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File Amended Tax Return

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File Amended Tax Return

File amended tax return 5. File amended tax return   Soil and Water Conservation Expenses Table of Contents Introduction Topics - This chapter discusses: Business of Farming Plan Certification Conservation ExpensesWater well. File amended tax return Assessment by Conservation DistrictAssessment for Depreciable Property 25% Limit on DeductionNet operating loss. File amended tax return When to Deduct or Capitalize Sale of a Farm Introduction If you are in the business of farming, you can choose to deduct certain expenses for: Soil or water conservation, Prevention of erosion of land used in farming, or Endangered species recovery. File amended tax return Otherwise, these are capital expenses that must be added to the basis of the land. File amended tax return (See chapter 6 for information on determining basis. File amended tax return ) Conservation expenses for land in a foreign country do not qualify for this special treatment. File amended tax return The deduction for conservation expenses cannot be more than 25% of your gross income from farming. File amended tax return See 25% Limit on Deduction , later. File amended tax return Although some expenses are not deductible as soil and water conservation expenses, they may be deductible as ordinary and necessary farm expenses. File amended tax return These include interest and taxes, the cost of periodically clearing brush from productive land, the regular removal of sediment from a drainage ditch, and expenses paid or incurred primarily to produce an agricultural crop that may also conserve soil. File amended tax return You must include in income most government payments for approved conservation practices. File amended tax return However, you can exclude some payments you receive under certain cost-sharing conservation programs. File amended tax return For more information, see Agricultural Program Payments in chapter 3. File amended tax return To get the full deduction to which you are entitled, you should maintain your records to clearly distinguish between your ordinary and necessary farm business expenses and your soil and water conservation expenses. File amended tax return Topics - This chapter discusses: Business of farming Plan certification Conservation expenses Assessment by conservation district 25% limit on deduction When to deduct or capitalize Sale of a farm Business of Farming For purposes of soil and water conservation expenses, you are in the business of farming if you cultivate, operate, or manage a farm for profit, either as an owner or a tenant. File amended tax return You are not in the business of farming if you cultivate or operate a farm for recreation or pleasure, rather than for profit. File amended tax return You are not farming if you are engaged only in forestry or the growing of timber. File amended tax return Farm defined. File amended tax return   A farm includes livestock, dairy, poultry, fish, fruit, and truck farms. File amended tax return It also includes plantations, ranches, ranges, and orchards. File amended tax return A fish farm is an area where fish and other marine animals are grown or raised and artificially fed, protected, etc. File amended tax return It does not include an area where they are merely caught or harvested. File amended tax return A plant nursery is a farm for purposes of deducting soil and water conservation expenses. File amended tax return Farm rental. File amended tax return   If you own a farm and receive farm rental payments based on farm production, either in cash or crop shares, you are in the business of farming. File amended tax return If you get cash rental for a farm you own that is not used in farm production, you cannot deduct soil and water conservation expenses for that farm. File amended tax return   If you receive a fixed rental payment that is not based on farm production, you are in the business of farming only if you materially participate in operating or managing the farm. File amended tax return Example. File amended tax return You own a farm in Iowa and live in California. File amended tax return You rent the farm for $175 in cash per acre and do not materially participate in producing or managing production of the crops grown on the farm. File amended tax return You cannot deduct your soil conservation expenses for this farm. File amended tax return You must capitalize the expenses and add them to the basis of the land. File amended tax return     For more information, see Material participation for landlords under Landlord Participation in Farming in chapter 12. File amended tax return Plan Certification You can deduct soil and water conservation expenses only if they are consistent with a plan approved by the Natural Resources Conservation Service (NRCS) of the Department of Agriculture. File amended tax return If no such plan exists, the expenses must be consistent with a soil conservation plan of a comparable state agency. File amended tax return Keep a copy of the plan with your books and records to support your deductions. File amended tax return Conservation plan. File amended tax return   A conservation plan includes the farming conservation practices approved for the area where your farmland is located. File amended tax return There are three types