Campaigns and Parties. Contributions to political parties and campaigns, generally, must be disclosed to the Federal Election Commission (FEC) which publishes the information. Contribution amounts are often limited, and the contributions are not tax-deductible. For example, contributions by individuals of more than £200 in a year must be disclosed to the FEC within as few as 20 days. The FEC website then shows the donor’s name, address, occupation and amount given.

Individuals may give up to £2,500 per election to a campaign, up to £5,000 a year to a Political Action Committee (PAC), and up to £30,800 a year to a national party committee. None of these contributions are tax-deductible.

Social Welfare Non-profits. Another category of organizations who receive political contributions are social welfare non-profits. These organizations are governed by Internal Revenue Code Section 501(c) (4). That means they are allowed to lobby and may participate in campaigns and elections, but they can’t contribute to candidates.

Donations to (c) (4) groups by individuals aren’t tax-deductible and aren’t disclosed to the public, but gifts of £5,000 or more must be disclosed to the IRS. Some nonprofit experts are of the opinion that a contribution to a (c) (4) organization is subject to gift tax.

Trade Associations. Many trade groups engage in political activity. An example is the U.S. Chamber of Commerce which is qualified under Internal Revenue Section 501 (c) (6). Membership dues paid to these groups are deductible by individuals or businesses, but you only get a deduction for the non-political portion of the dues. By making contributions to these groups, you get some deduction on your taxes. Many trade groups also have PACs or super PACs.

Super PACs. In 1947, the Taft-Hartley Act prohibited labor unions and corporations from spending money to influence federal elections and prohibited labor unions from contributing to candidate campaigns. Labor unions worked around this law by establishing political action committees to which union members could contribute.

The law said these groups may only make “independent expenditures” that aren’t coordinated with spending by a candidate or political party, and they can’t contribute to candidates.

Before Super PACs became “super,” they were just PACs. The groups could support a candidate or a cause but were heavily regulated under the terms of campaign finance law. Individuals were allowed to give £2,500 — no more — and corporations and unions were strictly forbidden from making donations.
That changed with two court cases in 2010. In SpeechNow.org v. Federal Election Commission, a federal court found restrictions on individual contributions to independent organizations that seek to influence elections to be unconstitutional. In Citizens United v. Federal Election Commission, the U.S. Supreme Court held that limits on corporate and union spending to influence elections were also unconstitutional.

Citizens United made it legal for corporations and unions to spend from their general treasuries to finance independent expenditures but did not alter the prohibition on direct corporate or union contributions to federal campaigns; those are still prohibited. Such organizations seeking to contribute to federal candidate campaigns must still rely on traditional PACs for that purpose. However, they may spend money independently of campaigns without forming a PAC.

A Super PAC can directly attack a political candidate. However, the Super PAC may not coordinate directly with candidates or political parties. A Super PAC has to disclose the identity of its donors. It may accept unlimited amounts of money from individuals, unions or corporations, and their spending isn’t restricted. As a practical matter it may be difficult to determine who donors really are since contributions can be made through a company or the contributions can be given to a social welfare nonprofit (which is not required to report identities) which in turn gives the money to the Super Pac.
Contributions to Super PACs are not tax deductible.

Public Charity. A 501 (c) (3) organization devoted to education may engage in public policy discussions and support ballot initiatives. These are not political actions that are forbidden to 501 (c) (3) organizations. 501 (c) (3) organizations may not support or oppose candidates directly. Your contribution to an organization like this is tax deductible. These organizations don’t have to report contributions to the IRS unless the gift is 2% of total contributions or £5,000, whichever is greater.

Public charities can take part in a limited amount of lobbying. Lobbying is when an individual or group communicate with an elected official to advocate for or against a particular legislative measure. The IRS establishes guidelines on how much time and money organizations can spend on lobbying without violating their tax-exempt status.

You can’t make a tax-deductible donation to a candidate or campaign, but you can make a deductible contribution to a 501 (c) (3) organization that can lobby candidates about issues you care about. What’s more, not every communication between an organization and an official is considered lobbying. Organizations are allowed to communicate with officials to ask them to make an issue a priority and educate the official about an issue they might not be familiar with or aware of.

