Richard Keyt, Author at KEYTLaw's Blog

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IRS Announces One-Time Filing Relief for Small Tax Exempt Organizations That Failed to File for Three Consecutive Years

Federal tax law provides that a tax-exempt organization that does not file appropriate tax returns for three consecutive years automatically loses its tax-exempt status. The IRS announced that it is giving one-time relief for small exempt organizations that failed to file for three years to reinstate compliance and retain tax-exempt status. Tax-exempt organizations that lose their exemptions must reapply for tax-exempt status. Income received by the organization while it is not tax-exempt may be taxable.

The IRS posted a list of organizations that may lose their tax-exempt status. See the list of Arizona tax-exempts that are in jeopardy. The listed organizations have until October 15, 2010, to file all necessary returns to reinstate their tax-exempt status.

If your organization needs to reinstate its tax-exempt status there are two options:

Small organizations that file Form 990-N should obtain this form from the IRS website and file it by October 15, 2010.
Organizations that file Form 990-EZ (but not eligible to file Form 990-N) should obtain the form from the IRS website and file it by October 15, 2010, plus pay a $100 – $500 compliance fee based on revenue.

Large tax-exempt organizations that must file IRS Form 990 or Form 990-P are not eligible for this one-time relief program.

From the IRS website:

Tax-exempt organizations that fail to satisfy annual filing requirements for three consecutive years automatically lose their tax-exempt status. The IRS is providing one-time relief that will allow small exempt organizations to come back into compliance and retain their tax-exempt status even though they failed to file for three consecutive years. If an organization loses its exemption, it will have to reapply to regain its tax-exempt status. Any income received between the revocation date and renewed exemption may be taxable.

This one-time relief benefits Form 990-N (e-Postcard) and Form 990-EZ filers only. Organizations required to file Form 990 or Form 990-PF are not eligible and are automatically revoked if they fail to file for three consecutive years.

List of organizations at risk of automatic revocation: The IRS website has a list of organizations at risk of losing their tax-exempt status because, according to IRS records, they have not filed for 2007, 2008 and 2009. The list contains the name of the organization and its last-known address. Check this list to see whether your organization is at risk of automatic revocation and can avoid this consequence by following IRS guidance.

Note: The list may be incomplete, as certain organizations may be at risk even though their names do not appear. In addition, the list may include organizations that were required to file Form 990 or Form 990-PF and are not eligible for the relief program, and organizations whose filing dates have not yet occurred.

Additional information:

Filing relief for small organizations – home

News release

Frequently asked questions

Automatic Revocation for Not Filing Annual Return or Notice – overview

Exempt Organization Annual Filing Requirements – Chart

What to do if you think IRS records are in error

Form 990-EZ filing thresholds

F-18 Pilot Ejects Seconds Before His Plane Hits the Ground & Explodes into a Fireball

Video of Canadian CF-18 pilot Brian Bews ejecting from his airplane moments before it strikes the ground and explodes into an orange and black fireball. He was making a low speed pass when he stalled the airplane, i.e., it stopped flying because it lacked minimum flying speed, and flipped over and dropped from the sky. I am sure the pilot had a lot of warning indicators going wild in his headset just before he ejected. It is normally a very bad idea to go low and slow close to the ground because there is not enough altitude to recover if the airplane stalls.

The pilot was very lucky he survived. Too many times the pilot waits too long before ejecting while trying to recover the airplane. Waiting too long usually means death. At some point, it becomes impossible to eject safely, even with a modern high tech zero zero ejection seat. During my days of flying the F-4 Phantom fighter-bomber for the USAF in the 1970s, the official rule was that if the airplane was out of control below 10,000 feet, eject. There is just not much time to correct a problem when traveling at high speeds. The Air Force knows from studying jet fighter accidents that waiting too long to eject has killed a lot of its fighter pilots.

