The American Legion Department of Alabama

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One-time filing relief allows tax-exempts to file Form 990 by Oct. 15 to save exempt status

IRS has announced that under a one-time relief program small tax-exempt organizations that failed to file returns for 2007, 2008 and 2009 can avoid losing their tax-exempt status by filing a return by Oct. 15, 2010. Two types of relief are available: (1) a filing extension for the smallest organizations (eligible to file Form 990-N); and (2) a voluntary compliance program for small organizations (eligible to file Form 990-EZ).

Filing requirement for tax-exempts. Under Code Sec. 6033(a), most tax-exempt organizations, other than churches, must file with IRS an annual Form 990, Form 990-EZ (Short Form Return or Organization Exempt From Income Tax), or Form 990-PF (Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation), or submit a Form 990-N (Electronic Notification (e-Postcard)). For the 2009 tax year (returns filed in 2010), exempt organizations with gross receipts over $500,000 or total assets over $1.25 million are required to file Form 990 (rather than Form 990-EZ). Under the discretionary exemption in Code Sec. 6033(a)(3)(B), IRS provides that exempt organizations whose annual gross receipts aren't normally in excess of a specified amount file the simplified Form 990-N. Starting with the 2010 tax year, IRS will increase from $25,000 to $50,000 the filing threshold for organizations required to file Form 990-N.

Three year filing rule. Under the 2006 Pension Protection Act (PPA), a non-church exempt organization's failure to file Form 990 for three consecutive years will result in the revocation of the organization's exempt organization status under Code Sec. 501(a) on and after the date IRS has set for filing the third annual return or notice. (Code Sec. 6033(j)(1)) The PPA filing requirement has been in effect since the beginning of 2007, which makes 2009 the third consecutive year under the new law. Thus, absent a relief measure, any exempt organization that fails to file for 2007, 2008 and 2009 automatically loses its federal tax-exempt status.

Form 990-series information returns are due on the 15th day of the fifth month after an organization's fiscal year ends. For organizations using the calendar year as their fiscal year, May 15 is the deadline. Since May 15 fell on a Saturday, the deadline this year was Monday, May 17.

If an organization loses its exemption, it ordinarily must reapply with IRS to regain its tax-exempt status, and any income received between the revocation date and renewed exemption may be taxable.

One-time relief. In IR 2010-87, IRS announced that two types of relief are available for small tax-exempt organizations that would lose their exempt status under the three-year filing rule: (1) a filing extension for the smallest organizations required to file Form 990-N; and (2) a voluntary compliance program for small tax-exempt organizations eligible to file Form 990-EZ. IRS has provided details about the relief program on its website, along with Frequently Asked Questions (FAQs). The one-time filing relief program FAQs can be viewed on the IRS website at http://www.irs.gov/charities/article/0,,id=225954,00.html.

IRS advised that tax-exempt organizations eligible to file Form 990-N need only go to its website, supply the eight information items called for on the form, and electronically file it by October 15. That will bring them back into compliance.

Under the voluntary compliance program, IRS advises that tax-exempt organizations eligible to file Form 990-EZ must file their delinquent annual information returns by October 15 and pay a compliance fee. IRS says that the compliance fee is in lieu of taxes, penalties, and interest that otherwise would be incurred because of the failure to file. If the organization's gross receipts (as reported on the 2009 information return) are $100,000 or less, the compliance fee is $100; if they are $100,001 to $200,000, the fee is $200; and if they are $200,001 to $499,999, the fee is $500. The payment of the compliance fee doesn't affect the organization's liability for any taxes that would be imposed even if they had filed their returns, including but not limited to unrelated business income tax and employment taxes.

IRS cautions that this relief isn't available to larger organizations required to file Form 990 or to private foundations that file Form 990-PF.

List of noncompliant organizations. To further alert tax-exempt organization to the problem, IRS has also posted on its website the names and last-known addresses of at-risk organizations with return due dates between May 17 and Oct. 15, 2010 for which IRS has no record that the required returns have been filed for the past three years (see http://www.irs.gov/charities/article/0,,id=225889,00.html). IRS will keep this list on its website until Oct. 15, 2010. Organizations that have not filed their required returns by that date will have their tax-exempt status revoked. IRS will publish a list of these revoked organizations in early 2011.

