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Tax Filing 2014

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Tax Filing 2014

Tax filing 2014 3. Tax filing 2014   Section 501(c)(3) Organizations Table of Contents IntroductionChild care organizations. Tax filing 2014 Topics - This chapter discusses: Useful Items - You may want to see: Contributions to 501(c)(3) OrganizationsCertain annuity contracts. Tax filing 2014 Certain contracts held by a charitable remainder trust. Tax filing 2014 Excise Taxes. Tax filing 2014 Indoor tanning services. Tax filing 2014 Application for Recognition of ExemptionPolitical activity. Tax filing 2014 Private delivery service. Tax filing 2014 Amendments to organizing documents required. Tax filing 2014 How to show reasonable action and good faith. Tax filing 2014 Not acting reasonably and in good faith. Tax filing 2014 Prejudicing the interest of the Government. Tax filing 2014 Procedure for requesting extension. Tax filing 2014 More information. Tax filing 2014 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. Tax filing 2014 Grass roots expenditures. Tax filing 2014 Lobbying nontaxable amount. Tax filing 2014 Grass roots nontaxable amount. Tax filing 2014 Organization that no longer qualifies. Tax filing 2014 Tax on organization. Tax filing 2014 Tax on managers. Tax filing 2014 Taxes on organizations. Tax filing 2014 Taxes on managers. Tax filing 2014 Political expenditures. Tax filing 2014 Correction of expenditure. Tax filing 2014 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. Tax filing 2014 Religious. Tax filing 2014 Charitable. Tax filing 2014 Scientific. Tax filing 2014 Testing for public safety. Tax filing 2014 Literary. Tax filing 2014 Educational. Tax filing 2014 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). Tax filing 2014 The prevention of cruelty to children or animals. Tax filing 2014 To qualify, the organization must be a corporation, community chest, fund, articles of association, or foundation. Tax filing 2014 A trust is a fund or foundation and will qualify. Tax filing 2014 However, an individual or a partnership will not qualify. Tax filing 2014 Examples. Tax filing 2014   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. Tax filing 2014 Child care organizations. Tax filing 2014   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. Tax filing 2014 Instrumentalities. Tax filing 2014   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). Tax filing 2014 Examples of a qualifying instrumentality might include state schools, universities, or hospitals. Tax filing 2014 However, if an organization is an integral part of the local government or possesses governmental powers, it does not qualify for exemption. Tax filing 2014 A state or municipality itself does not qualify for exemption. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 Fundraising events. Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 See Disclosure of Quid Pro Quo Contributions in chapter 2. Tax filing 2014 Exemption application not filed. Tax filing 2014   Donors cannot deduct any charitable contribution to an organization that is required to apply for recognition of exemption but has not done so. Tax filing 2014 Separate fund—contributions that are deductible. Tax filing 2014   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. Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014 Personal benefit contracts. Tax filing 2014   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. Tax filing 2014   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. Tax filing 2014 Certain annuity contracts. Tax filing 2014   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). Tax filing 2014 Certain contracts held by a charitable remainder trust. Tax filing 2014   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. Tax filing 2014 Excise tax. Tax filing 2014   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. Tax filing 2014 The excise tax does not apply if all of the direct and indirect beneficiaries under the contract are organizations. Tax filing 2014 Excise Taxes. Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014 Indoor tanning services. Tax filing 2014   If your organization provides an indoor tanning bed service, the ACA imposed a 10% excise tax on services provided after June 30, 2010. Tax filing 2014 For more information, go to IRS. Tax filing 2014 gov and select Affordable Care Act Tax Provisions. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 See the organization headings that follow for specific information your organization may need to provide. Tax filing 2014 Form 1023. Tax filing 2014   Your organization must file its application for recognition of exemption on Form 1023. Tax filing 2014 See chapter 1 and the instructions accompanying Form 1023 for the procedures to follow in applying. Tax filing 2014 Some organizations are not required to file Form 1023. Tax filing 2014 See Organizations Not Required To File Form 1023, later. Tax filing 2014    Additional information to help you complete your application can be found online. Tax filing 2014 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. Tax filing 2014 See Exemption Requirements - Section 501(c)(3) Organizations. Tax filing 2014   Form 1023 and accompanying statements must show that all of the following are true. Tax filing 2014 The organization is organized exclusively for, and will be operated exclusively for, one or more of the purposes (religious, charitable, etc. Tax filing 2014 ) specified in the introduction to this chapter. Tax filing 2014 No part of the organization's net earnings will inure to the benefit of private shareholders or individuals. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 See Political activity, next, and Lobbying Expenditures , near the end of this chapter. Tax filing 2014 Political activity. Tax filing 2014   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). Tax filing 2014 Such participation or intervention includes the publishing or distributing of statements. Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014 Effective date of exemption. Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 Otherwise, exemption will be recognized only from the date of receipt. Tax filing 2014 The date of receipt is the date of the U. Tax filing 2014 S. Tax filing 2014 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. Tax filing 2014 Private delivery service. Tax filing 2014   If a private delivery service designated by the IRS, rather than the U. Tax filing 2014 S. Tax filing 2014 Postal Service, is used to deliver the application, the date of receipt is the date recorded or marked by the private delivery service. Tax filing 2014 The following private delivery services have been designated by the IRS. Tax filing 2014 DHL Express (DHL): DHL “Same Day” Service. Tax filing 2014 Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First. Tax filing 2014 United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. Tax filing 2014 M. Tax filing 2014 , UPS Worldwide Express Plus, and UPS Worldwide Express. Tax filing 2014 Amendments to organizing documents required. Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014 Extensions of time for filing. Tax filing 2014   There are two ways organizations seeking exemption can receive an extension of time for filing Form 1023. Tax filing 2014 Automatic 12-month extension. Tax filing 2014 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. Tax filing 2014 To get this extension, an organization must add the following statement at the top of its application: “Filed Pursuant to Section 301. Tax filing 2014 9100-2. Tax filing 2014 ” Discretionary extensions. Tax filing 2014 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. Tax filing 2014 How to show reasonable action and good faith. Tax filing 2014   An organization acted reasonably and showed good faith if at least one of the following is true. Tax filing 2014 The organization requests relief before its failure to file is discovered by the IRS. Tax filing 2014 The organization failed to file because of intervening events beyond its control. Tax filing 2014 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. Tax filing 2014 The organization reasonably relied upon the written advice of the IRS. Tax filing 2014 The organization reasonably relied upon the advice of a qualified tax professional who failed to file or advise the organization to file Form 1023. Tax filing 2014 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. Tax filing 2014 Not acting reasonably and in good faith. Tax filing 2014   An organization has not acted reasonably and in good faith under the following circumstances. Tax filing 2014 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. Tax filing 2014 It was informed of the requirement to file and related tax consequences, but chose not to file. Tax filing 2014 It uses hindsight in requesting relief. Tax filing 2014 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. Tax filing 2014 Prejudicing the interest of the Government. Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 Procedure for requesting extension. Tax filing 2014   To request a discretionary extension, an organization must submit (to the IRS address shown on Form 1023 and Notice 1382) the following. Tax filing 2014 A statement showing the date Form 1023 was required to have been filed and the date it was actually filed. Tax filing 2014 Any documents relevant to the application. Tax filing 2014 An affidavit describing in detail the events that led to the failure to apply and to the discovery of that failure. