This is a final determination. Since we have a reasonable assurance that our application was filed before the deadline, all donations to LFS dating back to September 5, 2000 should be eligible for deduction from federal income taxes. Donations are only allowable as deductions to the extent that the donations are gifts. LFS memberships and LFS t-shirts, and LFS movie ticket sales are not really eligible because people receive consideration for those purchases.
The following determination letter has been digitally scanned into text, so there may be some typos. E-mail me (Robert Roten) so I can fix any typos you might spot. My e-mail address can be found on my web page Laramie Movie Scope.
A copy of IRS Publication 1771 which outlines the rules for charitable donations, included with the decision letter, is also included on this page. This short, two page document is well worth reading if you plan to donate anything to any non-profit organization. I was unable to scan this document into a text file, but I found a copy of it on the Internet (it is not available at the IRS site for some reason). A copy of Publication 1771 is included with the copy of the decision letter linked above. To read it, click on this link.
The 501 (c)(3) application for recognition of exemption (forms 1023, 8718, and 872-C) was delivered to the IRS office in Kentucky at 9 a.m. December 28, 2001, according to the UPS Internet delivery tracking system.
The delivery was three days before the deadline (the end of the 15th month from the date of incorporation). That means donations to LFS back to the date of incorporation (Sept. 5, 2000) should be tax-deductible. I have one copy of the application and I have made two others so that LFS Secretary Lynn Hamblin and Treasurer Casey Woods can keep them on file. I will also keep a copy on file. By law, a copy of the application must be kept on file for public inspection for three years.
The application uses form 872-C to “consent fixing period of limitation upon assessment of tax under section 4890 of the Internal Revenue Code.” The reason for including this form in the application is that it is required when seeking an "advance ruling" rather than a "definitive ruling" on our tax- exempt status. Rather than making an advance ruling, however, the IRS chose to make a final ruling, so that form was evidently not needed. Who knew?
INTERNAL REVENUE SERVICE
P.0. BOX 2508
CINCINNATI, OH 45201
Date: Feb. 06 2002
DEPARTMENT OF THE TREASURY
LARAMIE FILM SOCIETY
3019 POPE SPRINGS RD
LARAMIE, WY 82070
EVELYN D. GRIFFITHS
Accounting Period Ending:
Form 990 Required:
IRS Publication 1771
Based on information supplied, and assuming your operations will be as stated in your application for recognition of exemption, we have determined you are exempt from federal income tax under section 501 (a) of the Internal Revenue Code as an organization described in section 501(c) (3).
We have further determined that you are not a private foundation within the meaning of section 509(a) of the Code, because you are an organization described in section 509 (a) (2).
If your sources of support, or your purposes, character, or method of operation change, please let us know so we can consider the effect of the change on your exempt status and foundation status. In the case of an amendment to your organizational document or bylaws, please send us a copy of the amended document or bylaws. Also, you should inform us of all changes in your name or address.
As of January 1, 1984, you are liable for taxes under the Federal Insurance Contributions Act (social security taxes) on remuneration of $100 or more you pay to each of your employees during a calendar year. You are not liable for the tax imposed under the Federal Unemployment Tax Act (FUTA).
Since you are not a private foundation, you are not subject to the excise taxes under Chapter 42 of the Code. However, if you are involved in an excess benefit transaction, that transaction might be subject to the excise taxes of section 4958. Additionally, you are not automatically exempt from other federal excise taxes. If you have any questions about excise, employment, or other federal taxes, please contact your key district office.
Grantors and contributors may rely on this determination unless the Internal Revenue Service publishes notice to the contrary. However, if you lose your section 509 (a) (2) status, a grantor or contributor may not rely on this determination if he or she was in part responsible for, or was aware of, the act or failure to act, or the substantial or material change on the
Letter 947 (DO/CG)
LARAMIE FILM SOCIETY
part of the organization that resulted in your loss of such status, or if he or she acquired knowledge that the Internal Revenue Service had given notice that you would no longer be classified as a section 509(a) (2) organization.
Donors may deduct contributions to you as provided in section 170 of the Code. Bequests, legacies, devises, transfers, or gifts to you or for your use are deductible for federal estate and gift tax purposes if they meet the applicable provisions of Code sections 2055, 2106, and 2522.
Contribution deductions are allowable to donors only to the extent that their contributions are gifts, with no consideration received. Ticket purchases and similar payments in conjunction with fundraising events may not necessarily qualify as deductible contributions, depending on the circumstances. See Revenue Ruling 67-246, published in Cumulative Bulletin 1967-2, on page 104, which sets forth guidelines regarding the deductibility, as charitable contributions, of payments made by taxpayers for admission to or other participation in fundraising activities for charity.
In the heading of this letter we have indicated whether you must file Form 990, Return of Organization Exempt From Income Tax. If Yes is indicated. you are required to file Form 990 only if your gross receipts each year are normally more than $25,000. However, if you receive a Form 990 package in the mail, please file the return even if you do not exceed the gross receipts test. If you are not required to file, simply attach the label provided, check the box in the heading to indicate that your annual gross receipts are normally $25,000 or less, and sign the return.