of approved plans. File amended tax return NRCS individual site plans. File amended tax return These plans are issued individually to farmers who request assistance from NRCS to develop a conservation plan designed specifically for their farmland. File amended tax return NRCS county plans. File amended tax return These plans include a listing of farm conservation practices approved for the county where the farmland is located. File amended tax return You can deduct expenses for conservation practices not included on the NRCS county plans only if the practice is a part of an individual site plan. File amended tax return Comparable state agency plans. File amended tax return These plans are approved by state agencies and can be approved individual site plans or county plans. File amended tax return   A list of NRCS conservation programs is available at www. File amended tax return nrcs. File amended tax return usda. File amended tax return gov/programs. File amended tax return Individual site plans can be obtained from NRCS offices and the comparable state agencies. File amended tax return Conservation Expenses You can deduct conservation expenses only for land you or your tenant are using, or have used in the past, for farming. File amended tax return These expenses include, but are not limited to, the following. File amended tax return The treatment or movement of earth, such as: Leveling, Conditioning, Grading, Terracing, Contour furrowing, and Restoration of soil fertility. File amended tax return The construction, control, and protection of: Diversion channels, Drainage ditches, Irrigation ditches, Earthen dams, and Watercourses, outlets, and ponds. File amended tax return The eradication of brush. File amended tax return The planting of windbreaks. File amended tax return You cannot deduct expenses to drain or fill wetlands, or to prepare land for center pivot irrigation systems, as soil and water conservation expenses. File amended tax return These expenses are added to the basis of the land. File amended tax return If you choose to deduct soil and water conservation expenses, you cannot exclude from gross income any cost-sharing payments you receive for those expenses. File amended tax return See chapter 3 for information about payments eligible for the cost-sharing exclusion. File amended tax return New farm or farmland. File amended tax return   If you acquire a new farm or new farmland from someone who was using it in farming immediately before you acquired the land, soil and water conservation expenses you incur on it will be treated as made on land used in farming at the time the expenses were paid or incurred. File amended tax return You can deduct soil and water conservation expenses for this land if your use of it is substantially a continuation of its use in farming. File amended tax return The new farming activity does not have to be the same as the old farming activity. File amended tax return For example, if you buy land that was used for grazing cattle and then prepare it for use as an apple orchard, you can deduct your conservation expenses. File amended tax return Land not used for farming. File amended tax return   If your conservation expenses benefit both land that does not qualify as land used for farming and land that does qualify, you must allocate the expenses between the two types of land. File amended tax return For example, if the expenses benefit 200 acres of your land, but only 120 acres of this land are used for farming, then you can deduct 60% (120 ÷ 200) of the expenses. File amended tax return You can use another method to allocate these expenses if you can clearly show that your method is more reasonable. File amended tax return Depreciable conservation assets. File amended tax return   You generally cannot deduct your expenses for depreciable conservation assets. File amended tax return However, you can deduct certain amounts you pay or incur for an assessment for depreciable property that a soil and water conservation or drainage district levies against your farm. File amended tax return See Assessment for Depreciable Property , later. File amended tax return   You must capitalize expenses to buy, build, install, or improve depreciable structures or facilities. File amended tax return These expenses include those for materials, supplies, wages, fuel, hauling, and moving dirt when making structures such as tanks, reservoirs, pipes, culverts, canals, dams, wells, or pumps composed of masonry, concrete, tile, metal, or wood. File amended tax return You recover your capital investment through annual allowances for depreciation. File amended tax return   You can deduct soil and water conservation expenses for nondepreciable earthen items. File amended tax return Nondepreciable earthen items include certain dams, ponds, and terraces described under Property Having a Determinable Useful Life in chapter 7. File amended tax return Water well. File amended tax return   You cannot deduct the cost of drilling a water well for irrigation and other agricultural purposes as a soil and water conservation expense. File amended tax return It is a capital expense. File amended tax return You recover your cost through depreciation. File amended tax return You also must capitalize your cost for drilling a test hole. File amended tax return If the test hole produces no water and you continue drilling, the cost of the test hole