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 ” 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. Tax filing 2014 This includes the organization's return preparer, and any accountant or attorney, knowledgeable in tax matters, who advised the taxpayer on the application. Tax filing 2014 The affidavits must describe the engagement and responsibilities of the individual and the advice that he or she provided. Tax filing 2014 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. Tax filing 2014 ” 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. Tax filing 2014 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. Tax filing 2014 The organization, if requested, has to submit copies of its tax returns, and copies of the returns of other affected taxpayers. Tax filing 2014   A request for this relief in connection with an application for exemption does not require payment of an additional user fee. Tax filing 2014 Also, a request for relief under the automatic 12-month extension does not require payment of a user fee. Tax filing 2014 More information. Tax filing 2014   For more information about these procedures, see Regulations sections 301. Tax filing 2014 9100-1, 301. Tax filing 2014 9100-2, 301. Tax filing 2014 9100-3, Revenue Procedure 2013-4, section 6. Tax filing 2014 04, 2013-1 I. Tax filing 2014 R. Tax filing 2014 B. Tax filing 2014 126, and Revenue Procedure 2013-8, 2013-1 I. Tax filing 2014 R. Tax filing 2014 B. Tax filing 2014 237. Tax filing 2014 See Revenue Procedure 2013-4 and Revenue Procedure 2013-8. Tax filing 2014 Notification from the IRS. Tax filing 2014   Organizations filing Form 1023 and satisfying all requirements of section 501(c)(3) will be notified of their exempt status in writing. Tax filing 2014 Organizations Not Required To File Form 1023 Some organizations are not required to file Form 1023. Tax filing 2014 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. Tax filing 2014 Any organization (other than a private foundation) normally having annual gross receipts of not more than $5,000 (see Gross receipts test, later). Tax filing 2014 These organizations are exempt automatically if they meet the requirements of section 501(c)(3). Tax filing 2014 Filing Form 1023 to establish exemption. Tax filing 2014   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. Tax filing 2014 By establishing its exemption, potential contributors are assured by the IRS that contributions will be deductible. Tax filing 2014 A subordinate organization (other than a private foundation) covered by a group exemption letter does not have to submit a Form 1023 for itself. Tax filing 2014 Private foundations. Tax filing 2014   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. Tax filing 2014 Gross receipts test. Tax filing 2014   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. Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014 The organization must file Form 1023 within 90 days after the end of its second tax year. Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014 Example. Tax filing 2014   An organization is organized and operated exclusively for charitable purposes and is not a private foundation. Tax filing 2014 It was incorporated on January 1, 2009, and files returns on a calendar-year basis. Tax filing 2014 It did not file a Form 1023. Tax filing 2014 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. Tax filing 2014 Therefore, it did not have to file Form 1023 and is exempt for those years. Tax filing 2014 However, for 2010, 2011, and 2012 the total gross receipts were $15,900. Tax filing 2014 Therefore, the organization must file Form 1023 within 90 days after the end of its 2012 tax year. Tax filing 2014 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. Tax filing 2014 The organization, however, will not lose its exempt status for the tax years ending before January 1, 2012. Tax filing 2014   The IRS will consider applying the Commissioner's discretionary authority to extend the time for filing Form 1023. Tax filing 2014 See the procedures for this extension discussed earlier. Tax filing 2014 Articles of Organization Your organization must include a conformed copy of its articles of organization with the application for recognition of exemption. Tax filing 2014 This may be its trust instrument, corporate charter, articles of association, or any other written instrument by which it is created. Tax filing 2014 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. Tax filing 2014 These conditions for exemption are referred to as the organizational test. Tax filing 2014 Section 501(c)(3) is the provision of law that grants exemption to the organizations described in this chapter. Tax filing 2014 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). Tax filing 2014 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. Tax filing 2014 Moreover, the organizational test is not satisfied by statements of your organization's officers that you intend to operate only for exempt purposes. Tax filing 2014 Also, the test is not satisfied by the fact that your actual operations are for exempt purposes. Tax filing 2014 In interpreting an organization's articles, the law of the state where the organization was created is controlling. Tax filing 2014 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. Tax filing 2014 The following are examples illustrating the organizational test. Tax filing 2014 Example 1. Tax filing 2014 Articles of organization state that an organization is formed exclusively for literary and scientific purposes within the meaning of section 501(c)(3). Tax filing 2014 These articles appropriately limit the organization's purposes. Tax filing 2014 The organization meets the organizational test. Tax filing 2014 Example 2. Tax filing 2014 An organization, by the terms of its articles, is formed to engage in research without any further description or limitation. Tax filing 2014 The organization will not be properly limited as to its purposes since all research is not scientific. Tax filing 2014 The organization does not meet the organizational test. Tax filing 2014 Example 3. Tax filing 2014 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). Tax filing 2014 The organization meets the organizational test. Tax filing 2014 Example 4. Tax filing 2014 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. Tax filing 2014 Example 5. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 Example 6. Tax filing 2014 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. Tax filing 2014 Such purposes are vague and may be accomplished other than in an exempt manner. Tax filing 2014 Example 7. Tax filing 2014 A stated purpose to operate a hospital does not meet the organizational test since it is not necessarily charitable. Tax filing 2014 A hospital may or may not be exempt depending on the manner in which it is operated. Tax filing 2014 Example 8. Tax filing 2014 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. Tax filing 2014 Dedication and Distribution of Assets Assets of an organization must be permanently dedicated to an exempt purpose. Tax filing 2014 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. Tax filing 2014 If the assets could be distributed to members or private individuals or for any other purpose, the organizational test is not met. Tax filing 2014 Dedication. Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014 Distribution. Tax filing 2014   Revenue Procedure 82-2, 1982-1 C. Tax filing 2014 B. Tax filing 2014 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. Tax filing 2014 The procedure also provides a sample of an acceptable dissolution provision for organizations required to have one. Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014 Sample articles of organization. Tax filing 2014   See sample articles of organization in the Appendix in the back of this publication. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 You must submit a copy of the pertinent contracts, agreements, publications, programs, etc. Tax filing 2014 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. Tax filing 2014 See also Private Schools , discussed later. Tax filing 2014 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. Tax filing 2014 Advocacy of a position. Tax filing 2014   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. Tax filing 2014 The mere presentation of unsupported opinion is not educational. Tax filing 2014 Method not educational. Tax filing 2014   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). Tax filing 2014 The following factors may indicate that the method is not educational. Tax filing 2014 The presentation of viewpoints unsupported by facts is a significant part of the organization's communications. Tax filing 2014 The facts that purport to support the viewpoint are distorted. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014   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. Tax filing 2014 Qualifying organizations. Tax filing 2014   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. Tax filing 2014 College book stores, cafeterias, restaurants, etc. Tax filing 2014   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. Tax filing 2014 Alumni association. Tax filing 2014   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. Tax filing 2014 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 . Tax filing 2014 Athletic organization. Tax filing 2014   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. Tax filing 2014 If it is not so engaged, your organization may be exempt as a social club described in chapter 4. Tax filing 2014 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. Tax filing 2014 If your organization is not exempt as an educational organization, see Amateur Athletic Organizations , later in this chapter. Tax filing 2014 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. Tax filing 2014 The racial composition of the student body, and of the faculty and administrative staff, as of the current academic year. Tax filing 2014 (This information also must be projected, so far as may be feasible, for the next academic year. Tax filing 2014 ) The amount of scholarship and loan funds, if any, awarded to students enrolled and the racial composition of students who have received the awards. Tax filing 2014 A list of the school's incorporators, founders, board members, and donors of land or buildings, whether individuals or organizations. Tax filing 2014 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. Tax filing 2014 The public school district and county in which the school is located. Tax filing 2014 How to determine racial composition. Tax filing 2014   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. Tax filing 2014 Nevertheless, a statement of the method by which the racial composition was determined must be supplied. Tax filing 2014 The identity of individual students or members of the faculty and administrative staff should not be included with this information. Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014 Also, the school must circulate information that clearly states the school's admission policies. Tax filing 2014 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. Tax filing 2014 The IRS considers discrimination on the basis of race to include discrimination on the basis of color or national or ethnic origin. Tax filing 2014 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. Tax filing 2014 Conversely, the absence of racial discrimination in the employment of faculty and administrative staff is indicative of a racially nondiscriminatory policy as to students. