, and political fundraising receipts) minus any deductions directly connected with the production of that income. 2011 tax brackets   Failure to file an amended Form 8871 will cause the organization not to be treated as a tax-exempt section 527 organization. 2011 tax brackets If an organization is treated as not being a tax-exempt section 527 organization, the taxable income of the organization will be determined by considering any exempt function income and deductions during the period beginning on the date of the material change and ending on the date that the amended Form 8871 is filed. 2011 tax brackets    The tax is computed by multiplying the organization's taxable income by the highest corporate tax rate. 2011 tax brackets Fraudulent returns. 2011 tax brackets   Any individual or corporation that willfully delivers or discloses to the IRS any list, return, account, statement or other document known to be fraudulent or false as to any material matter will be fined not more than $10,000 ($50,000 in the case of a corporation) or imprisoned for not more than 1 year or both. 2011 tax brackets Waiver of penalties. 2011 tax brackets   The IRS may waive any additional tax assessed on an organization for failure to file Form 8871 if the failure was due to reasonable cause and not willful neglect. 2011 tax brackets Additional information. 2011 tax brackets   For more information on Form 8871, see the form and its instructions. 2011 tax brackets For a discussion on the public inspection requirements for the form, see Public Inspection of Exemption Applications, Annual Returns, and Political Organization Reporting Forms , later. 2011 tax brackets Form 8872 Every tax-exempt section 527 political organization that accepts a contribution or makes an expenditure, for an exempt function during the calendar year, must file Form 8872 except: A political organization that is not required to file Form 8871 (discussed earlier). 2011 tax brackets A political organization that is subject to tax on its income because it did not file or amend Form 8871. 2011 tax brackets A qualified state or local political organization (QSLPO), discussed below. 2011 tax brackets All other tax-exempt section 527 organizations that accept contributions or make expenditures for an exempt function are required to file Form 8872. 2011 tax brackets Qualified state or local political organization. 2011 tax brackets   A state or local political organization may be a QSLPO if: All of its political activities relate solely to state or local public office (or office in a state or local political organization). 2011 tax brackets It is subject to a state law that requires it to report (and it does report) to a state agency information about contributions and expenditures that is similar to the information that the organization would otherwise be required to report to the IRS. 2011 tax brackets The state agency and the organization make the reports publicly available. 2011 tax brackets No federal candidate or office holder: Controls or materially participates in the direction of the organization, Solicits contributions for the organization, or Directs the disbursements of the organization. 2011 tax brackets Information required on Form 8872. 2011 tax brackets   If an organization pays an individual $500 or more for the calendar year, the organization is required to disclose the individual's name, address, occupation, employer, amount of the expense, the date the expense was paid, and the purpose of the expense on Form 8872. 2011 tax brackets   If an organization receives contributions of $200 or more from one contributor for the calendar year, the organization must disclose the donor's name, address, occupation, employer, and the date the contributions were made. 2011 tax brackets   For additional information that is required, see Form 8872. 2011 tax brackets Due dates. 2011 tax brackets   The due dates for filing Form 8872 vary depending on whether the form is due for a reporting period that occurs during a calendar year in which a regularly scheduled election is held, or any other calendar year (a nonelection year). 2011 tax brackets   If the due date falls on a Saturday, Sunday, or legal holiday, the organization can file on the next business day. 2011 tax brackets Election year filing. 2011 tax brackets    In election years, Form 8872 must be filed on either a quarterly or a monthly basis. 2011 tax brackets Both a pre-election report and a post-election report are also required to be filed in an election year. 2011 tax brackets An election year is any year in which a regularly scheduled general election for federal office is held (an even-numbered year). 2011 tax brackets Nonelection year filing. 2011 tax brackets    In nonelection years, the form must be filed on a semiannual or monthly basis. 2011 tax brackets A complete listing of these filing periods are in the Form 8872 Instructions. 