Friday, June 30, 2006

Notes on Tax-Exempt Organizations

I went to Bruce R. Hopkin's seminar on "The Law of Tax Exempt Organizations," which used his text of the same name. It was last week in Arlington. The guy is a nonprofit law rockstar and, where I found applications to what he was saying, the content was fairly interesting. When he got off on charities and museums and all that stuff, I kind of glazed. Most of the people there were CPAs or tax lawyers, so it was quite a high level of discourse.

My big takeaways were this:

1) The tax code is very complicated, and it's okay to have even fairly basic questions. People who are afraid to act dumb and ask the questions are sorry later when they're asking even dumber questions.

2) The tax code sucks. Why should it be so complicated and why should an entire industry have to exist to keep people from losing their shirts to the government? And UBI is a minefield.

3) The IRS is riding nonprofits really hard right now, and congress could tighten up on them. I have mixed feelings about this, especially viz points 1 and 2. Nonprofits are often staffed by volunteers and the aforementioned volunteers can be clueless about how to file their taxes, etc. Of course there are fly-by-nights taking advantage of the code but there is a high ignorance factor that makes me scared for all the clueless out there.

He gave us a few copies of his newsletter, which you can find here. And his website, which has interesting discussions of current cases, is here.

UPDATE: I forgot I wanted to make mention that I finally figured out what the difference between the terms "nonprofit" and "not-for-profit" is. I quote:
The word nonprofit should not be confused with the term not-for-profit (although it often is). The former describes a type of organization; the latter describes a type of activity. For example, in the federal tax setting, expenses associated with a not-for-profit activity (namely, one conducted without the requisite profit motive) are not deductible as business expenses.
From The Law of Tax-Exempt Organizations, p. 4