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 Policy statement. Tax filing 2014   The school must include a statement of its racially nondiscriminatory policy in all its brochures and catalogs dealing with student admissions, programs, and scholarships. Tax filing 2014 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. Tax filing 2014 Publicity requirement. Tax filing 2014   The school must make its racially nondiscriminatory policy known to all segments of the general community served by the school. Tax filing 2014 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. Tax filing 2014 To satisfy this requirement, the school must use one of the following two methods. Tax filing 2014 Method one. Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 If this method is used, the notice must meet the following printing requirements. Tax filing 2014 It must appear in a section of the newspaper likely to be read by prospective students and their families. Tax filing 2014 It must occupy at least 3 column inches. Tax filing 2014 It must have its title printed in at least 12 point bold face type. Tax filing 2014 It must have the remaining text printed in at least 8 point type. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014   Method two. Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 Exceptions. Tax filing 2014   The publicity requirements will not apply in the following situations. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 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 . Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014   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. Tax filing 2014 The IRS believes that these publicity requirements are the most effective methods to make known a school's racially nondiscriminatory policy. Tax filing 2014 In this regard, it is each school's responsibility to determine whether either of the exceptions applies. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 Facilities and programs. Tax filing 2014   A school must be able to show that all of its programs and facilities are operated in a racially nondiscriminatory manner. Tax filing 2014 Scholarship and loan programs. Tax filing 2014   As a general rule, all scholarship or other comparable benefits obtainable at the school must be offered on a racially nondiscriminatory basis. Tax filing 2014 This must be known throughout the general community being served by the school and should be referred to in its publicity. Tax filing 2014 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. Tax filing 2014 Certification. Tax filing 2014   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. Tax filing 2014   Failure to comply with the guidelines ordinarily will result in the proposed revocation of the exempt status of a school. Tax filing 2014 Recordkeeping requirements. Tax filing 2014 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. Tax filing 2014 Records indicating the racial composition of the student body, faculty, and administrative staff for each academic year. Tax filing 2014 Records sufficient to document that scholarship and other financial assistance is awarded on a racially nondiscriminatory basis. Tax filing 2014 Copies of all materials used by or on behalf of the school to solicit contributions. Tax filing 2014 Copies of all brochures, catalogs, and advertising dealing with student admissions, programs, and scholarships. Tax filing 2014 (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. Tax filing 2014 ) 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. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 Similarly, the IRS does not require a school to keep records prohibited under state or federal law. Tax filing 2014 Exceptions. Tax filing 2014   The school does not have to independently maintain these records for IRS use if both of the following are true. Tax filing 2014 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. Tax filing 2014 The school maintains copies of these reports from which this information is readily obtainable. Tax filing 2014 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. Tax filing 2014 Failure to maintain records. Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 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). Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 The rest of this section contains a description of the information to be provided by certain specific organizations. Tax filing 2014 This information is in addition to the required inclusions described in chapter 1, and other statements requested on Form 1023. Tax filing 2014 Each of the following organizations must submit the information described. Tax filing 2014 Charitable organization supporting education. Tax filing 2014   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. Tax filing 2014 Scholarships. Tax filing 2014   If the organization awards or plans to award scholarships, complete Schedule H of Form 1023. Tax filing 2014 Also, submit the following: Criteria used for selecting recipients, including the rules of eligibility. Tax filing 2014 How and by whom the recipients are or will be selected. Tax filing 2014 If awards are or will be made directly to individuals, whether information is required assuring that the student remains in school. Tax filing 2014 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. Tax filing 2014 A copy of the scholarship application form and any brochures or literature describing the scholarship program. Tax filing 2014 Hospital. Tax filing 2014   If you are organized to operate a charitable hospital, complete and attach Section I of Schedule C, Form 1023. Tax filing 2014   If your hospital was transferred to you from proprietary ownership, complete and attach Schedule G of Form 1023. Tax filing 2014 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. Tax filing 2014 Submit also an appraisal showing the fair rental value of the rented space. Tax filing 2014 Clinic. Tax filing 2014   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. Tax filing 2014 Home for the aged. Tax filing 2014   If you are organized to operate a home for the aged, complete and attach Schedule F of Form 1023 and required attachments. Tax filing 2014 Community nursing bureau. Tax filing 2014   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. Tax filing 2014 Organization providing loans. Tax filing 2014   If you make, or will make, loans for charitable and educational purposes, submit the following information. Tax filing 2014 An explanation of the circumstances under which such loans are, or will be, made. Tax filing 2014 Criteria for selection, including the rules of eligibility. Tax filing 2014 How and by whom the recipients are or will be selected. Tax filing 2014 Manner of repayment of the loan. Tax filing 2014 Security required, if any. Tax filing 2014 Interest charged, if any, and when payable. Tax filing 2014 Copies in duplicate of the loan application and any brochures or literature describing the loan program. Tax filing 2014 Public-interest law firms. Tax filing 2014   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. Tax filing 2014 How the litigation can reasonably be said to be representative of a broad public interest rather than a private one. Tax filing 2014 Whether the organization will accept fees for its services. Tax filing 2014 A description of the cases litigated or to be litigated and how they benefit the public generally. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 Acceptance of attorneys' fees. Tax filing 2014   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. Tax filing 2014 Upon undertaking a representation, the organization cannot withdraw from the case because the litigant is unable to pay the fee. Tax filing 2014   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. Tax filing 2014 All fee awards must be paid to the organization and not to its individual staff attorneys. Tax filing 2014 Instead, a public-interest law firm can reasonably compensate its staff attorneys, but only on a straight salary basis. Tax filing 2014 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. Tax filing 2014   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. Tax filing 2014   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. Tax filing 2014 Religious Organizations To determine whether an organization meets the religious purposes test of section 501(c)(3), the IRS maintains two basic guidelines. Tax filing 2014 That the particular religious beliefs of the organization are truly and sincerely held. Tax filing 2014 That the practices and rituals associated with the organization's religious belief or creed are not illegal or contrary to clearly defined public policy. Tax filing 2014 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. Tax filing 2014 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. Tax filing 2014 Churches. Tax filing 2014   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. Tax filing 2014 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. Tax filing 2014   In determining whether an admittedly religious organization is also a church, the IRS does not accept every assertion that the organization is a church. Tax filing 2014 Because beliefs and practices vary so widely, there is no single definition of the word church for tax purposes. Tax filing 2014 The IRS considers the facts and circumstances of each organization applying for church status. Tax filing 2014 Convention or association of churches. Tax filing 2014   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. Tax filing 2014 Integrated auxiliaries. Tax filing 2014   An organization is an integrated auxiliary of a church if all the following are true. Tax filing 2014 The organization is described both in sections 501(c)(3) and 509(a)(1), 509(a)(2), or 509(a)(3). Tax filing 2014 It is affiliated with a church or a convention or association of churches. Tax filing 2014 It is internally supported. Tax filing 2014 An organization is internally supported unless both of the following are true. Tax filing 2014 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). Tax filing 2014 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. Tax filing 2014 Special rule. Tax filing 2014   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. Tax filing 2014   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. Tax filing 2014   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. Tax filing 2014 Scientific Organizations You must show that your organization's research will be carried on in the public interest. Tax filing 2014 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. Tax filing 2014 Aiding in the scientific education of college or university students. Tax filing 2014 Obtaining scientific information that is published in a treatise, thesis, trade publication, or in any other form th
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IRA One-Rollover-Per-Year Rule