2011 tax brackets A nonelection year is any odd-numbered year. 2011 tax brackets How to file. 2011 tax brackets   Form 8872 can be filed either electronically or by mail. 2011 tax brackets However, organizations that have, or expect to have, contributions or expenditures of $50,000 or more for the year must file electronically. 2011 tax brackets    To file by mail, send Form 8872 to the:   Department of the Treasury Internal Revenue Service Center Ogden, UT 84201-0027 Electronic filing. 2011 tax brackets   File electronically via the IRS internet website at www. 2011 tax brackets IRS. 2011 tax brackets gov/polorgs. 2011 tax brackets You will need a user ID and password to electronically file Form 8872. 2011 tax brackets Organizations that have completed the electronic filing of Form 8871 and submitted a completed and signed Form 8453-X will receive a username and password in the mail. 2011 tax brackets   Organizations that have completed the electronic filing of Form 8871, but have not received their user ID and password can request one by writing to the following address: Internal Revenue Service Attn: Request for 8872 Password Mail Stop 6273 Ogden, UT 84201 Lost username and password. 2011 tax brackets   If you have forgotten or misplaced the username and password issued to your organization after you filed your initial Form 8871, send a letter requesting a new username and password to the address under Electronic filing. 2011 tax brackets You can also fax your request to (801) 620-3249. 2011 tax brackets It may take 3-6 weeks for your new username and password to arrive, as they will be mailed to the organization. 2011 tax brackets Penalty A penalty will be imposed if the organization is required to file Form 8872 and it: Fails to file the form by the due date, or Files the form but fails to report all of the information required or reports incorrect information. 2011 tax brackets The penalty is 35% of the total amount of contributions and expenditures to which a failure relates. 2011 tax brackets Fraudulent returns. 2011 tax brackets   Any individual or corporation that willfully delivers or discloses any list, return, account, statement, or other document known to be fraudulent or false as to any material matter will be fined not more than $10,000 ($50,000 in the case of a corporation), or imprisoned for not more than 1 year, or both. 2011 tax brackets Waiver of penalties. 2011 tax brackets   The IRS may waive any additional tax assessed on an organization for failure to file Form 8872 if the failure was due to reasonable cause and not willful neglect. 2011 tax brackets Donee Information Return Dispositions of donated property. 2011 tax brackets   If an organization receives charitable deduction property and within three years sells, exchanges, or otherwise disposes of the property, the organization must file Form 8282, Donee Information Return. 2011 tax brackets However, an organization is not required to file Form 8282 if: The property is valued at $500 or less, or The property is consumed or distributed for charitable purposes. 2011 tax brackets   Form 8282 must be filed with the IRS within 125 days after the disposition. 2011 tax brackets Additionally, a copy of Form 8282 must be given to the donor. 2011 tax brackets If the organization fails to file the required information return, penalties may apply. 2011 tax brackets Charitable deduction property. 2011 tax brackets   This is any property (other than money or publicly traded securities) for which the donee organization signed an appraisal summary or Form 8283, Noncash Charitable Contributions. 2011 tax brackets Publicly traded securities. 2011 tax brackets   These are securities for which market quotations are readily available on an established securities market as of the date of the contribution. 2011 tax brackets Appraisal summary. 2011 tax brackets   If the value of the donated property exceeds $5,000, the donor must get a qualified appraisal for contributions of property, see the Exceptions. 2011 tax brackets below. 2011 tax brackets Exceptions. 2011 tax brackets   A written appraisal is not needed if the property is: Nonpublicly traded stock of $10,000 or less, A vehicle (including a car, boat, or airplane), if your deduction for the vehicle is limited to the gross proceeds from its sale, Intellectual property, Certain securities considered to have market quotations readily available (see Regulations section 1. 2011 tax brackets 170A-13(c)(7)(xi)(B)), Inventory and other property donated by a corporation that are qualified contributions for the care of the ill, the needy, or infants, within the meaning of section 170(e)(3)(A), or Any donation of stock in trade, inventory, or property held primarily for sale to customers in the ordinary course of your trade or business. 2011 tax brackets   The donee organization is not a qualified appraiser for the purpose of valuing the donated property. 2011 tax brackets For more information, get Publication 561, Determining the Value of Donated Property. 2011 tax brackets Form 8283. 2011 tax brackets   For noncash donations over $5,000, the donor must attach Form 8283 to the tax return to support the charitable deduction. 