First, it's helpful to understand that Texas law provides for unincorporated nonprofit associations. Texas law concerning unincorporated nonprofit associations is codified as chapter 252 of the Texas Business Organizations Code (BOC). A "nonprofit association" is...
Every organization that qualifies for tax exemption as an organization described in section 501(c)(3) is a private foundation unless it falls into one of the categories specifically excluded from the definition of that term (referred to in section 509(a)). In...
Answer: The IRS sometimes recognizes a group of organizations as tax-exempt if they are affiliated with a central organization. This avoids the need for each of the organizations to apply for exemption individually. A group exemption letter has the same effect as an...
Answer: Yes. If your Canadian donors have U.S. income, they can generally claim any gifts to U.S. charities that would be allowed on a U.S. return. In general, Canadians can claim the eligible amount of their U.S. gifts up to 75% of the net U.S. income they report on...
The Treasury Offset Program is not subject to a statute of limitations and can collect on the defaulted SBA loan indefinitely. The Treasury can, among other things, garnish wages, even in states where wage garnishment by creditors is generally prohibited. The Treasury...
It is settled law that state limitations statutes are relevant in determining a claim’s viability at the time the federal agency acquires the claim. If the state statute of limitations has expired before the government acquires a claim, that claim is not revived by...
A cash contribution made for the use of a public charity is deductible up to 30% of the donor's adjusted gross income for the tax year; a contribution of property made for the use of a public charity is deductible up to 20% of the donor's adjusted gross income for the...
Question. I defaulted on an SBA loan. What happens next? Answer: The SBA Collection process follows a more or less standard path as set forth in the SBA Standard Operating Procedures (SOPS). But, to think the SOP's describe the reality of the SBA collection process...
Question. Will the SBA Accept My Offer in Compromise? Answer. There is no way to know. Period. There are so many variables: 1. Who handles your file; 2. What SBA office is handling your file; 3. Your level of cooperation with the lender, both real and perceived; 4....
Question. If I want to make offer to settle, do I contact the lender or the SBA? Answer. In general, you will reach out to the lender first. Even in the event of an SBA loan default, your lender will generally continue to service the loan. If there is some...
Question. Can the SBA Bring a Contract Action More than 6 Years After the Default? Answer. 28 U.S.C.§ 2415(a) establishes the federal statute of limitations applicable to SBA actions to recover under contract. Under this statue the SBA has 6-years to file suit to...
Question.What if my Note is purchased by a third-party. How long do they have to sue me? Answer: In Texas, the answer is settled, but in other states this answer may vary. In FDIC v. Bledsoe, 989 F.2d 805 (5th Cir.1993),the Fifth Circuit held that assignees of the...
Question.My state has a four-years statue of limitations on contract actions. How can the SBA sue after it has expired? Answer. It is settled law that state limitations statutes are relevant in determining a claim's viability at the time the federal agency acquires...
Question. What is the Treasury Offset Program Answer.The Treasury Offset Program (TOP) is a centralized offset program, administered by the Bureau of the Fiscal Service's Debt Management Services (DMS), to collect delinquent debts owed to federal agencies and states,...
Question.What can the Treasury take to satisfy a defaulted SBA loan balance? Answer. The Treasury Offset Program is not subject to a statute of limitations and can collect on the defaulted SBA loan indefinitely. The Treasury can, among other things, garnish wages,...
Question.How can I avoid my delinquent disaster loan being referred to the U.S. Treasury for enforced collection? Answer. You must contact an SBA Treasury Offset Representative prior to your loan being referred to the Department of the Treasury to set up acceptable...
If contributions to a church fund are earmarked by the donor for a particular individual, they are treated, in effect, as being gifts to the designated individual and are not deductible. Therefore, placing a check marked "For Pastor John Doe" in the donation box would...
Question. What do I do if I receive a Notice of Deficiency from the IRS? Answer. You will get this letter if you owe additional tax or other amounts for the tax year(s) listed in the letter. The letter explains how to dispute the adjustments if you do not agree. If...
