Non-Profit Supporting Organizations: Mastering the Exempt Rules of IRC 509(a)(3)

Understanding Life Cycle and Tax Issues of Supporting Organizations

Recording of a 110-minute CPE/CLE webinar with Q&A

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Conducted on Tuesday, October 20, 2015

Recorded event now available

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Course Materials

This course will examine the tax and accounting issues specific to IRC Section 509(a)(3) “supporting organizations” and will discuss preparation of Schedule A relating to supporting organizations. The panel will review the “organizational,” “operational,” and “control” tests prescribed by those regulations, and discuss the nature of the supporting organization’s required relationship with the supported public charities. The webinar will detail the regulations and rulings relating to the life cycle of a supporting organization, its relationship with private foundations and exempt noncharitable organizations, the §501(h) election, and related issues.

Description

The “supporting organization” is one of the most complex aspects of tax-exempt organizations. The IRS defines a supporting organization as “a charity that carries out its exempt purposes by supporting other exempt organizations, usually other public charities.” This classification is important because it allows a charity to avoid classification as a private foundation, a status that is subject to a more restrictive regulatory regime.

All supporting organizations must pass three tests: organizational, operational and relational tests. Under the relational test, there are three different classes of supporting organizations, depending on the relationship it has with its supported organization(s). Advisers and directors of supporting organizations must be be sure to set up and operate supporting organizations in accordance with IRS guidelines. Failure to conform with IRS rules will have significant tax consequences.

Listen as our experience panel reviews the relevant tests prescribed by IRS regulations, details best practices for maintaining supporting organization status, and discusses preparation of Schedule A as it relates to supporting organizations.

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Outline

  1. Section 509(a)(3) framework
  2. Tests (operational, organizational)
  3. Three sub-classes of supporting orgs
  4. Supported organization rules
  5. Preparation of Schedule A relating to supporting orgs

Benefits

The panel will discuss these and other critical issues:

  • What are the various tests that supporting organizations must meet to qualify with IRS regulations?
  • Functionally integrated supporting organizations (FISOs)
  • Risks of intermediate sanctions from excess benefit transactions
  • Excess business holdings

Faculty

Rebekuh Eley
Rebekuh Eley
Tax Senior Director
BDO

Ms. Eley's area of focus is the tax issues facing nonprofit organizations and their for-profit affiliates,...  |  Read More

Cook, Jake
Jake Cook, CPA
Nonprofit Tax Managing Director
BDO USA

Mr. Cook specializes in his firm’s tax-exempt practice and is part of his firm’s nonprofit industry team....  |  Read More

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