2011 tax brackets The donee must sign Part IV of Section B, Form 8283 unless publicly traded securities are donated. 2011 tax brackets The person who signs for the donee must be an official authorized to sign the donee's tax or information returns, or a person specifically authorized to sign by that official. 2011 tax brackets The signature does not represent concurrence in the appraised value of the contributed property. 2011 tax brackets A signed acknowledgment represents receipt of the property described on Form 8283 on the date specified on the form. 2011 tax brackets The signature also indicates knowledge of the information reporting requirements on dispositions, as previously discussed. 2011 tax brackets A copy of Form 8283 must be given to the donee. 2011 tax brackets Information Provided to Donors In some situations, a donor must obtain certain information from a donee organization to obtain a deduction for a charitable contribution. 2011 tax brackets In other situations, the donee organization is required to provide information to the donor. 2011 tax brackets A charitable organization must give a donor a disclosure statement for a quid pro quo contribution over $75. 2011 tax brackets (See Disclosure statement. 2011 tax brackets later. 2011 tax brackets ) This is a payment a donor makes to a charity partly as a contribution and partly for goods or services. 2011 tax brackets See Quid pro quo contribution below for an example. 2011 tax brackets Failure to make the required disclosure may result in a penalty to the organization. 2011 tax brackets A donor cannot deduct a charitable contribution of $250 or more unless the donor has a written acknowledgment from the charitable organization. 2011 tax brackets In certain circumstances, an organization may be able to meet both of these requirements with the same written document. 2011 tax brackets Disclosure of Quid Pro Quo Contributions A charitable organization must provide a written disclosure statement to donors of a quid pro quo contribution over $75. 2011 tax brackets Quid pro quo contribution. 2011 tax brackets   A contribution made by a donor in exchange for goods or services is known as a quid pro quo contribution. 2011 tax brackets Your charitable organization must provide the donor a written statement informing the donor of the fair market value of the items or services it provided in exchange for the contribution. 2011 tax brackets Generally, a written statement is required for each payment, whenever the contribution portion is over $75. 2011 tax brackets Example. 2011 tax brackets If a donor gives your charity $100 and receives a concert ticket valued at $40, the donor has made a quid pro quo contribution. 2011 tax brackets In this example, the charitable part of the payment is $60. 2011 tax brackets Even though the deductible part of the payment is not more than $75, a written statement must be filed because the total payment is more than $75. 2011 tax brackets If your organization fails to disclose quid pro quo contributions, the organization may be subject to a penalty. 2011 tax brackets Disclosure statement. 2011 tax brackets   The required written disclosure statement must: Inform the donor that the amount of the contribution that is deductible for federal income tax purposes is limited to the excess of any money (and the value of any property other than money) contributed by the donor over the fair market value of goods or services provided by the charity, and Provide the donor with a good faith estimate of the fair market value of the goods or services that the donor received. 2011 tax brackets The charity must furnish the statement in connection with either the solicitation or the receipt of the quid pro quo contribution. 2011 tax brackets If the disclosure statement is furnished in connection with a particular solicitation, it is not necessary for the organization to provide another statement when it actually receives the contribution. 2011 tax brackets   No disclosure statement is required if any of the following are true. 2011 tax brackets The goods or services given to a donor have insubstantial value as described in Revenue Procedure 90-12, 1990-1 C. 2011 tax brackets B. 2011 tax brackets 471, Revenue Procedure 90-12, and Revenue Procedure 92-49, 1992-1 C. 2011 tax brackets B. 2011 tax brackets 507 (as adjusted for inflation), Revenue Procedure 92-49. 2011 tax brackets There is no donative element involved in a particular transaction with a charity (for example, there is generally no donative element involved in a visitor's purchase from a museum gift shop). 2011 tax brackets There is only an intangible religious benefit provided to the donor. 2011 tax brackets The intangible religious benefit must be provided to the donor by an organization organized exclusively for religious purposes, and must be of a type that generally is not sold in a commercial transaction outside the donative context. 2011 tax brackets For example, a donor who, for a payment, is granted admission to a religious ceremony for which there is no admission charge is provided an intangible religious benefit. 