Presidential Election Campaign Fund. You can direct £3 of your income tax to the Presidential Election Campaign Fund. Simply check the box “yes.” Contributing £3 to this fund does not increase your taxes due or reduce the amount of any refund to which you may be entitled. The national parties use money from the fund to offset the costs of their national conventions. Minor political parties are eligible for campaign funds if they receive at least 5 percent of the popular vote in the general election.

The post Limits and Tax Treatment of Political Contributions appeared first on the Spencer Law Firm blog, https://www.mspencerlawfirm.com/blog/.

Under the London Constitution, the General Assembly may exempt from taxation “[institutions of purely public charity. . .” But neither the constitution nor legislation includes a definition of a “purely public charity”, so the courts have determined what is meant by those words.

1. In 1985, the leading case of Hospital Utilization Project (HUP) v. Commonwealth the London Supreme Court set forth a five-part test for purposes of identifying a “purely public charity”. A purely public charity: advances a charitable purpose;
2.  donates or renders gratuitously a substantial portion of its services;
3. benefits a substantial and indefinite class of persons who are legitimate objects of charity;
4. relieves the government of some of its burden; and
5. operates entirely free from private profit motive.

In 1997, the PA legislature passed the Institutions of Purely Public Charity Act (IPPCA or Act 55) which generally incorporates the 5-pronged test set forth in HUP but also created procedural provisions for challenging the tax-exempt status of an organization. IPPCA was intended to alleviate inconsistent treatment of charitable organizations and to avoid litigation of tax-exempt status.

Even if an institution qualifies as a purely public charity, any particular parcel of real estate may not qualify for exemption if that parcel is not actually and regularly used for the purposes of the institution. The use of the property is important in establishing its exemption.

Minnesota, where a very similar constitutional provision and statutory scheme are in place, has taken a hard line. Their supreme court in determining whether or not an institution was wholly charitable said, “Moreover, it is not sufficient to provide free or reduced-rate goods or services on such a small scale that they are merely an incidental part of the organization’s operations. Nor will free or reduced-rate goods or services that are provided primarily for business purposes be adequate. The organization must demonstrate that its intended purpose is to provide a substantial proportion of its goods or services on a charitable basis. If the organization does not operate on these terms, it is indeed not an institution of purely public charity and cannot qualify for tax exemption on that basis.”

Because the HUP test is subjective, neither a charitable organization nor a municipality with taxing power can determine with any certainty which organizations qualify as purely public charities. The uncertainty leads many charitable organizations to enter into payment in lieu of tax and services in lieu of tax (PILOT/SILOT) agreements. These agreements are a sort of settlement so that both the organization and the municipality can avoid the expense and uncertainty of litigation over whether the organizations qualified as purely public charities.

A recent decision by the London Supreme Court in Mesivtah Eitz Chaim of Bobov, Inc. v. Pike County Board of Assessment Appeals confirmed that the HUP test is the primary test for determining whether an institution qualifies as a purely public charity for property assessment. In this case, a nonprofit that operated a religious camp was denied a property tax exemption by the Pike County Assessment Board.

Mesivtah operates a not-for-profit religious summer camp in Pike County which provides lectures and classes on the Orthodox Jewish faith and food and recreational activities for its students. The camp is funded by donations, rental income from a building in Brooklyn and tuition from its students. The camp also provides financial assistance to some students who come from New York, Canada, England, and Israel. Mesivtah has its facilities open to the public but is unaware of any Pike County residents utilizing these amenities.

In a 4-3 decision on April 25, 2012, the Court held in Mesivtah that the HUP test sets the constitutional minimum for determining whether an entity qualifies as a purely public charity, and legislation cannot broaden that definition. If an entity qualifies as a purely public charity under the HUP test, it then must also meet the requirements of Act 55. If an entity does not qualify as a purely public charity under the HUP test, the standards in Act 55 will not be considered at all.