Beginning as early as January 1, 2015, you can make only one rollover from a traditional IRA to another (or the same) traditional IRA in any 12-month period, regardless of the number of IRAs you own (Announcement  2014-15). A similar limitation will apply to rollovers between Roth IRAs. You can, however, continue to make as many trustee-to-trustee transfers between IRAs as you want. Amounts transferred between traditional IRAs, either by rollover or trustee-to-trustee transfer, are excluded from your gross income.

Current law

You don’t have to include in your gross income any amount distributed to you from a traditional IRA if you deposit the amount into another (or the same) traditional IRA within 60 days (Internal Revenue Code Section 408(d)(3)). Under Internal Revenue Code Section 408(d)(3)(B), only one IRA-to-IRA rollover can be made in any 12-month period. Proposed Treasury Regulation Section 1.408-4(b)(4)(ii), published in 1981, and IRS Publication 590, Individual Retirement Arrangements (IRAs) interpret this limitation as applying on an IRA-by-IRA basis, meaning a rollover from one IRA to another would not affect a rollover involving other IRAs of the same individual.

U.S. Tax Court decision

The Tax Court recently held that you can’t make a non-taxable rollover from one IRA to another if you have already made a rollover from any of your IRAs in the preceding 1-year period (Bobrow v. Commissioner, T.C. Memo. 2014-21). Following the holding in this decision means:

  • you must include in gross income any previously untaxed amounts distributed from an IRA if you made an IRA-to-IRA rollover in the preceding 12 months, and
  • you may be subject to the 10% early withdrawal tax on the amount you include in gross income.

Additionally, if you pay these amounts into another (or the same) IRA, they may be:

Prospective application

The IRS intends to follow the Tax Court’s interpretation of Internal Revenue Code Section 408(d)(3)(B). However, to give IRA owners and trustees time to adjust, the IRS will delay implementation until January 1, 2015, at the earliest. Proposed Treasury Regulation Section 1.408-4(b)(4)(ii) will be withdrawn and Publication 590 will be revised to reflect the new interpretation.

Only rollovers will be affected

This change won’t affect your ability to transfer funds from one IRA trustee directly to another, because this type of transfer isn’t a rollover (Revenue Ruling 78-406, 1978-2 C.B. 157). The one-rollover-per-year rule of Internal Revenue Code Section 408(d)(3)(B) applies only to rollovers.

