Tax Planning and Compliance for Tax-Exempt Organizations: Rules, Checklists and Procedures, 4th Edition

By Jody Blazek, CPA

John Wiley & Sons, Inc., 2004; ISBN: 0-471-27177-2; 742 pages, $150

Paperback supplement forthcoming April 2005, 96 pages, $65

Reviewed by Lisa F. Quint

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As the author indicates, the IRS is currently updating the application form and annual information return for exempt organizations, including electronic filing. The IRS issued a revised Form 1023 in October 2004. An update of this book will be needed when all these forms are completed by the IRS, and the author expects to publish a supplement then, with access to a website for timely updates.

This book is clearly a desk reference, with numerous footnotes and cross-references to other sections of the book and to IRS regulations, rulings, and other useful information. The author also cites various other texts for information beyond the scope of the current book. In addition, each state has its own rules for tax-exempt organizations. The chapter on unrelated-business income tax (UBIT) explains how to determine which items sold in a museum gift shop represent unrelated income and are therefore subject to UBIT. The author is familiar with Texas rules and occasionally refers to them; a reader would also need to consult applicable state regulations.

The book is organized into three parts, with 26 chapters, including 155 subchapters and 54 exhibits (including 12 annual tax compliance checklists), plus an index:

• Part 1. Chapters 1–11: Qualifications of Tax-Exempt Organizations
• Part 2. Chapters 12–17: Standards for Private Foundations
• Part 3. Chapters 18–26: Obtaining and Maintaining Tax-Exempt Status

Chapter 1 discusses whether an entity should file for tax-exempt status and under which IRC section. Chapters 2 through 5 focus on IRC section 501(c)(3) organizations, while Chapters 6 to 10 discuss other 501(c) entities, and Chapter 11 compares public and private charities.

Chapters 12 to 17 discuss issues specifically related to private foundations, including the excise tax on investment income. This section also addresses various IRC penalties that fall short of immediate loss of tax-exempt status. These penalty taxes are similar to the intermediate sanctions for public charities established by Congress in 1996. Other information in this section is often applicable to public charities.

Chapters 18 to 26 include information that all types of tax-exempt organizations can use, including a description of the required annual filings with the IRS and advice on how to continue operating as a tax-exempt organization. This section also discusses the rules that set forth which types of organizations can be involved in influencing legislation or participating in elections.

The author addresses the distinction between public charities and private foundations, including private operating foundations. The book focuses on the issues unique to various types of tax-exempt organizations, except for the chapter on employment taxes, which includes information needed by all employers.

Although additional references are needed, including references for applicable state laws and revisions and updates by the IRS, this book is a useful addition to a reference library for tax issues affecting various types of tax-exempt organizations.