Charitable organizations are often interchangeably referred to as foundations, non-profits and tax-exempt organizations. Regardless of how they are named, the law governing their creation, operation and dissolution is technical and significantly differs from the law to which profit-making entities are subject. This is particularly true in the area of tax.
Generally, if an organization wants to be exempt from federal income tax, it must file an application with the Internal Revenue Service to be so classified. This application requires the disclosure of significant information regarding the organization and its anticipated operations. This information provided in the application can, in turn, raise issues and concerns with the Internal Revenue Service. ScottHulse lawyers regularly prepare and submit applications for exempt status on behalf of our clients, and have had great success in obtaining tax exemptions for them.
Exempt organizations are subject to complex rules that restrict their activities. Failure to comply with these rules can result in the imposition of onerous taxes – and even the loss of tax exemption. ScottHulse lawyers have considerable experience helping clients satisfy the numerous, complicated federal and state laws and regulations that pertain to non-taxable entities – such as the rules governing private foundations, public charities (including supporting organizations), homeowners and other associations, business leagues, lobbying activities and unrelated business taxable income. We also work with accountants and in-house accounting personnel to help ensure that issues raised in tax returns and reports are properly addressed.
The Internal Revenue Service audits charitable and similar organizations to determine if they are meeting the requirements for exempt status. ScottHulse lawyers regularly represent exempt organizations during all phases of such audits – from initial examination to administrative appeals and court proceedings.
We represent exempt organizations with modest assets as well as charities with endowments in the hundreds of millions of dollars. As charitable organizations grow and prosper, they sometimes decide to create multiple entity structures in order to safeguard their exempt status, to minimize their liability, and to enhance efficiency. These multiple entity structures can include both non-profit and for-profit corporations. The non-profit organizations frequently have differing tax exempt classifications. ScottHulse lawyers have considerable experience setting up multi-entity systems for their clients; and then helping to ensure that these systems remain in compliance with applicable federal and state laws.