2011 tax brackets A donor is not provided intangible religious benefits for payments made for tuition for education leading to a recognized degree, travel services, or consumer goods. 2011 tax brackets The donor makes a payment of $75 or less per year and receives only annual membership benefits that consist of: Any rights or privileges (other than the right to purchase tickets for college athletic events) that the taxpayer can exercise often during the membership period, such as free or discounted admissions or parking or preferred access to goods or services, or Admission to events that are open only to members and the cost per person of which is within the limits for low-cost articles described in Revenue Procedure 90-12 (as adjusted for inflation), Revenue Procedure 90-12. 2011 tax brackets Good faith estimate of fair market value (FMV). 2011 tax brackets   An organization can use any reasonable method to estimate the FMV of goods or services it provided to a donor, as long as it applies the method in good faith. 2011 tax brackets   The organization can estimate the FMV of goods or services that generally are not commercially available by using the FMV of similar or comparable goods or services. 2011 tax brackets Goods or services may be similar or comparable even if they do not have the unique qualities of the goods or services being valued. 2011 tax brackets Example 1. 2011 tax brackets A charity provides a 1-hour tennis lesson with a tennis professional for the first $500 payment it receives. 2011 tax brackets The tennis professional provides 1-hour lessons on a commercial basis for $100. 2011 tax brackets A good faith estimate of the lesson's FMV is $100. 2011 tax brackets Example 2. 2011 tax brackets For a payment of $50,000, a museum allows a donor to hold a private event in a room of the museum. 2011 tax brackets A good faith estimate of the FMV of the right to hold the event in the museum can be made by using the cost of renting a hotel ballroom with a capacity, amenities, and atmosphere comparable to the museum room, even though the hotel ballroom lacks the unique art displayed in the museum room. 2011 tax brackets If the hotel ballroom rents for $2,500, a good faith estimate of the FMV of the right to hold the event in the museum is $2,500. 2011 tax brackets Example 3. 2011 tax brackets For a payment of $1,000, a charity provides an evening tour of a museum conducted by a well-known artist. 2011 tax brackets The artist does not provide tours on a commercial basis. 2011 tax brackets Tours of the museum normally are free to the public. 2011 tax brackets A good faith estimate of the FMV of the evening museum tour is $0 even though it is conducted by the artist. 2011 tax brackets Penalty for failure to disclose. 2011 tax brackets   A penalty is imposed on a charity that does not make the required disclosure of a quid pro quo contribution of more than $75. 2011 tax brackets The penalty is $10 per contribution, not to exceed $5,000 per fundraising event or mailing. 2011 tax brackets The charity can avoid the penalty if it can show that the failure was due to reasonable cause. 2011 tax brackets Acknowledgment of Charitable Contributions of $250 or More A donor can deduct a charitable contribution of $250 or more only if the donor has a written acknowledgment from the charitable organization. 2011 tax brackets The donor must get the acknowledgment by the earlier of: The date the donor files the original return for the year the contribution is made, or The due date, including extensions, for filing the return. 2011 tax brackets The donor is responsible for requesting and obtaining the written acknowledgment from the donee. 2011 tax brackets A charitable organization that receives a payment made as a contribution is treated as the donee organization for this purpose even if the organization (according to the donor's instructions or otherwise) distributes the amount received to one or more charities. 2011 tax brackets Quid pro quo contribution. 2011 tax brackets   If the donee provides goods or services to the donor in exchange for the contribution (a quid pro quo contribution), the acknowledgment must include a good faith estimate of the value of the goods or services. 2011 tax brackets See Disclosure of Quid Pro Quo Contributions earlier. 2011 tax brackets Form of acknowledgment. 2011 tax brackets   Although there is no prescribed format for the written acknowledgment, it must provide enough information to substantiate the amount of the contribution. 2011 tax brackets For more information, see IRS Publication 1771, Charitable Contributions – Substantiation and Disclosure Requirements. 2011 tax brackets Cash contributions. 2011 tax brackets   To deduct a contribution of cash, a check, or other monetary gift (regardless of the amount), a donor must maintain a bank record or a written communication from the donee organization showing the donee's name, date, and amount of the contribution. 