When I was a student learning to fly the Phantom at Luke Air Force Base, Arizona, in 1971 – 1972, an F-4 with two students in it crashed on the Gila Bend gunnery range during a practice bombing mission. The crew was learning how to dive bomb at a 45 degree dive angle. The student pilot got too steep during a dive bomb run. His dive angle was much greater than 45 degrees. The steeper the dive angle, the more altitude it takes to recover the airplane and avoid hitting the ground. The ranger safety officer and the flight leader saw that the student was too steep and warned the student pilot. A steep dive bomb run has less than 10 seconds from starting the dive until pull out, which is not much time while speeding toward the ground at 450 knots.

Somebody realized that the airplane was approaching the point of no return and yelled over the radio for the crew to eject. They did. The backseater ejected safely, but the frontseater hit the ground before his parachute opened. The F-4 front ejection seat fires 3/4 of a second after the backseat fires. That means the frontseater would have lived if he had ejected one second earlier.

Ejection seat technology has saved a lot of lives. The F-4 had a Martin Baker ejection seat with zero zero ejection capability. Zero zero means that a man sitting in the ejection seat fully strapped in would be able to successfully eject if the altitude were zero and the airspeed were zero. The F-4’s ejection seat with its rocket motor could blast a man 300 feet from the airplane. However, zero zero can be offset by the downward velocity of a stricken airplane. For example, if your airplane is descending at 500 knots, that is 845 a second. It the upward velocity of the ejection seat were 300 feet per second, the net downward velocity would be 545 feet per second. If the ejection shoots the pilot out horizontal, then there is no upward velocity to offset the downward velocity.

The ejection seat with its rocket motor is also a very dangerous device. Too many people have been killed and injured from accidental discharges of ejection seats on the ground during maintenance or accidents involving pilots and their seats. The F-4 ejection seat had seven safety pins in it when not in use. All were designed to prevent the accidental firing of the seat. If a single safety pin were not removed, the seat would not fire. Each of the safety pins was connected by a nylon line to all of the other pins. Before getting into the cockpit, we had to check to make sure that six of the seven safety pins were removed and that the seventh pin on the top of the seat was inserted into its slot. We removed the seventh safety pin after sitting in the seat and strapping in, which involved two connections to the survival kit in the seat, one lap belt, two parachute / lap belt connections, and four leg restraints. Although I loved my ejection seat, I was also very much afraid of it.

See still photos of the crash. The black thing below and to the right of the pilot is the ejection seat after it separated from the pilot. See also Flying the F-4 and Dressed for the Aerial Office.

Federal Judge Rules Cheerleading is not a Sport – Yes, Really!

Quinnipiac University dropped volleyball as a girls’ sport because it could not afford the expense so naturally the girls sued. The girls claimed that QU must pay for them to play a college sport because under a federal law known as Title IX, the school could not drop volleyball because then its ratio of mens’ sports participants to womens’ sports participants would drop below that required by Title XI. QU had 62% women and 38% men enrolled during the period in question. Without counting cheerleading as a sport, the percent of women in QU’s sports program fell to a disgustingly low and clearly discriminatory 58%. Big brother cannot allow such an injustice to stand.

Title IX is a perfect example of the federal government having too much power. Title IX does specify participation rules that colleges with sports must follow or experience the wrath (a cut off of federal funds, which means financial death) of the Department of Education. Should government in a free country be dictating to colleges how many girls and boys can play college sports?

QU replaced girls volleyball with less expensive cheerleading, but the federal judge ruled that college cheerleading does not qualify as a college sport and so the number of cheerleaders on the squad will not be counted in determiing if QU has the proper ratio of boys to girls. Result: Ratio test failure and QU must spend more money and continue the girls volleyball team. One of the common solutions colleges have when they are bleeding money on sports and need to keep their ratios up to the federal requirement is to drop both boys and girls teams. This is one reason a lot of mens’ college sports teams have disappeared since the inception of Title IX.

See the judge’s ruling. See also “Judge: Quinnipiac violated female athletes’ rights.”

