Experienced Non-Profit Organization Attorney for Board Members Facing IRS Issues

501(c)3 not-for-profit organizations operating in the United States enjoy the benefit of state and federal tax exemptions. Under the current tax code, the nonprofit must be able to show that earned income is directly related to supporting its mission, is guided by a voluntary Board of Directors, and uses a substantial percentage of its earnings to programs and services according to its mission. The exemption does not pertain to staff members or consultants who derive an income from the organization.

What Is a UBIT?

UBIT is nonprofit industry jargon for unrelated business income tax. Nonprofit organizations often get into trouble with the IRS because they make improper judgment calls about what is mission-related income and what will be viewed as earned income that is unrelated to the fulfillment of their mission. For example, donations made to the organization are tax deductible for the donor, and must be used as either directed or undirected funds. Under nearly all circumstances, donation funds are tax exempt. On the other hand, a faith-based organization with a mission to serve meals to the underprivileged might have trouble justifying tax exempt status on income earned from the sale of a private-label product line that has no outward connection to the mission.

Non-Profit Organizations Are Typically Incorporated. Who Is Responsible?

Members of the Board of Directors ultimately share responsibility for resolving tax matters with the IRS. This can include being charged with UBIT evasion, tax fraud and other civil penalties. Individual members of the staff, up to and including the executive director, may also be charged with tax fraud if it is determined that criminal activity occurred without the Board's knowledge or direction.

If you are a board member or an executive facing an IRS audit or investigation, talk to attorney Angelique M. Neal in Brighton, Michigan. Ms. Neal is a former IRS lawyer and Special Assistant United States Attorney with more than 15 years of experience in federal and state tax law matters. The Law Offices of Angelique M. Neal, PLC, is recognized for efficient, cost-effective resolutions and strategies to help avoid future problems.

Serving Non-Profit Boards Throughout Michigan, the Midwest and the Nation

From offices in Brighton, Michigan, tax lawyer Angelique M. Neal represents clients throughout the state, the Midwest and the United States. Wherever you are, call toll free 888-351-8395 or contact the firm by e-mail to arrange a consultation with an experienced national attorney for tax exempt organizations.