Revenooer Enforcers Attack Nonprofit Group

IRS took a hit, recently, when found to be a defendant in a lawsuit instigated by a conservative Jewish organization which asserts the Revenooers are discriminating against groups which advocate policies different than those of the Obama administration.

            Seems Z Street found its application for tax exempt status stalled because of its support for Israel.  Fox News reports that IRS refuses to comment on the matter, citing privacy laws.  Z Street’s suit claims that it was notified last July by an IRS agent that its application was “at least delayed, and may be denied because of a special IRS policy in place regarding organizations in any way connected with Israel.”  The agent went on to say, according to litigation documents, that applications of many pro-Israel groups had been assigned to a “special unit in the D.C. office to determine whether the organization’s activities contradict the administration’s public policies.”

            Nice.

            And speaking of nonprofits, if yours is a small one (less than $25,000 of annual gross) which conducts business in California or has a tax return filing obligation there, you may already have received one of about 240,000 letters recently mailed out by the California FTB notifying you of the new requirement to begin electronic filing of your annual returns.  Although there may no penalty for failure to comply (Why not? – There’s a penalty for every other form of noncompliance!) the California rules indicate that failure to file for three consecutive years will automatically result on loss of tax exempt status.

            And from our “Merry Christmas from the IRS” department this week, comes word from the IRS that the interest rates they charge on deficiencies will decrease by one percentage point, beginning on New Year’s Day!  Of course, the rate they pay you when they owe you a few bucks will likewise decline.  The new rate will be 3% on both sides of the ledger for individual folk.

            And how can we refrain from commenting on all the hoorah going on between Obama and Congress (mainly members there who share the President’s own party) regarding the fate of the “Bush Tax Cuts” come next January 1.  Obviously, we like the notion that taxes will not increase if Obama’s proposed deal goes through.  The two year time limit on the extension, however, leaves us cold.  How does business do any long range planning when uncertainty continues to loom? 

            And we hear Harry Reid (D-NV) has already fashioned a bill regarding all of this, which unfortunately also contains a few silly “green” provisions, including cash subsidies for wind and solar corporations, not to mention ethanol subsidies which Senator Tom Harkin (D-IA) likes.

            And curiously, while all of this is going on, Obama is slated to meet, this week, with a handful of big business CEOs – at a daylong “summit” to which he has summoned them this Wednesday.  The Wall Street Journal notes that executives from Google, Cisco, Facebook, IBM, American Express, Dow Chemical and Pepsico have been invited, to discuss, among other things, tax and regulatory issues.

            Let’s hope they give Obama an earful regarding how business really works.  And let’s further hope that he listens, for once, and maybe even learns something.

CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters.  You should consult your CPA regarding the implications to your own particular situation.

            Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, Ltd., with offices in Incline Village and Reno.  He is also a contributor to the 13th edition of Tax Savvy for Small Business, published by Nolo.  He can be reached at 831-7288, and welcomes comments below.

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