IRS warns, however, that the list may be incomplete, and that certain organizations may be at risk even though their names don't appear. In addition, the list may include organizations that were required to file Form 990 or Form 990-PF and so aren't eligible for the relief program, as well as organizations whose filing dates have not yet occurred.

IRS advises that donors who contribute to at-risk organizations are protected until this final revocation list is published.

RIA Research References: For tax-exempt organization's annual return Form 990, see FTC 2d/FIN ¶ S-2801; United States Tax Reporter ¶ 60,334; TaxDesk ¶ 688,001.

IR 2010-87 (http://www.irs.gov/newsroom/article/0,,id=225959,00.html)

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Legion World Series again to be streamed live on Web site

INDIANAPOLIS — For American Legion Baseball fans, a perfect summer day is spent sitting in the stands, watching a Legion World Series game. Those who are unable to attend the upcoming World Series in Spokane, Wash., Aug. 13-17, can enjoy the next best thing: watching the games online, as they’re played. For the second year in a row, the Legion Baseball World Series will be streamed live via the Legion’s Web site.

All 14 games played this year at Avista Stadium will be available for live viewing online at www.legion.org. Fans tuning in will hear play-by-play announcements from former Major League Baseballl star Jeff Kent, as well as longtime Legion Baseball supporter Jim Darby.

Last year’s World Series in Fargo, N.D., marked the Legion’s first-ever web streaming of games. Nearly 19,000 unique visitors from 15 different countries tuned in to watch a total of 2.4 million minutes of play throughout the four-day tournament.

Fans who missed last year’s live streaming of the championship, or who simply want to see the highlights, can still watch the webcasts from the 2009 American Legion Baseball World Series. Go to www.legion.org/legiontv and click on “Baseball.”

In the meantime, remember to tune in to www.legion.org/baseball Aug. 13-17 to watch live coverage, free of charge, of the 2010 American Legion Baseball World Series.

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Celebrate Flag Day by Protecting Old Glory

Celebrate Flag Day by Protecting Old Glory

By Clarence E. Hill

One sure way to light up The American Legion’s switchboards is for an overzealous homeowners association to ban the display of Old Glory within its community. While these disturbing incidents seem to be on the rise in recent years, I find it completely ironic that while a ban can exist on flying the flag of our country, no such ban is allowed to exist on desecrating it.

“Sorry, Mr. Veteran, you’re not allowed to fly the flag on your private property, but the Constitution says you can urinate on it, spit on it, and burn it all you want,” is what the government seems to be telling us.

The American Legion finds this unacceptable. In fact, for 21 years now, dating back to the Supreme Court’s flawed Texas v. Johnson decision, we’ve been pretty fired up about it. In that case, a narrow 5-4 majority ruled that flag desecration was permitted by the First Amendment. Essentially, a margin consisting of one Supreme Court Justice invalidated flag protection laws enacted by 48 states and the federal government. The high court removed from the people the right to protect their nation’s foremost symbol – a right that the people have enjoyed since the birth of this nation.

Supreme Court Justice John Paul Stevens and the late Chief Justice William Rehnquist usually voted on opposite sides, but they were both right about flag desecration. “In my considered judgment, sanctioning the public desecration of the flag will tarnish its value – both for those who cherish the ideals for which it waves and for those who desire to don the robes of martyrdom by burning it” Stevens said. “That tarnish is not justified by the trivial burden on free expression occasioned by requiring that an available, alternative mode of expression – including uttering words critical of the flag … be employed.”

Rather than “free expression,” Rehnquist compared flag desecration to an “inarticulate grunt,” and wrote, “I cannot agree that the First Amendment invalidates the Act of Congress, and the laws of 48 of the 50 states, which make criminal the burning of the flag.”

Fortunately, there is something we can do about it. Measures sit in both the U.S. Senate and the House of Representatives that would allow for a narrowly drawn constitutional amendment which would return to the people the right to protect Old Glory. It simply says “The Congress shall have power to prohibit the physical desecration of the flag of the United States.”

Flag protection amendments have passed the House of Representative six times in the past, only to fall short of the necessary two-thirds supermajority required in the Senate.