2011 tax brackets In the case of a lump-sum contribution (rather than a contribution by payroll deduction) made through the Combined Federal Campaign or a similar program such as a United Way Campaign, the written communication must include the name of the donee organization that is the ultimate recipient of the charitable contribution. 2011 tax brackets Contributions by payroll deduction. 2011 tax brackets   An organization may substantiate an employee's contribution by deduction from its payroll by: A pay stub, Form W-2, or other document showing a contribution to a donee organization, together with A pledge card or other document from the donee organization that shows its name. 2011 tax brackets   For contributions of $250 or more, the document must state that the donee organization provides no goods or services for any payroll contributions. 2011 tax brackets The amount withheld from each payment of wages to a taxpayer is treated as a separate contribution. 2011 tax brackets Acknowledgment of Vehicle Contribution If an exempt organization receives a contribution of a qualified vehicle with a claimed value of more than $500, the donee organization is required to provide a contemporaneous written acknowledgment to the donor. 2011 tax brackets The donee organization can use a completed Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, for the contemporaneous written acknowledgment. 2011 tax brackets See section 3. 2011 tax brackets 03 of Notice 2005-44 for guidance on the information that must be included in a contemporaneous written acknowledgment and the deadline for furnishing the acknowledgment to the donor. 2011 tax brackets Any donee organization that provides a contemporaneous written acknowledgment to a donor is required to report to the IRS the information contained in the acknowledgment. 2011 tax brackets The report is due by February 28 (March 31 if filing electronically) of the year following the year in which the donee organization provides the acknowledgment to the donor. 2011 tax brackets The organization must file the report on Copy A of Form 1098-C. 2011 tax brackets An organization that files Form 1098-C on paper should send it with Form 1096, Annual Summary and Transmittal of U. 2011 tax brackets S. 2011 tax brackets Information Returns. 2011 tax brackets See the Instructions for Form 1096 for the correct filing location. 2011 tax brackets An organization that is required to file 250 or more Forms 1098-C during the calendar year must file the forms electronically or magnetically. 2011 tax brackets Specifications for filing Form 1098-C electronically or magnetically can be found in Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically at www. 2011 tax brackets IRS. 2011 tax brackets gov/pub/irs-pdf/p1220. 2011 tax brackets pdf. 2011 tax brackets Acknowledgment For a contribution of a qualified vehicle with a claimed value of $500 or less, do not file Form 1098-C. 2011 tax brackets However, you can use it as the contemporaneous written acknowledgment under section 170(f)(8) by providing the donor with Copy C only. 2011 tax brackets See the Instructions for Form 1098-C. 2011 tax brackets Generally, the organization should complete Form 1098-C as the written acknowledgment to the donor and the IRS. 2011 tax brackets The contents of the acknowledgment depend upon whether the organization: Sells a qualified vehicle without any significant intervening use or material improvement, Intends to make a significant intervening use of or material improvement to a qualified vehicle prior to sale, or Sells a qualified vehicle to a needy individual at a price significantly below fair market value, or a gratuitous transfer to a needy individual in direct furtherance of a charitable purpose of the organization of relieving the poor and distressed or the underprivileged who are in need of a means of transportation. 2011 tax brackets For more information on the acknowledgment, see Notice 2005-44, 2005-25 I. 2011 tax brackets R. 2011 tax brackets B. 2011 tax brackets 1287, at www. 2011 tax brackets irs. 2011 tax brackets gov/irb/2005-25_IRB/2005-25_IRB/ar09. 2011 tax brackets html. 2011 tax brackets Material improvements or significant intervening use. 2011 tax brackets   To constitute significant intervening use, the organization must actually use the vehicle to substantially further the organization's regularly conducted activities, and the use must be significant, not incidental. 2011 tax brackets Factors in determining whether a use is a significant intervening use depend on the nature, extent, frequency, and duration. 2011 tax brackets For this purpose, use includes providing transportation on a regular basis for a significant period of time or significant use directly related to training in vehicle repair. 2011 tax brackets Use does not include the use of a vehicle to provide training in business skills, such as marketing or sales. 2011 tax brackets Examples of significant use include: Driving a vehicle every day for 1 year to deliver meals to needy individuals, if delivering meals is an activity regularly conducted by the organization. 