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Hurricane Sandy: Non-Profit Tax Alerts


This webpage contains two alerts - please click on one below to view the specific alert.


Alert #1: Hurricane Sandy: Expedited Review and Approval of Tax-exempt Status Applications

Synopsis
On November 6, 2012, the Treasury Department and IRS announced an expedited review and approval process for charitable organizations seeking tax-exempt status in order to provide relief for victims of Hurricane Sandy.  The IRS also encourages people to use existing organizations working on immediate aid efforts.

Suggested Action
Persons considering providing disaster relief to victims of Hurricane Sandy may want to contact CohnReznick for assistance in reviewing the Federal and state tax rules applicable to providing disaster relief through charitable organizations, and in deciding whether to use a new or existing organization.  Please visit the CohnReznick Hurricane Sandy webpage as it is constantly being revised for updates.

Issues

For New Organizations:

The IRS anticipates the formation of new charities to address specific needs of disaster victims. To expedite the review and approval process, the IRS requested that organizations applying for tax-exempt status file IRS Form 1023 and include “Disaster Relief, Hurricane Sandy” at the top of the form. The IRS will give such applications expedited attention and ensure they meet the legal requirements for tax exemption. Organizations that have already submitted an application may fax a request to (513) 263-4554 labeled “Disaster Relief, Hurricane Sandy” and include the:

  • Organization’s name;
  • Employer Identification Number;
  • Contact name; and
  • Phone number.


IRS Publication 3833, Disaster Relief: Providing Assistance Through Charitable Organizations, provides information about establishing a new charitable organization.

For Existing Organizations:

The IRS urges taxpayers to make use of existing charitable organizations, including churches and other places of worship, to facilitate relief to victims of Hurricane Sandy as existing organizations often have long-established fund-raising and distribution infrastructures in place.

Contact:
For more information, please visit the CohnReznick Not-for-Profit and Education Practice webpage and contact:
Thomas Lanning, Partner, at thomas.lanning@cohnreznick.com or 646.834.4108;
Philip Cornblatt, Partner, at philip.cornblatt@cohnreznick.com or 410.783.6236; or
Phil Royalty, Director, at phil.royalty@cohnreznick.com or 916.930.5222.


Alert #2: IRS on Hurricane Sandy: What is the Tax Treatment of Donating Employee Leave?

Synopsis
On November 6, 2012, the Treasury and IRS announced special relief to support leave-based donation programs for the aid of Hurricane Sandy victims.

Suggested Action
After reading this Alert, please contact a CohnReznick professional services representative for more information. In addition, please visit our www.cohnreznick.com/sandy for updates related to Hurricane Sandy relief as these pages are constantly being updated. .

Issue
Employers may have adopted or may be considering adopting leave-based donation programs to aid victims of Hurricane Sandy. Under these programs, employees elect to forego vacation, sick, or personal leave in exchange for cash payments an employer makes to organizations eligible to receive charitable contributions (“charitable organizations”) for the relief of Hurricane Sandy victims. The IRS will not assert that these cash payments constitute gross income or wages of the employees if the payments are:

  • Made to charitable organizations for the relief of Hurricane Sandy victims; and
  • Paid to charitable organizations before January 1, 2014.

The IRS will not assert that the opportunity to make such an election results in constructive receipt of gross income or wages for employees. Electing employees may not claim a charitable contribution deduction for the value of the foregone leave. The IRS will not assert that an employer will be only permitted to deduct these cash payments as charitable contributions rather than as ordinary trade or business expenses. These cash payments need not be included in Box 1, 3 (if applicable), or 5 of an employee’s Form W-2.

Contact:
For more information, please visit the CohnReznick Not-for-Profit and Education Practice webpage and contact:

Thomas Lanning, Tax Partner, at thomas.lanning@cohnreznick.com or 646.834.4108;
Philip Cornblatt, Tax Partner, at philip.cornblatt@cohnreznick.com or 410.783.6236; or
Phil Royalty, Director, at phil.royalty@cohnreznick.com or 916.930.5222.

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