is added to the cost of the producing well. File amended tax return You can recover the total cost through depreciation deductions. File amended tax return   If a test hole, dry hole, or dried-up well (resulting from prolonged lack of rain, for instance) is abandoned, you can deduct your unrecovered cost in the year of abandonment. File amended tax return Abandonment means that all economic benefits from the well are terminated. File amended tax return For example, filling or sealing a well excavation or casing so that all economic benefits from the well are terminated constitutes an abandonment. File amended tax return Endangered species recovery expenses. File amended tax return   If you are in the business of farming and meet other specific requirements, you can choose to deduct the conservation expenses discussed earlier as endangered species recovery expenses. File amended tax return Otherwise, these are capital expenses that must be added to the basis of the land. File amended tax return   The expenses must be paid or incurred for the purpose of achieving site-specific management actions recommended in a recovery plan approved under section 4(f) of the Endangered Species Act of 1973. File amended tax return See Internal Revenue Code section 175 for more information. File amended tax return Assessment by Conservation District In some localities, a soil or water conservation or drainage district incurs expenses for soil or water conservation and levies an assessment against the farmers who benefit from the expenses. File amended tax return You can deduct as a conservation expense amounts you pay or incur for the part of an assessment that: Covers expenses you could deduct if you had paid them directly, or Covers expenses for depreciable property used in the district's business. File amended tax return Assessment for Depreciable Property You generally can deduct as a conservation expense amounts you pay or incur for the part of a conservation or drainage district assessment that covers expenses for depreciable property. File amended tax return This includes items such as pumps, locks, concrete structures (including dams and weir gates), draglines, and similar equipment. File amended tax return The depreciable property must be used in the district's soil and water conservation activities. File amended tax return However, the following limits apply to these assessments. File amended tax return The total assessment limit. File amended tax return The yearly assessment limit. File amended tax return After you apply these limits, the amount you can deduct is added to your other conservation expenses for the year. File amended tax return The total for these expenses is then subject to the 25% of gross income from farming limit on the deduction, discussed later. File amended tax return See Table 5-1 for a brief summary of these limits. File amended tax return Table 5-1. File amended tax return Limits on Deducting an Assessment by a Conservation District for Depreciable Property Total Limit on Deduction for Assessment for Depreciable Property Yearly Limit on Deduction for Assessment for Depreciable Property Yearly Limit for All Conservation Expenses 10% of: $500 + 10% of: 25% of: Total assessment against all members of the district for the property. File amended tax return Your deductible share of the cost to the district for the property. File amended tax return Your gross income from farming. File amended tax return No one taxpayer can deduct more than 10% of the total assessment. File amended tax return Any amount over 10% is a capital expense and is added to the basis of your land. File amended tax return If an assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. File amended tax return If the amount you pay or incur for any year is more than the limit, you can deduct for that year only 10% of your deductible share of the cost. File amended tax return You can deduct the remainder in equal amounts over the next 9 tax years. File amended tax return Limit for all conservation expenses, including assessments for depreciable property. File amended tax return Amounts greater than 25% can be carried to the following year and added to that year's expenses. File amended tax return The total is then subject to the 25% of gross income from farming limit in that year. File amended tax return To ensure your deduction is within the deduction limits, keep records to show the following. File amended tax return The total assessment against all members of the district for the depreciable property. File amended tax return Your deductible share of the cost to the district for the depreciable property. File amended tax return Your gross income from farming. File amended tax return Total assessment limit. File amended tax return   You cannot deduct more than 10% of the total amount assessed to all members of the conservation or drainage district for the depreciable property. File amended tax return This applies whether you pay the assessment in one payment or in installments. File amended tax return If your assessment is more than 10% of the total amount assessed, both the following rules apply. File amended tax return The amount over 10% is a capital expense and is added to the basis of your land. File amended tax return If the assessment is paid in installments, each payment must be prorated between the conservation expense and the capital expense. File amended