2011 tax brackets Driving a vehicle for 10,000 miles over a 1-year period to deliver meals to needy individuals, if delivering meals is an activity regularly conducted by the organization. 2011 tax brackets   Material improvements include major repairs and additions that improve the condition of the vehicle in a manner that significantly increases the value. 2011 tax brackets To be a material improvement, the improvement cannot be funded by an additional payment to the organization from the donor of the vehicle. 2011 tax brackets Material improvements do not include cleaning, minor repairs, routine maintenance, painting, removal of dents or scratches, cleaning or repair of upholstery, and installation of theft deterrent devices. 2011 tax brackets Penalties. 2011 tax brackets   If your charitable organization receives contributions of used motor vehicles, boats, and airplanes valued over $500 it may be subject to a penalty if it knowingly: Fails to furnish an acknowledgement in a timely manner, showing the required information, or Furnishes a false or fraudulent acknowledgement of the contribution. 2011 tax brackets    Other penalties may apply. 2011 tax brackets See Part O in the 2012 General Instructions for Certain Information Returns. 2011 tax brackets   An acknowledgment containing a certification will be presumed to be false or fraudulent if the qualified vehicle is sold to a buyer other than a needy individual without a significant intervening use or material improvement within 6 months of the date of the contribution. 2011 tax brackets   If a charity sells a donated vehicle at auction, the IRS will not accept as substantiation an acknowledgment from the charity stating that the vehicle is to be transferred to a needy individual for significantly below fair market value. 2011 tax brackets Vehicles sold at auction are not sold at prices significantly below fair market value, and the IRS will not treat vehicles sold at auction as qualifying for this exception. 2011 tax brackets   The penalty for a false or fraudulent acknowledgment where the donee certifies that the vehicle will not be transferred for money, other property, or services before completion of material improvements or significant intervening use or the donee certifies that the vehicle is to be transferred to a needy individual for significantly below fair market value in furtherance of the donee's charitable purpose is the larger of $5,000 or the claimed value of the vehicle multiplied by 39. 2011 tax brackets 6%. 2011 tax brackets   The penalty for an acknowledgment relating to a qualified vehicle being sold in an arm's length transaction to an unrelated party is the larger of the gross proceeds from the sale or the sales price stated in the acknowledgment multiplied by 39. 2011 tax brackets 6%. 2011 tax brackets Qualified Intellectual Property A taxpayer who contributes qualified intellectual property to a charity may be entitled to a charitable deduction, in addition to any initial deduction allowed in the year of contribution. 2011 tax brackets The additional deduction is based on a specified percentage of the qualified donee income with respect to the qualified intellectual property. 2011 tax brackets To qualify for the additional charitable deduction, the donor must provide notice to the donee at the time of the contribution that the donor intends to treat the contribution as qualified intellectual property contribution for purposes of sections 170(m) and 6050L. 2011 tax brackets Every donee organization described in section 170(c) (except a private foundation as defined in section 509(a) that is not described in section 170(b)(1)(F)) that receives or accrues net income from a charitable gift of qualified intellectual property must file Form 8899. 2011 tax brackets Form 8899. 2011 tax brackets   Form 8899, Notice of Income From Donated Intellectual Property, is used by a donee to report net income from qualified intellectual property to the donor of the property and to the IRS and is due by the last day of the first full month following the close of the donee’s tax year. 2011 tax brackets This form must be filed for each tax year of the donee in which the donated property produces net income, but only if all or part of that tax year occurs during the 10-year period beginning on the date of the contribution and that tax year does not begin after the expiration of the legal life of the donated property. 2011 tax brackets Qualified donee income. 2011 tax brackets   Qualified donee income is any net income received by or accrued to the donee that is properly allocable to the qualified intellectual property for the tax year of the donee which ends within or with the tax year of the donor. 2011 tax brackets Income is not treated as allocated to qualified intellectual property if it is received or accrued after the earlier of the expiration of the legal life of the qualified intellectual property, or the 10-year period beginning with the date of