Regulatory / Oversight

2009 Form 990 Informational Tax Return

The IRS has released revised 990 and 990-EZ forms, along with schedules and instructions, for filing tax information in 2010-11.

Type III Supporting Organizations

The Pension Protection Act of 2006 changed the law regulating supporting organizations and created a category for Type III supporting organizations. Type III entities are “operated in connection with” a publicly-supported organization and meet certain tests designed to ensure that it will be responsive to, and significantly involved with, the operations of the supported organization. Congress tasked the IRS with clarifying the differences and coming up with an appropriate payout requirement for organizations that are not closely related to the entities they support. The IRS released proposed regulations for Type III supporting organizations that outline criteria for determining whether they are “functionally integrated” with their supported organizations. Organizations not meeting those criteria would be subject to a five percent annual payout requirement. The IRS is evaluating public comments about the proposed rules and is expected to issue final regulations this year.

Donor Advised Fund Study

The Pension Protection Act of 2006 directed the Treasury Department and the IRS to study the law and practices applicable to donor advised funds to determine whether and to what extent additional restrictions should be imposed on these entities. Donor advised funds are defined as accounts created at public charities, including community foundations, to which donors have advisory privileges related to the distribution or investment of balances held in the account. The IRS has sought public comments on a number of questions designed to clarify whether these charitable giving vehicles should be treated in a manner similar to private foundations, including the imposition of minimum payout requirements. The Treasury/IRS study was due in 2007, but is expected to be released in March or April 2010.

The IRS has prepared useful guidance on donor advised funds.