tax return Yearly assessment limit. File amended tax return   The maximum amount you can deduct in any one year is the total of 10% of your deductible share of the cost as explained earlier, plus $500. File amended tax return If the amount you pay or incur is equal to or less than the maximum amount, you can deduct it in the year it is paid or incurred. File amended tax return If the amount you pay or incur is more, you can deduct in that year only 10% of your deductible share of the cost. File amended tax return You can deduct the remainder in equal amounts over the next 9 tax years. File amended tax return Your total conservation expense deduction for each year is also subject to the 25% of gross income from farming limit on the deduction, discussed later. File amended tax return Example 1. File amended tax return This year, the soil conservation district levies and you pay an assessment of $2,400 against your farm. File amended tax return Of the assessment, $1,500 is for digging drainage ditches. File amended tax return You can deduct this part as a soil or conservation expense as if you had paid it directly. File amended tax return The remaining $900 is for depreciable equipment to be used in the district's irrigation activities. File amended tax return The total amount assessed by the district against all its members for the depreciable equipment is $7,000. File amended tax return The total amount you can deduct for the depreciable equipment is limited to 10% of the total amount assessed by the district against all its members for depreciable equipment, or $700. File amended tax return The $200 excess ($900 − $700) is a capital expense you must add to the basis of your farm. File amended tax return To figure the maximum amount you can deduct for the depreciable equipment this year, multiply your deductible share of the total assessment ($700) by 10%. File amended tax return Add $500 to the result for a total of $570. File amended tax return Your deductible share, $700, is greater than the maximum amount deductible in one year, so you can deduct only $70 of the amount you paid or incurred for depreciable property this year (10% of $700). File amended tax return You can deduct the balance at the rate of $70 a year over the next 9 years. File amended tax return You add $70 to the $1,500 portion of the assessment for drainage ditches. File amended tax return You can deduct $1,570 of the $2,400 assessment as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed later. File amended tax return Example 2. File amended tax return Assume the same facts in Example 1 except that $1,850 of the $2,400 assessment is for digging drainage ditches and $550 is for depreciable equipment. File amended tax return The total amount assessed by the district against all its members for depreciable equipment is $5,500. File amended tax return The total amount you can deduct for the depreciable equipment is limited to 10% of this amount, or $550. File amended tax return The maximum amount you can deduct this year for the depreciable equipment is $555 (10% of your deductible share of the total assessment, $55, plus $500). File amended tax return Since your deductible share is less than the maximum amount deductible in one year, you can deduct the entire $550 this year. File amended tax return You can deduct the entire assessment, $2,400, as a soil and water conservation expense this year, subject to the 25% of gross income from farming limit on the deduction, discussed below. File amended tax return Sale or other disposal of land during 9-year period. File amended tax return   If you dispose of the land during the 9-year period for deducting conservation expenses subject to the yearly limit, any amounts you have not yet deducted because of this limit are added to the basis of the property. File amended tax return Death of farmer during 9-year period. File amended tax return   If a farmer dies during the 9-year period, any remaining amounts not yet deducted are deducted in the year of death. File amended tax return 25% Limit on Deduction The total deduction for conservation expenses in any tax year is limited to 25% of your gross income from farming for the year. File amended tax return Gross income from farming. File amended tax return   Gross income from farming is the income you derive in the business of farming from the production of crops, fish, fruits, other agricultural products, or livestock. File amended tax return Gains from sales of draft, breeding, or dairy livestock are included. File amended tax return Gains from sales of assets such as farm machinery, or from the disposition of land, are not included. File amended tax return Carryover of deduction. File amended tax return   If your deductible conservation expenses in any year are more than 25% of your gross income from farming for that year, you can carry the unused deduction over to later years. File amended tax return However, the deduction in any later year is limited to 25% of the gross income from farming for that year as well. File amended tax return Example. File amended tax return In 2012, you have gross income of $32,000 from two farms. File amended tax return During the year, you incurred $10,000 of deductible soil and water conservation expenses for one of the farms. File amended tax return However, your deduction is limited to 25% of $32,000, or $8,000. File amended tax return The $2,000 