Question: How do I appeal and IRS Audit? Answer: First, after you audit, the IRS sends an examination report with proposed adjustments to the taxpayer; these will also include additional penalties and interest. Assuming you don't sign off and return a copy of the...
Question. What is a Small Tax Case? Answer. “Small tax cases” are handled under simpler, less formal procedures than regular cases. However, the Tax Court’s decision in a small tax case cannot be appealed to a Court of Appeals by the IRS or by the taxpayer(s). If you...
Question. What is a DBA and when do I need one? Answer. A DBA is short for "Doing Business As." This is a legal declaration that your company is doing business another another name. For example, ABC Corporation d/b/a ABC Trucking. In Texas, the DBA is often referred...
Question: Is there a faster way to obtain tax-exempt status for my charity? Answer: Currently, the IRS has more than 60,000 501(c)(3) applications in its backlog, with many of them pending for nine months. IRS Form 1023 is a 26-page monster and requires on average 100...
Question: What’s the Difference Between a Church and a Religious Organization? Answer: Let’s first do what we can to define the terms and then address the question. As we all know the Internal Revenue Code (IRC) is not always an easy read, but here are a few facts:...
Question: What is the Difference Between a 501(c) (3) and a 501 (c) (4) Organization? Answer: A 501(c)(3) organization is a nonprofit organization created for charitable, religious, educational, scientific, or literary purposes. The main benefit of this status is that...
Question: What are “directly connected” expenses? Answer: Deductions incurred solely because of the unrelated business are known as directly connected expenses. These are expenses that wouldn’t be incurred if the unrelated business didn’t exist. For example, the...
If your nonprofit engages in inactivity unrelated to its exempt purpose, you may have Unrelated Business Income that is taxable. Unrelated Business Income is the income from a trade or business regularly conducted by an exempt organization and not substantially...
Question: What are “dual use” expenses? Answer: If an expense is incurred both to carry on exempt functions of your nonprofit and to conduct an unrelated business, then you have what is known as a dual use expense. For example, let's assume your nonprofit’s president...
Question. Can I use federal grant money to fund lobbying efforts of my Nonprofit? Answer: No, nonprofits that receive federal funds may not use funds received by the nonprofit as a result of a contract or grant to attempt to influence any federal or state legislation,...
Many nonprofits are under the impression that lobbying is forbidden or severely restricted, but that is not entirely the case. The fact is that nonprofits need to be very careful about blindly engaging in lobbying activity, but they may freely engage in lobbying as...
Question: Does a Church need to apply for 501c3? Answer: While it is true that Section 508(c)(1) of the Code relieves Churches from applying for favorable determination letters regarding their exempt status, there is nothing in Section 508(c)(1) which relieves a...
Question? Can I setup my Nonprofit as an LLC? Answer: Yes, but only under very limited circumstances would this be of benefit. In order to understand why, let’s break the one question into its two parts: Can I form a Nonprofit LLC in Texas? The Texas Business...
Question: Can my Nonprofit hold Raffle to Raise Money? The Charitable Raffle Enabling Act, effective January 1, 1990, permits "qualified organizations" to hold up to two raffles per calendar year, with certain specified restrictions. Answer: A raffle is defined as the...
Question: Can my Nonprofit hold a Poker Tournament or Casino Night Fundraiser? Answer: Unlike raffles and bingo, there is NO exception to the gambling law in Texas for nonprofits to hold poker or casino night fundraising events. The gambling law, Chapter 47 of the...
Question: What is an In-Business Trust Fund Installment Agreement? Answer: Small businesses who currently have employees can qualify for an In-Business Trust Fund Express Installment Agreement (IBTF-Express IA). These installment agreements generally do not require a...
By law, organizations that fail to file annual reports for three consecutive years will see their federal tax exemptions automatically revoked as of the due date of the third required filing. The Pension Protection Act of 2006 mandates that most tax-exempt...
Question: Answer: A Texas limited liability company is created by filing a certificate of formation with the Texas Secretary of State. The Secretary of State provides a form that meets minimum state law requirements. The limited liability company (LLC) is not a...
