Economic Stimulus Rebate 

Many Americans Unaware They Qualify for Federal Economic Stimulus Rebate

Many members of the population served by nonprofit organizations are not aware they qualify for a rebate as a result of the Federal Economic Stimulus Plan passed by the U.S. Congress in February.

The following is from the IRS information package, Information about Economic Stimulus Payments for Social Security, Veterans, and Other Beneficiaries, available at the IRS website:

The United States Congress passed and President George W. Bush signed into law the Economic Stimulus Act of 2008.  The law provides for economic stimulus payments to be made to over 130 million American households.  The payments will be starting in May 2008.  However, to receive a payment in 2008 you have to file a 2007 tax return.

If you do not have to file a 2007 tax return for tax purposes, you still need to file a return in order to receive an economic stimulus payment.  You are eligible for a payment if you have a total of $3,000 or more in qualifying income.  Qualifying income is –

·       Earned income;

·         Social security benefits (including social security disability payments;

        Supplemental Security Income (SSI) payments do not count towards

        qualifying income);

·       Certain railroad retirement benefits;

·       Certain veterans’ benefits; and

·       Nontaxable combat pay.

File a Form 1040A with only a few lines filled in to receive your economic stimulus payment.  You may also file electronically free.  Visit www.irs.gov and click on the free file icon.

You should file as soon as possible, but to be sure that you receive your stimulus payment in 2008 you must file Form 1040A with the IRS by October 15, 2008.

Many people who no longer file returns because they do not pay taxes on their Social Security and/or benefit payments may find the prospect of filing a Federal income tax return overwhelming.  (Filing a state income tax return IS NOT required.)  To help those people, in late March 2008, the IRS will mail a packet of information to recipients of Social Security benefits who did not file a tax return last year.  The IRS website also contains information for free tax preparation by volunteers.

The IRS is also warning tax filers to be aware of a number of scams relating to the economic stimulus rebate.  People should never provide their social security numbers in an email message or over the telephone.  The IRS does not email or call tax filers requesting information.  People should also stay away from individuals or businesses offering advance payments on the rebate.

Federal Acquisition Regulation (FAR), Contractor Code of Business Ethics and Conduct

A recently issued Federal Acquisition Regulation (FAR) final rule prescribes policies and procedures for the establishment and dissemination of a written business ethics code, education and enforcement of ethical rules of conduct, and the display of fraud hotline posters.

The FAR final rule affects business entities awarded Federal contracts:

·         Beginning on or after December 24, 2007;

·         Valued at more than $5 million;

·         With a performance period of at least 120 days;

·         That were not awarded under Part 12; and

·         With contract work that will be performed within the United States.

The FAR final rule requires businesses with Federal contracts meeting the above specifications to:

Within 30 days after the contract award:

·    Write a code of business ethics and conduct; and

·    Provide a copy of the code to each employee engaged in performance of the contract.

Within 90 days after contract award:

·    Establish an ongoing business ethics and business conduct awareness program; and

·    Implement an internal control system that facilitates timely discovery of improper conduct in connection with Government contracts and carries out corrective measures.

During the contract’s performance period:

Prominently display in common work areas within business segments performing work under this contract and at contract work sites any agency fraud hotline poster or Department of Homeland Security (DHS) fraud hotline poster.  Additionally, if the contractor maintains a company website as a method of providing information to employees, the contractor shall display an electronic version of the poster (s) at the website.

If the contractor has implemented a business ethics and conduct awareness program, including a reporting mechanism, such as a hotline poster, then the contractor does not need to display any agency fraud hotline posters, other than any required DHS posters.

The contractor can submit a request to the contracting officer for an extension on the 30-day time period for preparation of a code of business ethics and conduct and the 90-day time period for establishment of an ethics awareness and compliance program and internal control system.

A copy of the FAR final rule is available at the Federal Register website, Vol. 72, No. 225, November 23, 2007, pages 65873–65882.

IRS Code Section 501(h): An Option for Nonprofits Interested in Influencing Legislation

During the current presidential election year, the IRS appears to be increasing its scrutiny of nonprofits engaged in political activity.  However, certain nonprofits interested in influencing legislation for their strategic future, their clients, or the populations they represent should consider an IRS election that defines the type of activities and the monetary boundaries of this particular type of political activity.

The U.S. Federal tax law strictly prohibits public charities that apply for tax exempt status under IRC Section 501(c)(3) from engaging in political campaign activity on behalf of or in opposition to any candidate for public office on the Federal, state or local level.  In addition, 501(c)(3) nonprofit organizations will lose their tax-exempt status if a “substantial part” of their activities consists of attempting to influence legislation.  However, the restrictions do not prevent 501(c)(3) nonprofit organizations from engaging in any and all forms of political activity.  As long as the advocacy and influencing of legislation is not a “substantial part” of the nonprofit’s day to day activities, a 501(c)(3) organization can lobby for legislative change.

For a subset of 501(c)(3) organizations, the influencing of legislation or “lobbying” is made easier by the IRC Section 501(h) election.  Section 501(h) and its companion, Section 4911, eliminate the need to determine how much lobbying is “substantial” and define how to determine the organization’s monetary limits.   Section 4911 defines the types of lobbying allowed under the 501(h) election (direct lobbying and grass roots lobbying) and provides calculations on the monetary limits of grass roots lobbying expenditures and the combined total lobbying expenditures as a percentage of the public charity’s total “exempt purpose expenditures” (i.e., the organization’s budget less various fundraising and capital costs).

IRC Section 501(h) contains a list of public charitable tax-exempt organizations allowed to choose the 501(h) election and descriptions of ineligible organizations.  The following are eligible organizations:

• Educational institutions;
• Hospitals and medical research organizations;
• Organizations supporting government schools;
• Organizations publicly supported by charitable contributions;
• Code Sec. 509(a)(2) organizations publicly supported by admissions, sales, etc.; and
• Certain Code Sec. 509 (a)(3) organizations supporting certain types of public charities.

For those eligible nonprofits that want to take the 501(h) election, they must file IRS Form 5768, Election/Revocation of Election by an Eligible Section 501(c)(3) Organization to Make Expenditures to Influence Legislation.  As with any issue regarding the U.S. Federal tax law, nonprofit organizations should consult their legal or accounting professionals before making a final decision.  Nonprofit organizations should also seek counsel on state specific lobbying restrictions for nonprofit organizations.

Nonprofit organizations do not have to surrender the right to participate in the political process and advocate for their clients and the populations they serve.  Eligible public charities can take advantage of the defined procedures and guidelines for lobbying activities and expenditures available by electing the 501(h) option.