excess ($10,000 − $8,000) is carried over to 2013 and added to deductible soil and water conservation expenses made in that year. File amended tax return The total of the 2012 carryover plus 2013 expenses is deductible in 2013, subject to the limit of 25% of your gross income from farming in 2013. File amended tax return Any expenses over the limit in that year are carried to 2014 and later years. File amended tax return Net operating loss. File amended tax return   The deduction for soil and water conservation expenses, after applying the 25% limit, is included when figuring a net operating loss (NOL) for the year. File amended tax return If the NOL is carried to another year, the soil and water conservation deduction included in the NOL is not subject to the 25% limit in the year to which it is carried. File amended tax return When to Deduct or Capitalize If you choose to deduct soil and water conservation expenses, you must deduct the total allowable amount on your tax return for the first year you pay or incur these expenses. File amended tax return If you do not choose to deduct the expenses, you must capitalize them. File amended tax return Change of method. File amended tax return   If you want to change your method for the treatment of soil and water conservation expenses, or you want to treat the expenses for a particular project or a single farm in a different manner, you must get the approval of the IRS. File amended tax return To get this approval, submit a written request by the due date of your return for the first tax year you want the new method to apply. File amended tax return You or your authorized representative must sign the request. File amended tax return   The request must include the following information. File amended tax return Your name and address. File amended tax return The first tax year the method or change of method is to apply. File amended tax return Whether the method or change of method applies to all your soil and water conservation expenses or only to those for a particular project or farm. File amended tax return If the method or change of method does not apply to all your expenses, identify the project or farm to which the expenses apply. File amended tax return The total expenses you paid or incurred in the first tax year the method or change of method is to apply. File amended tax return A statement that you will account separately in your books for the expenses to which this method or change of method relates. File amended tax return Send your request to the following  address. File amended tax return  Department of the Treasury Internal Revenue Service Center Cincinnati, OH 45999  For more information, see Change in  Accounting Method in chapter 2. File amended tax return Sale of a Farm If you sell your farm, you cannot adjust the basis of the land at the time of the sale for any unused carryover of soil and water conservation expenses (except for deductions of assessments for depreciable property, discussed earlier). File amended tax return However, if you acquire another farm and return to the business of farming, you can start taking deductions again for the unused carryovers. File amended tax return Gain on sale of farmland. File amended tax return   If you held the land 5 years or less before you sold it, gain on the sale of the land is treated as ordinary income up to the amount you previously deducted for soil and water conservation expenses. File amended tax return If you held the land less than 10 but more than 5 years, the gain is treated as ordinary income up to a specified percentage of the previous deductions. File amended tax return See Section 1252 property under Other Gains in chapter 9. 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Understanding Your CP32A Notice

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When filing your tax return, complete the requested banking information in the "Refund" section of your tax form if you want to direct deposit the entire amount into one account. If you want to deposit into more than one account, you must file Form 8888, Direct Deposit of Refund to More Than One Account, with your return.

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Refund checks are mailed only to the address of record, which is the address provided on the tax return or the result of a permanent address change request submitted after the return is filed.

I filed jointly, but my spouse and I are now divorced. Where will you send the refund? Can you send us two checks?
A refund check is mailed to the address of record, which is the address provided on the tax return or the result of a permanent address change request submitted after the return is filed. We will send one refund check listing both you and your spouse's names. If you wish to have the refund split and issued in two checks, you must return the uncashed refund check and a copy of your divorce decree showing how the refund is to be allocated.


Tips for next year

To receive your refund more quickly, consider requesting your refund through direct deposit. You can even request that your refund be distributed to separate accounts, such as checking, savings, or retirement accounts. To request this, use Form 8888, Direct Deposit of Refund to More Than One Account.

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The File Amended Tax Return

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