Additional resources

Page Last Reviewed or Updated: 26-Mar-2014

The Tax Filing 2014

Tax filing 2014 5. Tax filing 2014   Manufacturers Taxes Table of Contents Importer. Tax filing 2014 Use considered sale. Tax filing 2014 Lease considered sale. Tax filing 2014 Bonus goods. Tax filing 2014 Taxable Event ExemptionsRequirements for Exempt Sales Credits or Refunds Sport Fishing EquipmentRelated person. Tax filing 2014 Bows, Quivers, Broadheads, and Points Arrow ShaftsExemption for certain wooden arrows. Tax filing 2014 CoalExported. Tax filing 2014 Taxable TiresQualifying intercity or local bus. Tax filing 2014 Qualifying school bus. Tax filing 2014 Gas Guzzler TaxVehicles not subject to tax. Tax filing 2014 Imported automobiles. Tax filing 2014 VaccinesConditions to allowance. Tax filing 2014 Taxable Medical Devices The following discussion of manufacturers taxes applies to the tax on: Sport fishing equipment; Fishing rods and fishing poles; Electric outboard motors; Fishing tackle boxes; Bows, quivers, broadheads, and points; Arrow shafts; Coal; Taxable tires; Gas guzzler automobiles; and Vaccines. Tax filing 2014 Manufacturer. Tax filing 2014   The term “manufacturer” includes a producer or importer. Tax filing 2014 A manufacturer is any person who produces a taxable article from new or raw material, or from scrap, salvage, or junk material, by processing or changing the form of an article or by combining or assembling two or more articles. Tax filing 2014 If you furnish the materials and keep title to those materials and to the finished article, you are considered the manufacturer even though another person actually manufactures the taxable article. Tax filing 2014   A manufacturer who sells a taxable article in knockdown (unassembled) condition is liable for the tax. Tax filing 2014 The person who buys these component parts and assembles a taxable article may also be liable for tax as a further manufacturer depending on the labor, material, and overhead required to assemble the completed article if the article is assembled for business use. Tax filing 2014 Importer. Tax filing 2014   An importer is a person who brings a taxable article into the United States, or withdraws a taxable article from a customs bonded warehouse for sale or use in the United States. Tax filing 2014 Sale. Tax filing 2014   A sale is the transfer of the title to, or the substantial incidents of ownership in, an article to a buyer for consideration that may consist of money, services, or other things. Tax filing 2014 Use considered sale. Tax filing 2014   A manufacturer who uses a taxable article is liable for the tax in the same manner as if it were sold. Tax filing 2014 Lease considered sale. Tax filing 2014   The lease of an article (including any renewal or extension of the lease) by the manufacturer is generally considered a taxable sale. Tax filing 2014 However, for the gas guzzler tax, only the first lease (excluding any renewal or extension) of the automobile by the manufacturer is considered a sale. Tax filing 2014 Manufacturers taxes based on sale price. Tax filing 2014   The manufacturers taxes imposed on the sale of sport fishing equipment, electric outboard motors, and bows are based on the sale price of the article. Tax filing 2014 The taxes imposed on coal are based either on the sale price or the weight. Tax filing 2014   The price for which an article is sold includes the total consideration paid for the article, whether that consideration is in the form of money, services, or other things. Tax filing 2014 However, you include certain charges made when a taxable article is sold and you exclude others. Tax filing 2014 To figure the price on which you base the tax, use the following rules. Tax filing 2014 Include both the following charges in the price. Tax filing 2014 Any charge for coverings or containers (regardless of their nature). Tax filing 2014 Any charge incident to placing the article in a condition packed ready for shipment. Tax filing 2014 Exclude all the following amounts from the price. Tax filing 2014 The manufacturers excise tax, whether or not it is stated as a separate charge. Tax filing 2014 The transportation charges pursuant to the sale. Tax filing 2014 The cost of transportation of goods to a warehouse before their bona fide sale is not excludable. Tax filing 2014 Delivery, insurance, installation, retail dealer preparation charges, and other charges you incur in placing the article in the hands of the purchaser under a bona fide sale. Tax filing 2014 Discounts, rebates, and similar allowances actually granted to the purchaser. Tax filing 2014 Local advertising charges. Tax filing 2014 A charge made separately when the article is sold and that qualifies as a charge for “local advertising” may, within certain limits, be excluded from the sale price. Tax filing 2014 Charges for warranty paid at the purchaser's option. Tax filing 2014 However, a charge for a warranty of an article that the manufacturer requires the purchaser to pay to obtain the article is included in the sale price on which the tax is figured. Tax filing 2014 Bonus goods. Tax filing 2014   Allocate the sale price if you give free nontaxable goods with the purchase of taxable merchandise. Tax filing 2014 Figure the tax only on the sale price attributable to the taxable articles. Tax filing 2014 Example. Tax filing 2014 A manufacturer sells a quantity of taxable articles and gives the purchaser certain nontaxable articles as a bonus. Tax filing 2014 The sale price of the shipment is $1,500. Tax filing 2014 The normal sale price is $2,000: $1,500 for the taxable articles and $500 for the nontaxable articles. Tax filing 2014 Since the taxable items represent 75% of the normal sale price, the tax is based on 75% of the actual sale price, or $1,125 (75% of $1,500). Tax filing 2014 The remaining $375 is allocated to the nontaxable articles. Tax filing 2014 Taxable Event Tax attaches when the title to the article sold passes from the manufacturer to the buyer. Tax filing 2014 When the title passes depends on the intention of the parties as gathered from the contract of sale. Tax filing 2014 In the absence of expressed intention, the legal rules of presumption followed in the jurisdiction where the sale occurs determine when title passes. Tax filing 2014 If the taxable article is used by the manufacturer, the tax attaches at the time use begins. Tax filing 2014 The manufacturer is liable for the tax. Tax filing 2014 Partial payments. Tax filing 2014   The tax applies to each partial payment received when taxable articles are: Leased, Sold conditionally, Sold on installment with chattel mortgage, or Sold on installment with title to pass in the future. Tax filing 2014 To figure the tax, multiply the partial payment by the tax rate in effect at the time of the payment. Tax filing 2014 Exemptions The following sales by the manufacturer are exempt from the manufacturers tax. Tax filing 2014 Sale of an article to a state or local government for the exclusive use of the state or local government. Tax filing 2014 This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. Tax filing 2014 State is defined in Definitions in chapter 1. Tax filing 2014 Sale of an article to a nonprofit educational organization for its exclusive use. Tax filing 2014 This exemption does not apply to the taxes on coal, gas guzzlers, and vaccines. Tax filing 2014 Nonprofit educational organization is defined under Communications Tax in chapter 4. Tax filing 2014 Sale of an article to a qualified blood collector organization. Tax filing 2014 This exemption does not apply to gas guzzlers, recreational equipment, and vaccines. Tax filing 2014 Qualified blood collector organizations are defined under Communications Tax in chapter 4. Tax filing 2014 Sale of an article for use by the purchaser as supplies for vessels. Tax filing 2014 This exemption does not apply to the taxes on coal and vaccines. Tax filing 2014 Supplies for vessels means ships' stores, sea stores, or legitimate equipment on vessels of war of the United States or any foreign nation, vessels employed in the fisheries or whaling business, or vessels actually engaged in foreign trade. Tax filing 2014 Sale of an article for use by the purchaser for further manufacture, or for resale by the purchaser to a second purchaser for use by the second purchaser for further manufacture. Tax filing 2014 This exemption does not apply to the tax on coal and tires. Tax filing 2014 Use for further manufacture means use in the manufacture or production of an article subject to the manufacturers excise taxes. Tax filing 2014 If you buy articles tax free and resell or use them other than in the manufacture of another article, you are liable for the tax on their resale or use just as if you had manufactured and sold them. Tax filing 2014 Sale of an article for export or for resale by the purchaser to a second purchaser for export. Tax filing 2014 The article may be exported to a foreign country or to a possession of the United States. Tax filing 2014 A vaccine shipped to a possession of the United States is not considered to be exported. Tax filing 2014 If an article is sold tax free for export and the manufacturer does not receive proof of export, described later, the manufacturer is liable for the tax. Tax filing 2014 Sales of articles of native Indian handicraft, such as bows and arrow shafts, manufactured by Indians on reservations, in Indian schools, or under U. Tax filing 2014 S. Tax filing 2014 jurisdiction in Alaska. Tax filing 2014 For tire exemptions, see section 4221(e)(2). Tax filing 2014 Requirements for Exempt Sales The following requirements must be met for a sale to be exempt from the manufacturers tax. Tax filing 2014 Registration requirements. Tax filing 2014   The manufacturer, first purchaser, and second purchaser in the case of resales must be registered. Tax filing 2014 See the Form 637 instructions for more information. Tax filing 2014 Exceptions to registration requirements. Tax filing 2014   Registration is not required for: State or local governments, Foreign purchasers of articles sold or resold for export, The United States, or Parties to a sale of supplies for vessels and aircraft. Tax filing 2014 Certification requirement. Tax filing 2014   If the purchaser is required to be registered, the purchaser must give the manufacturer its registration number and certify the exempt purpose for which the article will be used. Tax filing 2014 The information must be in