If a return is required, it must be filed by the 15th day of the fifth month after the end of your annual accounting period. A penalty of $20 a day is charged when a return is filed late, unless there is reasonable cause for the delay. However, the maximum penalty charged cannot exceed $10,000 or 5 percent of your gross receipts for the year, whichever is less. For organizations with gross receipts exceeding $1,000,000 in any year, the penalty is $100 per day per return, unless there is reasonable cause for the delay. The maximum penalty for an organization with gross receipts exceeding $1,000,000 shall not exceed $50,000. This penalty may also be charged if a return is not complete, so be sure your return is complete before you file it.
You are required to make your annual information return, Form 990 or Form 990-EZ, available for public inspection for three years after the later of the due date of the return or the date the return is filed. You are also required to make available for public inspection your exemption application, any supporting documents, and your exemption letter. Copies of these documents are also required to be provided to any individual upon written or in person request without charge other than reasonable fees for copying and postage. You may fulfill this requirement by placing these documents on the Internet. Penalties may be imposed for failure to comply with these requirements. Additional information is available in Publication 557, Tax-Exempt Status for Your Organization, or you may call our toll free number shown above.
Letter 947 (DO/CG)
LARAMIE FILM SOCIETY
You are not required to file federal income tax returns unless you are subject to the tax on unrelated business income under section 511 of the Code. If you are subject to this tax, you must file an income tax return on Form 990-T, Exempt Organization Business Income Tax Return. In this letter we are not determining whether any of your present or proposed activities are unrelated trade or business as defined in section 513 of the Code.
You need an employer identification number even if you have no employees. If an employer identification number was not entered on your application, a number will be assigned to you and you will be advised of it. Please use that number on all returns you file and in all correspondence with the Internal Revenue Service
If we have indicated in the heading of this letter that an addendum applies, the enclosed addendum is an integral part of this letter.
Because this letter could help resolve any questions about your exempt status and foundation status, you should keep it in your permanent records.
If you have any questions, please contact the person whose name and telephone number are shown in the heading of this letter.
Steven T. Miller Director,
Letter 947 (DO/CO)
A copy of Publication 1771 is attached.
PUBLICATION 1771 -- CHARITABLE CONTRIBUTIONS-SUBSTANTIATION AND DISCLOSURE REQUIREMENTS
UNDER THE NEW LAW, CHARITIES WILL NEED TO PROVIDE NEW KINDS OF INFORMATION TO DONORS. Failure to do so may result in denial of deductions to donors and the imposition of penalties on charities.
Legislation signed into law by the President on August 10, 1993, contains a number of significant provisions affecting tax-exempt charitable organizations described in section 501(c)(3) of the internal Revenue Code. These provisions include: (I) new substantiation requirements for donors, and (2) new public disclosure requirements for charities (with potential penalties for failing to comply). Additionally. charities should note that donors could be penalized by loss of the deduction if they fail to substantiate. THE SUBSTANTIATION AND DISCLOSURE PROVISIONS APPLY TO CONTRIBUTIONS MADE AFTER DECEMBER 31, 1993.
Charities need to familiarize themselves with these tax law changes in order to bring themselves into compliance. This Publication alert you to the new provisions affecting tax-exempt charitable organizations. Set forth below. are brief descriptions of the new law's key provisions. The internal Revenue Service plans to provide further guidance in the near future.
DONOR'S SUBSTANTIATION REQUIREMENTS
Documenting Certain Charitable Contributions.-Beginning January 1. 1994, no deduction will ill be allowed under section 170 of the Internal Revenue Code for any charitable contribution of $250 or more unless the donor has contemporaneous written substantiation from the charity In cases we here the charity has provided goods or services to the donor in exchange for making the contribution this contemporaneous written acknowledgement must include a good faith estimate of the value of such goods or services. Thus. taxpayers may no longer rely solely on a canceled check to substantiate a cash contribution of $250 or more.
The substantiation must be "contemporaneous." That is, it must be obtained by the donor no later than the date the donor actually files a return for the tax year in which the contribution was made. If the return is filed after the due date or extended due date, then the substantiation must have been obtained by the due date or extended due date. The responsibility for obtaining this substantiation lies with the donor, who must request it from the charity. The charity is not required to record or respond this information to the IRS on behalf of donors.
The legislation provides that substantiation will not be required if, in accordance with regulations prescribed by the Secretary, the charity reports directly to the IRS the information required to be provided in the written substantiation. At present, there are no regulations establishing procedures for direct reporting by charities to the IRS of charitable contributions made in 1994. Consequently, charities and donors should be prepared to provide/obtain the described substantiation for 1994 contributions of $250 or more.
There is no prescribed format for the written acknowledgement. For example, letters postcards or computer-generated forms may be acceptable. The acknowledgement does not have to include the donor's social security or tax identification number. It must, however, provide sufficient information to substantiate the amount of the deductible contribution. The acknowledgement should note the amount of any cash contribution. However, if the donation is in the form of property, then the acknowledgement must describe, but need not value, such property Valuation of the donated property is the responsibility of the donor.
