Earlier this summer, the IRS published a memorandum, casting serious doubt on whether NIL collectives qualify for tax-exempt status under Section 501(c (3) of the Internal Revenue Code. Beyond the NIL context, and while not directly addressed in the IRS memorandum, the memorandum raises questions regarding whether (and to what extent) an organization described in Section 501(c)(3) of the Code can rely on a favorable determination letter from the IRS. This presentation will explore (1) the consequences the memorandum may have on NIL collectives relying on a favorable IRS determination letter; (2) the rules pertaining to a tax-exempt organization’s reliance on its favorable determination letter; and (3) when retroactive revocation may be appropriate for organizations that filed a Form 1023 with a material omission or misstatement of fact.
Key topics to be discussed:
The tax-exempt status of NIL collectives after recent IRS guidance
Tax-exempt organization reliance on favorable IRS determination letters
Retroactive vs. prospective revocation of tax-exempt status
Strategies for guarding tax-exempt status
Date / Time: November 9, 2023
Elizabeth A. Prendergast | Michael Best & Friedrich LLP
Beth devotes her practice to advising nonprofit organizations in complex tax, governance, and compliance matters. Her tax exempt clients range from grassroots organizations to international establishments and include private foundations, public charities, religious organizations, educational institutions, advocacy groups, and trade associations, among others.
Beth focuses in the areas of tax-exempt entity formation, social enterprise, public-private partnerships, nonprofit governance and compliance, complex tax-exempt structuring, nonprofit mergers and consolidations, and compliance with state charitable solicitation laws.
As a seasoned corporate attorney with a passion for community development, Beth also helps mission-driven companies design and implement market-based strategies to maximize both financial and social returns.
As a co-leader of Michael Best’s Environmental, Social & Governance (ESG) group, Beth advises clients on ESG initiatives, working with leadership teams and external stakeholders to successfully reach organizational goals while achieving positive social change.
Before joining our firm, Beth founded her own firm, providing corporate legal services to social ventures and nonprofit organizations. She also practiced with a Chicago-based law firm where she helped mission driven organizations reach maximum impact at the intersection of business and social impact.
I. The tax-exempt status of NIL collectives after recent IRS guidance | 2:00pm – 2:15pm
II. Tax-exempt organization reliance on favorable IRS determination letters | 2:15pm – 2:30pm
III. Retroactive vs. prospective revocation of tax-exempt status | 2:30pm – 2:45pm
IV. Strategies for guarding tax-exempt status | 2:45pm – 3:00pm