writing and may be noted on the purchase order or other document furnished by the purchaser to the seller in connection with the sale. Tax filing 2014   For a sale to a state or local government, an exemption certificate must be signed by an officer or employee authorized by the state or local government. Tax filing 2014 See Regulations section 48. Tax filing 2014 4221-5(c) for the certificate requirements. Tax filing 2014   For sales for use as supplies for vessels and aircraft, if the manufacturer and purchaser are not registered, the owner or agent of the vessel must provide an exemption certificate to the manufacturer before or at the time of sale. Tax filing 2014 See Regulations section 48. Tax filing 2014 4221-4(d) for the certificate requirements. Tax filing 2014 Proof of export requirement. Tax filing 2014   Within 6 months of the date of sale or shipment by the manufacturer, whichever is earlier, the manufacturer must receive proof of exportation. Tax filing 2014 See Regulations section 48. Tax filing 2014 4221-3(d) for evidence that qualifies as proof of exportation. Tax filing 2014 Proof of resale for further manufacture requirement. Tax filing 2014   Within 6 months of the date of sale or shipment by the manufacturer, whichever is earlier, the manufacturer must receive proof that the article has been resold for use in further manufacture. Tax filing 2014 See Regulations section 48. Tax filing 2014 4221-2(c) for evidence that qualifies as proof of resale. Tax filing 2014 Information to be furnished to purchaser. Tax filing 2014   The manufacturer must indicate to the purchaser that the articles normally would be subject to tax and are being sold tax free for an exempt purpose because the purchaser has provided the required certificate. Tax filing 2014 Credits or Refunds The manufacturer may be eligible to obtain a credit or refund of the manufacturers tax for certain uses, sales, exports, and price readjustments. Tax filing 2014 The claim must set forth in detail the facts upon which the claim is based. Tax filing 2014 Uses, sales, and exports. Tax filing 2014   A credit or refund (without interest) of the manufacturers taxes may be allowable if a tax-paid article is, by any person: Exported, Used or sold for use as supplies for vessels (except for coal and vaccines), Sold to a state or local government for its exclusive use (except for coal, gas guzzlers, and vaccines), Sold to a nonprofit educational organization for its exclusive use (except for coal, gas guzzlers, and vaccines), Sold to a qualified blood collector organization for its exclusive use (except for gas guzzlers, recreational equipment, and vaccines), or Used for further manufacture of another article subject to the manufacturers taxes (except for coal). Tax filing 2014 Export. Tax filing 2014   If a tax-paid article is exported, the exporter or shipper may claim a credit or refund if the manufacturer waives its right to claim the credit or refund. Tax filing 2014 In the case of a tax-paid article used to make another taxable article, the subsequent manufacturer may claim the credit or refund. Tax filing 2014 Price readjustments. Tax filing 2014   In addition, a credit or refund (without interest) may be allowable for a tax-paid article for which the price is readjusted by reason of return or repossession of the article or a bona fide discount, rebate, or allowance for taxes based on price. Tax filing 2014 Conditions to allowance. Tax filing 2014   To claim a credit or refund in the case of export; supplies for vessels; or sales to a state or local government, nonprofit educational organization, or qualified blood collector organization; the person who paid the tax must certify on the claim that one of the following applies and that the claimant has the required supporting information. Tax filing 2014 The claimant sold the article at a tax-excluded price. Tax filing 2014 The person has repaid, or agreed to repay, the tax to the ultimate vendor of the article. Tax filing 2014 The person has obtained the written consent of the ultimate vendor to make the claim. Tax filing 2014 The ultimate vendor generally is the seller making the sale that gives rise to the overpayment of tax. Tax filing 2014 Claim for further manufacture. Tax filing 2014   To claim a credit or refund for further manufacture, the claimant must include a statement that contains the following. Tax filing 2014 The name and address of the manufacturer and the date of payment. Tax filing 2014 An identification of the article for which the credit or refund is claimed. Tax filing 2014 The amount of tax paid on the article and the date on which it was paid. Tax filing 2014 Information indicating that the article was used as material in the manufacture or production of, or as a component part of, a second article manufactured or produced by the manufacturer, or was sold on or in connection with, or with the sale of a second article manufactured or produced by the manufacturer. Tax filing 2014 An identification of the second article. Tax filing 2014   For claims by the exporter or shipper, the claim must contain the proof of export and a statement signed by the person that paid the tax waiving the right to claim a credit or refund. Tax filing 2014 The statement must include the amount of tax paid, the date of payment, and the office to which it was paid. Tax filing 2014 Claim for price readjustment. Tax filing 2014   To claim a credit or refund for a price readjustment, the person who paid the tax must include with the claim, a statement that contains the following. Tax filing 2014 A description of the circumstances that gave rise to the price readjustment. Tax filing 2014 An identification of the article whose price was readjusted. Tax filing 2014 The price at which the article was sold. Tax filing 2014 The amount of tax paid on the article and the date on which it was paid. Tax filing 2014 The name and address of the purchaser. Tax filing 2014 The amount repaid to the purchaser or credited to the purchaser's account. Tax filing 2014 Sport Fishing Equipment A tax of 10% of the sale price is imposed on many articles of sport fishing equipment sold by the manufacturer. Tax filing 2014 This includes any parts or accessories sold on or in connection with the sale of those articles. Tax filing 2014 Pay this tax with Form 720. Tax filing 2014 No tax deposits are required. Tax filing 2014 Sport fishing equipment includes all the following items. Tax filing 2014 Fishing rods and poles (and component parts), fishing reels, fly fishing lines, and other fishing lines not over 130 pounds test, fishing spears, spear guns, and spear tips. Tax filing 2014 Items of terminal tackle, including leaders, artificial lures, artificial baits, artificial flies, fishing hooks, bobbers, sinkers, snaps, drayles, and swivels (but not including natural bait or any item of terminal tackle designed for use and ordinarily used on fishing lines not described in (1)). Tax filing 2014 The following items of fishing supplies and accessories: fish stringers, creels, bags, baskets, and other containers designed to hold fish, portable bait containers, fishing vests, landing nets, gaff hooks, fishing hook disgorgers, and dressing for fishing lines and artificial flies. Tax filing 2014 Fishing tip-ups and tilts. Tax filing 2014 Fishing rod belts, fishing rodholders, fishing harnesses, fish fighting chairs, fishing outriggers, and fishing downriggers. Tax filing 2014 See Revenue Ruling 88-52 in Cumulative Bulletin 1988-1 for a more complete description of the items of taxable equipment. Tax filing 2014 Fishing rods and fishing poles. Tax filing 2014   The tax on fishing rods and fishing poles (and component parts) is 10% of the sales price not to exceed $10 per article. Tax filing 2014 The tax is paid by the manufacturer, producer, or importer. Tax filing 2014 Fishing tackle boxes. Tax filing 2014   The tax on fishing tackle boxes is 3% of the sales price. Tax filing 2014 The tax is paid by the manufacturer, producer, or importer. Tax filing 2014 Electric outboard boat motors. Tax filing 2014   A tax of 3% of the sale price is imposed on the sale by the manufacturer of electric outboard motors. Tax filing 2014 This includes any parts or accessories sold on or in connection with the sale of those articles. Tax filing 2014 Certain equipment resale. Tax filing 2014   The tax on the sale of sport fishing equipment is imposed a second time under the following circumstances. Tax filing 2014 If the manufacturer sells a taxable article to any person, the manufacturer is liable for the tax. Tax filing 2014 If the purchaser or any other person then sells it to a person who is related (discussed next) to the manufacturer, that related person is liable for a second tax on any subsequent sale of the article. Tax filing 2014 The second tax, however, is not imposed if the constructive sale price rules under section 4216(b) apply to the sale by the manufacturer. Tax filing 2014   If the second tax is imposed, a credit for tax previously paid by the manufacturer is available provided the related person can document the tax paid. Tax filing 2014 The documentation requirement is generally satisfied only through submission of copies of actual records of the person that previously paid the tax. Tax filing 2014 Related person. Tax filing 2014   For the tax on sport fishing equipment, a person is a related person of the manufacturer if that person and the manufacturer have a relationship described in section 465(b)(3)(C). Tax filing 2014 Bows, Quivers, Broadheads, and Points The tax on bows is 11% (. Tax filing 2014 11) of the sales price. Tax filing 2014 The tax is paid by the manufacturer, producer, or importer. Tax filing 2014 It applies to bows having a peak draw weight of 30 pounds or more. Tax filing 2014 The tax is also imposed on the sale of any part or accessory suitable for inclusion in or attachment to a taxable bow and any quiver, broadhead, or point suitable for use with arrows described below. Tax filing 2014 Pay this tax with Form 720. Tax filing 2014 No tax deposits are required. Tax filing 2014 Arrow Shafts The tax on arrow shafts is listed on Form 720. Tax filing 2014 The tax is paid by the manufacturer, producer, or importer of any arrow shaft (whether sold separately or incorporated as part of a finished or unfinished product) of a type used in the manufacture of any arrow that after its assembly meets either of the following conditions. Tax filing 2014 It measures 18 inches