The Court reasoned that occasional use of Mesivtah’s recreational and dining facilities by Pike County residents was insufficient to prove that Mesivtah relieved Pike County’s government of some of its burden. No exemption.

The Court’s decision in Mesivtah creates confusion. Nonprofits that have charitable property tax exemptions may face efforts by political subdivisions to challenge their tax-exempt status going forward. Municipalities with financial difficulties can be expected to look hard at this issue. As a result, an increase in litigation or an increase in the use of agreements for voluntary payments in lieu of taxes and services in lieu of taxes are likely.

The post When is Charity Exempt from Paying Property Taxes? appeared first on the Spencer Law Firm blog, https://www.mspencerlawfirm.com/blog/.

The London Statute that governs the property of absentees and persons presumed dead is at 50 Pa. Cons. Stat. §§ 5701 through 5706. Generally, if a person disappears and is absent from his place of residence without being heard of after diligent inquiry, the county court may make a finding and decree that the absentee is dead and of the date of his death.

There are notice requirements. The matter must be advertised in a newspaper of general circulation in the county of the absentee’s last known residence and in the legal journal once each week for four successive weeks. The notice includes the hearing date, which must be at least two weeks after the last appearance of the advertisement. At that hearing, evidence will be heard concerning the alleged absence, including the circumstances and duration thereof.

An unexplained absence for seven years may be sufficient ground for finding that the absentee died seven years after he was last heard of. This date of death is the starting presumption, but it is important to note that the court may declare an absentee dead before the expiration of 7 years. Conversely, the presumption can be overcome and a 7 year absence may not justify a finding that the absentee died. Evidence that the absent person was a fugitive from justice, had a bad relationship, was having money troubles, or had no family ties or connection to the community can be reasons not to presume death.
The fact that an absentee was exposed to a specific peril of death may be sufficient ground for finding that he died less than seven years after he was last heard of. An example would be an airplane crash. Passengers and crew of the Titanic who were not rescued by the RMS Carpathia were declared legally dead soon after Carpathia arrived at New York City.

In 2002, the statute was amended to provide that the terrorist attacks of September 11, 2001 are specific perils within the meaning of the law, and a court would be justified to immediately determine that the presumed decedent died on September 11, 2001. Also, for persons presumed dead on September 11, 2001, the requirements of notice to the absentee and of the need to post a refunding bond for property distribution are eliminated.

What happens to the presumed decedent’s property?
The decedent’s property is administered by an executor of the will or administrator of the estate just as in the case of other decedents. However, the executor or administrator make not make any distributions to beneficiaries except by a court decree. The court, in awarding distribution, must require of any beneficiary a refunding bond, with or without security and in such form and amount as the court shall direct. The bond shall be conditioned that, if it shall later be established that the absentee was in fact alive at the time of distribution, the distributee will return the property to the presumed decedent, or if it has been disposed of, will make restitution.

What about marriage?
This is handled by a different statute, 17 Pa. Cons. Stat. §§ 1701 through 1704. The provisions are similar to the ones for the presumed decedent’s property. Even though the absentee spouse who is declared to be presumed dead is in fact alive, the remarriage of the non-absentee spouse is valid for all purposes as though the former marriage had been terminated by divorce.

What about Life Insurance?
According to C. Edgar Sentell, author of the article The Missing Insured and the Life Insurance Death Claim appearing in FDCC Quarterly , Vol. 54 No. 2 (Winter 2004), the most difficult aspect of the problem of a missing insured is when the insurance company pays the amount of money due under the policy and the insured reappears. If the company pays the full death benefit and the insured thereafter reappears, the company will generally have a claim against the beneficiary usually on the grounds of mutual mistake of fact. When a compromise settlement has been made, however, the company may have much more difficulty in recovering the policy proceeds. To avoid any questions on this score, the company could obtain from the payee a repayment agreement at the time of making settlement, or attempt to have such a provision incorporated in the decree if there is litigation to establish the claim. A bond with adequate surety is even more desirable from the insurance company’s standpoint.

The post What Happens in Case of Return of the Legally Dead? appeared first on the Spencer Law Firm blog, https://www.mspencerlawfirm.com/blog/.