The written substantiation should also note whether the donee organization provided any goods or services in consideration, in whole or in part, for the contribution and, if so, must provide a description and good-faith estimate of the value of the goods or services. In the new law these arc referred to as "quid pro quo contributions."
Please note that there is a new requiring charities to furnish disclosure statements to donors for such quid pro quo donations in excess of $75. This is addressed in the next section regarding Disclosure By Charity.
If the goods or services consist entirely of intangible religious benefits, the statement should indicate this, but the statement need not describe or provide an estimate of the value of these benefits. "Intangible religious benefits" are also discussed in the following section on Disclosure By Charity. If, on the other hand, the donor received nothing in return for the contribution, the written substantiation must so state.
The present law remains in effect that, generally. if the value of an item or group of like items exceeds $5,000, the donor must obtain a qualified appraisal and submit an appraisal summary with the return claiming the deduction.
The organization may either provide separate statements for each contribution of $250 or more from a taxpayer, or furnish periodic statements substantiating contributions of $250 or more.
Separate payments are regarded as independent contributions and are not aggregated for purposes of measuring the $250 threshold. However, the Service is authorized to establish anti-abuse rules to prevent avoidance of the substantiation requirement by taxpayers writing separate smaller checks on the same date.
If donations are made through payroll deductions, the deduction from each paycheck is regarded as a separate payment.
A charity that knowingly provides false written substantiation to a donor may be subject to the penalties for aiding and abetting an understatement of tax liability under section 6701 of the Code.
DISCLOSURE BY CHARITY OF RECEIPT OF QUID PRO QUO CONTRIBUTION
Beginning January 1, 1994. under new section 6115 of the Internal Revenue Code, a charitable organization must provide a written disclosure statement to donors who make a payment, described as a "quid pro quo contribution," in excess of $75. This requirement is separate from the written substantiation required for deductibility purposes as discussed above While, in certain circumstances, an organization may be able to meet both requirements with the same written document, an organization must be careful to satisfy the section 6115 written disclosure statement requirement in a timely manner because of the penalties involved.
A quid pro quo contribution is a payment made partly as a contribution and partly for goods or services provided to the donor by the charity. An example of a quid pro quo contribution is where the donor gives a charity $100 in consideration for a concert ticket valued at $40. In this example $60 would be deductible. Because the donor's payment (quid pro quo contribution) exceeds $75. the disclosure statement must be furnished, even though the deductible amount does not exceed of $75.
Separate payments of $75 or less made At different tin of the year for separate fund raising events will not be aggregated for purposes of the $75 threshold. However, the Service is authorized to develop anti-abuse rules to prevent avoidance of this disclosure requirement in situations such as the writing of multiple checks for the same transaction.
The required written disclosure statement must:
(1) inform the donor that the amount of die contribution that is deductible for federal income tax purposes is limited to the excess of any money (and the value of any property other than money) contributed by the donor over the value of goods or services provided by the charity, and
(2) provide the donor with a good-faith estimate of the value of the goods or services that the donor received.
The charity must furnish the statement in connection with either the solicitation or the receipt of the quid pro quo contribution. If the disclosure statement is furnished in connection with a particular solicitation, it is not necessary for the organization to provide another statement when the associated contribution is actually received.
The disclosure must be in writing and must be made in a manner that is reasonably likely to come to the attention of the donor. For example, a disclosure in small print within a larger document might not meet this requirement.
In the following three circumstances, the disclosure statement is not required.
(1) Where the only goods or services given to a donor meet the standards for "insubstantial value" set out in section 3.01, paragraph 2 of Rev. Proc. 90-12, 1990-l C.B. 471, as amplified by section 2.01 of Rev. Proc. 92-49, 1992-l C.B. 987 (or any updates or revisions thereof);
(2) Where there is no donative element involved in a particular transaction with a charity, such as in a typical museum gift shop sale.
(3) Where there is only an intangible religious benefit provided to the donor. The intangible religious benefit must be provided to the donor by an organization organized exclusively for religious purposes, and must be of a type that generally is not sold in a commercial transaction outside the donative context. An example of an intangible religious benefit would be admission to a religious ceremony. The exception also generally applies to de minimis tangible benefits, such as wine, provided in connection with a religious ceremony. The intangible religious benefit exception, however, does not apply to such items as payments for tuition for education leading to a recognized degree, or for travel services, or consumer goods.
A penalty is imposed on charities that do not meet the disclosure requirements. For failure to make the required disclosure in connection with a quid pro quo contribution of more than $75, there is a penalty of $10 per contribution, not to exceed $5,000 per fund raising event or mailing. The charity may avoid the penalty if it can show that the failure was due to reasonable cause.
Please note that the prevailing basic rule allowing donor only to the extent that the payment exceeds the fair market value of the goods or services received in return still applies generally to all quid pro quo contributions. The $75 threshold pertains only to the obligation to disclose and the imposition of the $l0 per contribution penalty, not the rule on deductibility of the payment.