17 julio, 2014 de 11:36 LLDM’s Tax Free Charitable Status Under Scrutiny in the U.S. A protest of an organization’s charitable status may be made in any County where the church is located, and may rise to a federal level affecting the organization’s charitable status nationwide. > Organizations described in section 501(c)(3) are commonly referred to as charitable organizations. > The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and the preventing cruelty to children or animals. “The time for a free ride for La Luz Del Mundo is over,” Scott Ogle said. “The rest of us pay so much more in taxes because clergy pay so much less, and current “Apostle” Samual Joaquin Flores and his inner, and extended family flaunt their individual wealth transferring property among themselves. Recently, Adoniram, the leader’s grandson, boasted his wealth and business ventures associated with the church “are self earned”. If these churches — which are accountable to no one in government yet get so many favors — are allowed to engage in tax-exempt politicking, it would be the ruination of our nation’s charitable status favors offered by the Internal Revenue Service. Further, the Internal Revenue Code prohibits tax-exempt 501(c)(3) organizations, including churches such as La Luz Del Mundo, from intervening or participating in political campaigns on behalf of or in opposition to any candidate. > The organization must not be organized or operated for the benefit of private interests, such as the creator (SJF) or the creator’s family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. No part of a section 501(c)(3) organization’s net earnings may inure to the benefit of any private shareholder or individual. A private shareholder or individual is a person having a personal and private interest in the activities of the organization. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction. > Section 501(c)(3) organizations are restricted in how much political and legislative (lobbying) activities they may conduct. > Life Cycle of a Public Charity – Jeopardizing Exemption > A section 501(c)(3) organization will jeopardize its exemption if ceases to be operated exclusively for exempt purposes. An organization will be operated exclusively for exempt purposes only if it engages primarily in activities that accomplish the exempt purposes specified in section 501(c)(3). An organization will not be so regarded if more than an insubstantial part of its activities does not further an exempt purpose. A 501(c)(3) organization: > * must ensure that its earnings do not inure to the benefit of any private shareholder or individual > * must not operate for the benefit of private interests such as those of its founder, the founder’s family, its shareholders or persons controlled by such interests > * must not operate for the primary purpose of conducting a trade or business that is not related to its exempt purpose, such as a school’s operation of a factory > * may not provide commercial-type insurance as a substantial part of its activities > * may not have purposes or activities that are illegal or violate fundamental public policy. > In addition to loss of the organization’s section 501(c)(3) exempt status, activities constituting inurement may result in the imposition of penalty excise taxes on individuals benefiting from excess benefit transactions. > EO Abusive Tax Avoidance Transactions > Tax-exempt organizations, by definition, are exempt from federal income tax under various provisions of the Internal Revenue Code. However, some are directly involved in Abusive Tax Avoidance Transactions (ATATs). In addition, because they are tax-indifferent, tax-exempt organizations are, at times, used by for-profit entities as accommodation parties in these transactions. > > Testimony: Charitable Giving Problems (cont-11) > Misuse of Tax-Exempt Entities by Donors and Investors > Section 509(a)(3) Supporting Organizations > A supporting organization is a public charity that in carrying out its charitable purpose supports another exempt organization, in almost all cases another public charity. The phrase can cover a wide variety of organizations: endowment funds for universities; subordinate entities that provide essential services for hospital systems; and many others. > The classification as a supporting organization is important because it is one method by which a charity can avoid classification as a private foundation. Because of the required relationship between the supporting organization and its supported organization, the supporting organization is> classified as a public charity, even though the supporting organization may be funded by a smaller number of persons. Private foundations are subject to many more restrictions and to the above-referenced regime of excise taxes on certain behaviors. > Let me emphasize here that while we believe La Luz Del Mundo / Light of the World Church’s charitable status deserves investigation on both a national, and international level due to their failure to abide by the statutes associated with its 501(c)(3) tax exempt status, the vast majority of supporting organizations are entirely legitimate and upstanding charities. However, some tax planners see the supporting organization primarily as a means by which an organization’s creator, such as the Joaquin family dynesty, can effectively operate what would ordinarily be a private foundation under the less restrictive rules applicable to public charities. Self-dealing and certain other transactions with substantial contributors to these organizations are prohibited in the private foundation context and should be enforced. All it takes is one match to start a forest fire of controversy.
Posted on: Thu, 17 Jul 2014 17:00:55 +0000
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