The Taxpayer Advocate Weighs in on the "Scandal"

On June 30, 2014, the National Taxpayer Advocate supplemented the required Fiscal Year 2014 Objectives Report to Congress (outlining work for the upcoming fiscal year) with National Taxpayer Advocate Special Report to Congress: Political Activity and the Rights of Applicants for Tax-Exempt Status.  The highlighted quote from Nina Olson on the homepage of the report says: “Today, the IRS is an institution in crisis.  In my view, however, the real crisis is not the one generating headlines.  The real crisis facing the IRS – and therefore taxpayers – is a radically transformed mission coupled with inadequate funding to accomplish that mission.  As a consequence of this crisis, the IRS gives limited consideration to taxpayer rights or fundamental tax administration principles as it struggles to get its job done.”

Read more: The Taxpayer Advocate Weighs in on the "Scandal"

Update on Proposed 501(c)(4) Regulations

In November of 2013, the IRS and the Department of the Treasury issued proposed guidance regarding qualification for tax-exempt status as a social welfare organization under §501(c)(4).  The guidance prompted uproar from almost every angle – generating over 150,000 comments.  In an attempt to clarify the perplexing guidance currently in existence regarding §501(c)(4)s and campaign activity, the proposed guidelines defined a new term – “candidate-related political activity” (affectionately referred to as CRAPA). Opposition to the proposed guidance created some strange bedfellows – even resulting in conservative and liberal organizations joining forces to oppose the new guidance.

Read more: Update on Proposed 501(c)(4) Regulations

UPDATED: The Form 1023-EZ is coming.....

As many folks know, the IRS is VERY behind on processing applications for tax-exempt status.  I have written about this issue in the past (here and here) and would definitely like to see some improvement.  At the end of March, the IRS submitted a draft of a new “1023-EZ” to the Office and Management and Budget for a comment period – and in theory we will see a final version this summer. What does this mean? [**UPDATE: The form was released on July 1st, 2014.  This post has been updated in light of the newly released form.]

Read more: UPDATED: The Form 1023-EZ is coming.....

A Primer on the Tax Treatment of Cryptocurrencies for Nonprofits

This week, the IRS released Notice 2014-21 regarding the treatment of Bitcoin and other similar cryptographic currencies (“cryptocurrencies”).  The increased popularity of using cryptocurrencies to pay for goods or services necessitated that the IRS clarify its position as to their tax treatment.

Read more: A Primer on the Tax Treatment of Cryptocurrencies for Nonprofits

Supreme Court - Severance Subject to FICA

This week the Supreme Court decided the case of US vs. Quality Stores and reversed the 6th Circuit’s holding that severance payments made to terminated employees were not subject to FICA.  Quality Stores had brought a case to obtain refunds for both the employer and employee shares of FICA on behalf of itself and some of its terminated employees (terminated as a part of the business going into bankruptcy).  The Supreme Court held that severance payments made to terminated employees and not linked to the receipt of state unemployment benefits are considered to be remuneration for employment and are taxable wages under FICA (in line with the fact that they are also subject to income tax withholding).

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