There are several issues that have been moving on the federal front that deserve attention from charitable leaders.
- Federal overtime rules. A major issue of concern for some charities is whether new U.S. Department of Labor standards on overtime pay affect their employees. The changes, which take effect December 1, 2016, update the salary levels for white-collar workers who are exempt from overtime pay requirements. The change raises that level from $23,660 a year to $47,476 annually. Workers paid below those levels are deemed to be eligible for overtime pay for employers that are covered by the Fair Labor Standards Act. The Department of Labor has created a publication for nonprofit organizations about these changes. Visit the department’s website to find additional information about which kinds of organizations and employees that are affected by the change.
- Fees to seek tax-exempt status. The Internal Revenue Service (IRS) has lowered the fee for organizations seeking tax-exempt status under the new Form 1023-EZ procedures. Organizations seeking tax-exempt recognition that have assets of less than $250,000 and receipts of less than $50,000 are eligible for the shortened process. The fee was previously $400 and now will be $275. The fees must be paid online by credit or debit card, or directly from a bank account.
- Political activity restrictions. During this campaign season, it is critical that leaders of 501(c)(3) organizations remain mindful of the restrictions against political activities, including endorsements and contributions to candidates’ campaigns. Inappropriate political activities can result in revocation of a group’s tax-exempt status. The prohibited activities do not include preclude charitable organizations from engaging in lobbying or attempting to influence legislation, as long as those activities are insubstantial in relation to their exempt purpose activities. Additional information about the permissible and impermissible political and lobbying activities of charities can be found on the IRS website.