Flag Day during an election year represents the perfect opportunity to urge your congressional delegation to vote to protect our flag, the embodiment of what Gen. Norman Schwarzkopf called our “national identity.”

While the Constitution is supposed to protect us from the tyranny of the majority, a strong case can be made that protecting flag desecration as free speech represents a “tyranny of the minority.” Polls repeatedly show that Americans support this amendment. Fifty state legislatures have called for the amendment’s passage. Overwhelming majorities in Congress have passed it in the past and the amendment fell only one vote short last time in the Senate. When is the last time that 66 percent of the Senate agreed on anything of substance?

Don’t be swayed by phony arguments about desecrating red, white and blue neckties, underwear or beach towels. These are not flags. Would anyone consider putting these items on the caskets of our fallen heroes? Would you run a scarf up a flagpole? The beauty of the flag amendment is its narrowness – it covers the flag, not its likenesses. It also covers “desecration,” not the respectful “burning” of it during its retirement, as opponents would have you believe.

The amendment is worth repeating: “The Congress shall have power to prohibit the physical desecration of the flag of the United States.” Nothing more, nothing less.

By encouraging Congress to support House Joint Resolution 47 and Senate Joint Resolution 15, we can make the statement that our flag is important and that “We the people” matter. You can reach your members of Congress by calling the U.S. Capitol, toll free, at 1-877-762-8762. It’s time to make somebody else’s switchboard light up.

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American Legion welcomes new measure to improve GI Bill benefits

American Legion welcomes new measure to

improve GI Bill benefits

WASHINGTON (June 3, 2010) – The American Legion welcomed the introduction of a Senate bill last week that would substantially improve and expand education benefits for veterans.

Sen. Daniel Akaka, D-Hawaii, is sponsoring the Post-9/11 Veterans Educational Assistance Improvements Act of 2010, which he introduced in the Senate on May 27.

“This new legislation would realize some of the changes we’ve been suggesting to Congress for the past couple of years,” said Clarence Hill, national commander of The American Legion. “We’re especially happy to see that Senator Akaka’s bill would extend benefits to those veterans attending vocational schools, on-the-job training and apprenticeships.”

Hill said the original 1944 GI Bill – authored and championed by The American Legion – paid for the education of about 16 million veterans. “And half of them went to some type of vocational institution after World War II, so it’s most appropriate to expand today’s benefits beyond traditional colleges and universities.”

Robert Madden, assistant director of The American Legion’s economic division, said that if Akaka’s bill (S. 3447) becomes law, “every veteran would be free to choose any type of education and employment path that he or she happens to desire.

“Veterans have served America with pride and dedication. With bipartisan support, Congress can show its gratitude to them and their families by creating a GI Bill that is much more equitable,” Madden said.

If passed, Akaka’s legislation would upgrade veterans education benefits with several new provisions, including:

Veterans attending vocational schools would receive the national yearly average for tuition/fee payments, plus housing stipend based upon regular rate of the military’s BHA (basic housing allowance).

On-the-job training and apprenticeships will be paid for on a prorated schedule:

75 percent of costs for the first six months, 55 percent for the next six months, and 35 percent for each subsequent month up to 24 additional months; benefits also include housing stipend and $1,000 annual book stipend.

60 percent of charges for flight training and 55 percent for correspondence courses will be covered, based on the national average of established cost at all institutions of higher learning.

Servicemembers who retired after Sept. 11, 2001 but before the Post-9/11 GI Bill went into effect would be able to transfer current veterans education benefits to their family members (this provision would be paid for by DoD and other federal agencies).

Housing allowance: distance-learning students and those attending schools overseas will receive 50 percent of the established rate (which would become prorated, based on a veteran’s actual course load).

Instead of paying up to $2,000 for a one-time test for licensure or certification, an unlimited number of tests will be allowed, with charges being deducted from a veteran’s monthly benefits.

During a hearing before the Senate Veterans’ Affairs Committee on April 21, Madden urged Congress to cover non-degree education programs with GI Bill benefits, saying that such a disparity “has caused much concern.”

At that same hearing, Akaka promised to introduce legislation before Memorial Day to help improve veterans education benefits. He delivered on that promise last week.

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