or more in overall length. Tax filing 2014 It measures less than 18 inches in overall length but is suitable for use with a taxable bow, described earlier. Tax filing 2014 Exemption for certain wooden arrows. Tax filing 2014   After October 3, 2008, the tax does not apply to any shaft made of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether sold separately or incorporated as part of a finished or unfinished product) and used in the manufacture of any arrow that after its assembly meets both of the following conditions. Tax filing 2014 It measures 5/16 of an inch or less in diameter. Tax filing 2014 It is not suitable for use with a taxable bow, described earlier. Tax filing 2014 Pay this tax with Form 720. Tax filing 2014 No tax deposits are required. Tax filing 2014 Coal A tax is imposed on the first sale of coal mined in the United States. Tax filing 2014 The producer of the coal is liable for the tax. Tax filing 2014 The producer is the person who has vested ownership of the coal under state law immediately after the coal is severed from the ground. Tax filing 2014 Determine vested ownership without regard to any contractual arrangement for the sale or other disposition of the coal or the payment of any royalties between the producer and third parties. Tax filing 2014 A producer includes any person who extracts coal from coal waste refuse piles (or from the silt waste product that results from the wet washing of coal). Tax filing 2014 The tax is not imposed on coal extracted from a riverbed by dredging if it can be shown that the coal has been taxed previously. Tax filing 2014 Tax rates. Tax filing 2014   The tax on underground-mined coal is the lower of: $1. Tax filing 2014 10 a ton, or 4. Tax filing 2014 4% of the sale price. Tax filing 2014   The tax on surface-mined coal is the lower of: 55 cents a ton, or 4. Tax filing 2014 4% of the sale price. Tax filing 2014   Coal will be taxed at the 4. Tax filing 2014 4% rate if the selling price is less than $25 a ton for underground-mined coal and less than $12. Tax filing 2014 50 a ton for surface-mined coal. Tax filing 2014 Apply the tax proportionately if a sale or use includes a portion of a ton. Tax filing 2014 Example. Tax filing 2014 If you sell 21,000 pounds (10. Tax filing 2014 5 tons) of coal from an underground mine for $525, the price per ton is $50. Tax filing 2014 The tax is $1. Tax filing 2014 10 × 10. Tax filing 2014 5 tons ($11. Tax filing 2014 55). Tax filing 2014 Coal production. Tax filing 2014   Coal is produced from surface mines if all geological matter (trees, earth, rock) above the coal is removed before the coal is mined. Tax filing 2014 Treat coal removed by auger and coal reclaimed from coal waste refuse piles as produced from a surface mine. Tax filing 2014   Treat coal as produced from an underground mine when the coal is not produced from a surface mine. Tax filing 2014 In some cases, a single mine may yield coal from both surface mining and underground mining. Tax filing 2014 Determine if the coal is from a surface mine or an underground mine for each ton of coal produced and not on a mine-by-mine basis. Tax filing 2014 Determining tonnage or selling price. Tax filing 2014   The producer pays the tax on coal at the time of sale or use. Tax filing 2014 In figuring the selling price for applying the tax, the point of sale is f. Tax filing 2014 o. Tax filing 2014 b. Tax filing 2014 (free on board) mine or f. Tax filing 2014 o. Tax filing 2014 b. Tax filing 2014 cleaning plant if you clean the coal before selling it. Tax filing 2014 This applies even if you sell the coal for a delivered price. Tax filing 2014 The f. Tax filing 2014 o. Tax filing 2014 b. Tax filing 2014 mine or f. Tax filing 2014 o. Tax filing 2014 b. Tax filing 2014 cleaning plant is the point at which you figure the number of tons sold for applying the applicable tonnage rate, and the point at which you figure the sale price for applying the 4. Tax filing 2014 4% rate. Tax filing 2014   The tax applies to the full amount of coal sold. Tax filing 2014 However, the IRS allows a calculated reduction of the taxable weight of the coal for the weight of the moisture in excess of the coal's inherent moisture content. Tax filing 2014 Include in the sale price any additional charge for a freeze-conditioning additive in figuring the tax. Tax filing 2014   Do not include in the sales price the excise tax imposed on coal. Tax filing 2014 Coal used by the producer. Tax filing 2014   The tax on coal applies if the coal is used by the producer in other than a mining process. Tax filing 2014 A mining process means the same for this purpose as for percentage depletion. Tax filing 2014 For example, the tax does not apply if, before selling the coal, you break it, clean it, size it, or apply any other process considered mining under the rules for depletion. Tax filing 2014 In this case, the tax applies only when you sell the coal. Tax filing 2014 The tax does not apply to coal used as fuel in the coal drying process since it is considered to be used in a mining process. Tax filing 2014 However, the tax does apply when you use the coal as fuel or as an ingredient in making coke since the coal is not used in a mining process. Tax filing 2014   You must use a constructive sale price to figure the tax under the 4. Tax filing 2014 4% rate if you use the coal in other than a mining process. Tax filing 2014 Base your constructive sale price on sales of a like kind and grade of coal by you or other producers made f. Tax filing 2014 o. Tax filing 2014 b. Tax filing 2014 mine or cleaning plant. Tax filing 2014 Normally, you use the same constructive price used to figure your percentage depletion deduction. Tax filing 2014 Blending. Tax filing 2014   If you blend surface-mined coal with underground-mined coal during the cleaning process, you must figure the excise tax on the sale of the blended, cleaned coal. Tax filing 2014 Figure the tax separately for each type of coal in the blend. Tax filing 2014 Base the tax on the amount of each type in the blend if you can determine the proportion of each type of coal contained in the final blend. Tax filing 2014 Base the tax on the ratio of each type originally put into the cleaning process if you cannot determine the proportion of each type of coal in the blend. Tax filing 2014 However, the tax is limited to 4. Tax filing 2014 4% of the sale price per ton of the blended coal. Tax filing 2014 Exemption from tax. Tax filing 2014   The tax does not apply to sales of lignite and imported coal. Tax filing 2014 The only other exemption from the tax on the sale of coal is for coal exported as discussed next. Tax filing 2014 Exported. Tax filing 2014   The tax does not apply to the sale of coal if the coal is in the stream of export when sold by the producer and the coal is actually exported. Tax filing 2014   Coal is in the stream of export when sold by the producer if the sale is a step in the exportation of the coal to its ultimate destination in a foreign country. Tax filing 2014 For example, coal is in the stream of export when: The coal is loaded on an export vessel and title is transferred from the producer to a foreign purchaser, or The producer sells the coal to an export broker in the United States under terms of a contract showing that the coal is to be shipped to a foreign country. Tax filing 2014   Proof of export includes any of the following items. Tax filing 2014 A copy of the export bill of lading issued by the delivering carrier. Tax filing 2014 A certificate signed by the export carrier's agent or representative showing actual exportation of the coal. Tax filing 2014 A certificate of landing signed by a customs officer of the foreign country to which the coal is exported. Tax filing 2014 If the foreign country does not have a customs administrator, a statement of the foreign consignee showing receipt of the coal. Tax filing 2014 Taxable Tires Taxable tires are divided into three categories for reporting and figuring the tax as described below. Tax filing 2014 A tax is imposed on taxable tires sold by the manufacturer, producer, or importer at the rate of $. Tax filing 2014 0945 ($. Tax filing 2014 04725 in the case of a biasply tire or super single tire) for each 10 pounds of the maximum rated load capacity over 3,500 pounds. Tax filing 2014 The three categories for reporting the tax and the tax rate are listed below. Tax filing 2014 Taxable tires other than biasply or super single tires at $. Tax filing 2014 0945. Tax filing 2014 Taxable tires, biasply or super single tires (other than super single tires designed for steering) at $. Tax filing 2014 04725. Tax filing 2014 Taxable tires, super single tires designed for steering at $. Tax filing 2014 0945. Tax filing 2014 A taxable tire is any tire of the type used on highway vehicles if wholly or partially made of rubber and if marked according to federal regulations for highway use. Tax filing 2014 A biasply tire is a pneumatic tire on which the ply cords that extend to the beads are laid at alternate angles substantially less than 90 degrees to the centerline of the tread. Tax filing 2014 A super single tire is a tire greater than 13 inches in cross section width designed to replace 2 tires in a dual fitment. Tax filing 2014 Special rule, manufacturer's retail stores. Tax filing 2014   The excise tax on taxable tires is imposed at the time the taxable tires are delivered to the manufacturer-owned retail stores, not at the time of sale. Tax filing 2014 Tires on imported articles. Tax filing 2014   The importer of an article equipped with taxable tires is treated as the manufacturer of the tires and is liable for the taxable tire excise tax when the article is sold (except in the case of an automobile bus chassis or body with tires). Tax filing 2014 Tires exempt from tax. Tax filing 2014   The tax on taxable tires does not apply to the following items. Tax filing 2014 Domestically recapped or retreaded tires if the tires have been sold previously in the United States and were taxable tires at the time of sale. Tax filing 2014 Tire carcasses not suitable for commercial use. Tax filing 2014 Tires for use on qualifying intercity, local, and school buses. Tax filing 2014 For tax-free treatment, the registration requirements discussed earlier under Requirements for Exempt Sales apply. Tax filing 2014 Tires sold for the exclusive use of the Department of Defense or the Coast Guard. Tax filing 2014 Tires of a type used exclusively on mobile