Law & Tax
Frequently Asked Questions about Law & Tax
Yes. If a nonprofit has over $25,000 in gross receipts in its fiscal year, it will file the IRS Form 990-EZ or 990. Schedule C must be filed with either of these forms, and political campaign and lobbying activity is reported on this schedule. There is no comparable filing in Iowa.
Volunteers may be able to claim a deduction for such expenses only if all of the following are true: the expense was unreimbursed; the expense was directly connected to the services provided to the organization; the expenses are only of the type that the volunteers had because of their service to the organization; the expenses are not personal family or living expenses. However volunteers are not able to claim deductions for the value of their time (i.e. the income they did not earn as a result of the time they spent volunteering). Volunteers may be able to deduct pro bono consulting, provided that they have a bill for the time contributed performing work for which, as professionals, they would normally charge a fee.
Yes. There was a time when nonprofits, under the doctrine of “charitable immunity,” were not held liable for injuries that they caused. However, nonprofit organizations can now be sued by anyone at any time, and nonprofits must accept legal and financial responsibility for their activities.
Learn more: Nonprofit Risk Management Center
Rev. Rul. 55-319 1955-1C.B. 119 holds that a wholly-owned state instrumentality may, under certain circumstances, qualify for exemption from Federal income tax under section 501(c)(3) of the Code. This position is amplified by Rev. Rul. 60-384 1960-2 C.B. 172 which holds that a wholly-owned state or municipal instrumentality that is a separate entity and a counterpart of an organization described in section 501(c)(3) of the Code may qualify for exemption under that section. However Rev. Rul. 60-384 further holds that an instrumentality would not be a clear counterpart of section 501(c)(3) organization if it is clothed with powers beyond those of an organization described in section 501(c)(3). Examples of such powers set forth in the Rev. Rul. are enforcement or regulatory powers exercised in the public interest such as health, welfare, or safety.
No. Under Iowa law, a nonprofit corporation is only required to have one or more board members (Iowa Code 504.803), but the IRS, on the Form 1023 Application for Exemptions, wants to see at least three board members. The Iowa Principles and Practices for Charitable Nonprofit Excellence recommends at least five board members (V.B.3).
Yes. According to the Iowa Principles and Practices for Charitable Nonprofit Excellence an Iowa nonprofit corporation that expands its activities into other states should submit the required foreign corporation filings in those states. (II. D. 5.) Usually the foreign corporation filing requirements are spelled out on the Secretary of State Web site for the state in which the nonprofit has begun to operate. The required forms are available on those sites. Forms and more information for the states bordering Iowa are available at these Web sites:
Illinois - Application for Authority to Conduct Affairs in Illinois (Form NFP113.15); $50 filing fee.
Minnesota - Select pdf for Certificate of Authority to Transact Business in MN; $50 filing fee.
Missouri - Go to Nonprofit Foreign Corporations and choose Foreign Nonprofit Corporation Application for Certificate of Authority to do Business in Missouri (Corp. 55A); $25 filing fee.
Nebraska - Corporations Nonprofit (Foreign) and choose Application for Certificate of Authority; $25 filing fee.
South Dakota - At the Secretary of State Web site choose Nonprofit Corporations Informational Pamphlet; $25 filing fee.
Wisconsin - go to Corporation Section Filing Forms and choose Foreign Nonstock Corporation Certificate of Authority Application (Form 121); $45 filing fee.