machinery. Tax filing 2014 A taxable tire used on mobile machinery is not exempt from tax. Tax filing 2014 Qualifying intercity or local bus. Tax filing 2014   This is any bus used mainly (more than 50%) to transport the general public for a fee and that either operates on a schedule along regular routes or seats at least 20 adults (excluding the driver). Tax filing 2014 Qualifying school bus. Tax filing 2014   This is any bus substantially all the use (85% or more) of which is to transport students and employees of schools. Tax filing 2014 Credit or refund. Tax filing 2014   A credit or refund (without interest) is allowable on tax-paid tires if the tires have been: Exported; Sold to a state or local government for its exclusive use; Sold to a nonprofit educational organization for its exclusive use (as defined under Communications Tax in chapter 4); Sold to a qualified blood collector organization (as defined under Communications Tax in chapter 4) for its exclusive use in connection with a vehicle the organization certifies will be primarily used in the collection, storage, or transportation of blood; Used or sold for use as supplies for vessels; or Sold in connection with qualified intercity, local, or school buses. Tax filing 2014   Also, a credit or refund (without interest) is allowable on tax-paid tires sold by any person on, or in connection with, any other article that is sold or used in an activity listed above. Tax filing 2014   The person who paid the tax is eligible to make the claim. Tax filing 2014 Gas Guzzler Tax Tax is imposed on the sale by the manufacturer of automobiles of a model type that has a fuel economy standard as measured by the Environmental Protection Agency (EPA) of less than 22. Tax filing 2014 5 miles per gallon. Tax filing 2014 If you import an automobile for personal use, you may be liable for this tax. Tax filing 2014 Figure the tax on Form 6197, as discussed later. Tax filing 2014 The tax rate is based on fuel economy rating. Tax filing 2014 The tax rates for the gas guzzler tax are shown on Form 6197. Tax filing 2014 A person that lengthens an existing automobile is the manufacturer of an automobile. Tax filing 2014 Automobiles. Tax filing 2014   An automobile (including limousines) means any four-wheeled vehicle that is: Rated at an unloaded gross vehicle weight of 6,000 pounds or less, Propelled by an engine powered by gasoline or diesel fuel, and Intended for use mainly on public streets, roads, and highways. Tax filing 2014 Vehicles not subject to tax. Tax filing 2014   For the gas guzzler tax, the following vehicles are not considered automobiles. Tax filing 2014 Limousines with a gross unloaded vehicle weight of more than 6,000 pounds. Tax filing 2014 Vehicles operated exclusively on a rail or rails. Tax filing 2014 Vehicles sold for use and used primarily: As ambulances or combination ambulance-hearses, For police or other law enforcement purposes by federal, state, or local governments, or For firefighting purposes. Tax filing 2014 Vehicles treated under 49 U. Tax filing 2014 S. Tax filing 2014 C. Tax filing 2014 32901 (1978) as non-passenger automobiles. Tax filing 2014 This includes limousines manufactured primarily to transport more than 10 persons. Tax filing 2014   The manufacturer can sell a vehicle described in item (3) tax free only when the sale is made directly to a purchaser for the described emergency use and the manufacturer and purchaser (other than a state or local government) are registered. Tax filing 2014   Treat an Indian tribal government as a state only if the police or other law enforcement purposes are an essential tribal government function. Tax filing 2014 Model type. Tax filing 2014   Model type is a particular class of automobile as determined by EPA regulations. Tax filing 2014 Fuel economy. Tax filing 2014   Fuel economy is the average number of miles an automobile travels on a gallon of gasoline (or diesel fuel) rounded to the nearest 0. Tax filing 2014 1 mile as figured by the EPA. Tax filing 2014 Imported automobiles. Tax filing 2014   The tax also applies to automobiles that do not have a prototype-based fuel economy rating assigned by the EPA. Tax filing 2014 An automobile imported into the United States without a certificate of conformity to United States emission standards and that has no assigned fuel economy rating must be either: Converted by installation of emission controls to conform in all material respects to an automobile already certified for sale in the United States, or Modified by installation of emission control components and individually tested to demonstrate emission compliance. Tax filing 2014   An imported automobile that has been converted to conform to an automobile already certified for sale in the United States may use the fuel economy rating assigned to that certified automobile. Tax filing 2014   A fuel economy rating is not generally available for modified imported automobiles because the EPA does not require a highway fuel economy test on them. Tax filing 2014 A separate highway fuel economy test would be required to devise a fuel economy rating (otherwise the automobile is presumed to fall within the lowest fuel economy rating category). Tax filing 2014   For more information about fuel economy ratings for imported automobiles, see Revenue Ruling 86-20 and Revenue Procedure 86-9 in Cumulative Bulletin 1986-1, and Revenue Procedure 87-10 in Cumulative Bulletin 1987-1. Tax filing 2014 Exemptions. Tax filing 2014   No one is exempt from the gas guzzler tax, including the federal government, state and local governments, qualified blood collector organizations, and nonprofit educational organizations. Tax filing 2014 However, see Vehicles not subject to tax, earlier. Tax filing 2014 Form 6197. Tax filing 2014   Use Form 6197 to figure your tax liability for each quarter. Tax filing 2014 Attach Form 6197 to your Form 720 for the quarter. Tax filing 2014 See the Form 6197 instructions for more information and the one-time filing rules. Tax filing 2014 Credit or refund. Tax filing 2014   If the manufacturer paid the tax on a vehicle that is used or resold for an emergency use (see item (3) under Vehicles not subject to tax), the manufacturer can claim a credit or refund. Tax filing 2014 For information about how to file for credits or refunds, see the Instructions for Form 720 or Form 8849. Tax filing 2014 Vaccines Tax is imposed on certain vaccines sold by the manufacturer in the United States. Tax filing 2014 A taxable vaccine means any of the following vaccines. Tax filing 2014 Any vaccine containing diphtheria toxoid. Tax filing 2014 Any vaccine containing tetanus toxoid. Tax filing 2014 Any vaccine containing pertussis bacteria, extracted or partial cell bacteria, or specific pertussis antigens. Tax filing 2014 Any vaccine containing polio virus. Tax filing 2014 Any vaccine against measles. Tax filing 2014 Any vaccine against mumps. Tax filing 2014 Any vaccine against rubella. Tax filing 2014 Any vaccine against hepatitis A. Tax filing 2014 Any vaccine against hepatitis B. Tax filing 2014 Any vaccine against chicken pox. Tax filing 2014 Any vaccine against rotavirus gastroenteritis. Tax filing 2014 Any HIB vaccine. Tax filing 2014 Any conjugate vaccine against streptococcus pneumoniae. Tax filing 2014 Any trivalent vaccine against influenza or any other vaccine against influenza. Tax filing 2014 Any meningococcal vaccine. Tax filing 2014 Any vaccine against the human papillomavirus. Tax filing 2014 The effective date for the tax on any vaccine against influenza, other than trivalent influenza vaccines, is the later of August 1, 2013, or the date the Secretary of Health and Human Services lists a vaccine against seasonal influenza for purposes of compensation for any vaccine-related injury or death through the Vaccine Injury Compensation Trust Fund. Tax filing 2014 The tax is $. Tax filing 2014 75 per dose of each taxable vaccine. Tax filing 2014 The tax per dose on a vaccine that contains more than one taxable vaccine is $. Tax filing 2014 75 times the number of taxable vaccines. Tax filing 2014 Taxable use. Tax filing 2014   Any manufacturer (including a governmental entity) that uses a taxable vaccine before it is sold will be liable for the tax in the same manner as if the vaccine was sold by the manufacturer. Tax filing 2014 Credit or refund. Tax filing 2014   A credit or refund (without interest) is available if the vaccine is: Returned to the person who paid the tax (other than for resale), or Destroyed. Tax filing 2014 The claim for a credit or refund must be filed within 6 months after the vaccine is returned or destroyed. Tax filing 2014 Conditions to allowance. Tax filing 2014   To claim a credit or refund, the person who paid the tax must have repaid or agreed to repay the tax to the ultimate purchaser of the vaccine or obtained the written consent of such purchaser to allowance of the credit or refund. Tax filing 2014 Taxable Medical Devices Taxable medical devices. Tax filing 2014   The tax on the sale of certain medical devices by the manufacturer, producer, or importer of the device is 2. Tax filing 2014 3% (. Tax filing 2014 023) of the sales price. Tax filing 2014 A taxable medical device is a device that is listed as a device with the Food and Drug Administration (FDA) under section 510(j) of the Federal Food, Drug, and Cosmetic Act and 21 CFR part 807, pursuant to FDA requirements. Tax filing 2014 There are specific exemptions for eyeglasses, contact lenses, and hearing aids. Tax filing 2014 There is also an exemption for devices that are determined by the Secretary to be of a type that are generally purchased by the general public at retail for individual use (this exemption is known as the retail exemption). Tax filing 2014 See T. Tax filing 2014 D. Tax filing 2014 9604 for information on how to determine whether a device falls within the retail exemption, and examples of how a taxpayer might evaluate a given device. Tax filing 2014 More information. Tax filing 2014   For more information on the medical device tax, see section 4191, T. Tax filing 2014 D. Tax filing 2014 9604, and Notice 2012-77. Tax filing 2014 You can find T. Tax filing 2014 D. Tax filing 2014 9604 and Notice 2012-77 on pages 730 and 781, respectively, of I. Tax filing 2014 R. Tax filing 2014 B. Tax filing 2014 2012-52 at www. Tax filing 2014 irs. Tax filing 2014 gov/pub/irs-irbs/irb12-52. Tax filing 2014 pdf. Tax filing 2014 Prev  Up  Next   Home   More Online Publications