Internet Sales Tax Eyed for Arizona

Arizona Republic: “Arizona could gain as much as $708 million in 2012 by taxing more Internet, Home Shopping Network, catalog and other out-of-state sales, according to the National Conference of State Legislatures. The catch: It would have to greatly simplify its sales-tax structure, with changes approved by state and federal lawmakers.”

All law students study International Shoe v. State of Washington, 326 U.S. 310 (1945), in constitutional law. The court was asked to decide if the State of Washington could collect unemployment taxes from corporation that had no contacts or office within Washington other than it employed 11 – 13 shoe salesmen permanently in the state. The court said:

“due process requires only that, in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ . . . it has been generally recognized that the casual presence of the corporate agent, or even his conduct of single or isolated items of activities in a state in the corporation’s behalf, are not enough to subject it to suit on causes of action unconnected with the activities there.”

“Whether due process is satisfied must depend, rather, upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure. That clause does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations.”

The lesson of this case is that a state cannot tax or collect money from a person or an entity that does not have minimum contacts with the state. This is also referred to as “nexus,” i.e., the person or entity must have a nexus with the taxing authority.

A more recent and also controlling U.S. Supreme Court case is Quill Corporation v. North Dakota, 504 U.S. 298 (1992). Quill operated an office supply business that sold its products from a catalog mailed to potential customers. It sold over $1,000,000 goods to 3,000+ customers in North Dakota, which sued Quill to force it to collect use tax on sales to North Dakota residents and pay the use tax to the state. Quill did not have any contacts with North Dakota. In ruling that the Due Process clause of the United States Constitution prohibited North Dakota from taxing Quill, the Supreme Court said:

“The Due Process Clause “requires some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax. . . . We expressly declined to obliterate the ‘sharp distinction . . . between mail order sellers with retail outlets, solicitors, or property within a State, and those who do no more than communicate with customers in the State by mail or common carrier as a part of a general interstate business.’ . . . “

“we have framed the relevant inquiry as whether a defendant had minimum contacts with the jurisdiction ‘such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.’ . . . In that spirit, we have abandoned more formalistic tests that focused on a defendant’s ‘presence’ within a State in favor of a more flexible inquiry into whether a defendant’s contacts with the forum made it reasonable, in the context of our federal system of government, to require it to defend the suit in that State. In Shaffer v. Heitner, 433 U.S. 186, 212 (1977), the Court extended the flexible approach that International Shoe had prescribed for purposes of in personam jurisdiction to in rem jurisdiction, concluding that ‘”all assertions of state court jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny.”

Iraq Veteran in Grad School at Harvard Eloquently Explains Why Kagan Should be Rejected for the Supreme Court

We normally don’t get involved in political things like the Elena Kagan confirmation to the U.S. Supreme Court, but I watched and listened to a YouTube video of testimony given by Army Captain Pete Hegseth in the Elena Kagan confirmation hearing in the U.S. Senate that convinced me that the Senate should reject her nomination to the court. The Captain’s statements really hit home with me as a military veteran.

Captain Hegseth is a graduate of Princeton University and is pursuing a masters degree at Harvard University. He is an Iraq war veteran now serving as an infantry officer in the Massachusetts Army National Guard. Please watch the video. The crux of the Captain’s argument against Elena Hagan is:

The U.S. is a nation at war.
Our enemy wants to destroy us.
Kagan’s actions with respect to banning military recruiters at Harvard were unbecoming a civic leader and a nominee for the Supreme Court.
Kagan refused to allow military recruiters to recruit at Harvard because of the military’s don’t ask, don’t tell policy.
Kagan’s action “prevented the military from having equal access to top notch recruits during a time of war.”
“We’re nominating someone who unapologetically obstructed the military in a time of war?”
She impeded, rather than empowered “the warriors who have fought and fallen for this county?
Although Kagan talks nice about the military, “actions always speak louder than words.”
“Miss Kagan’s actions toward recruiters with wars raging overseas undercut the military’s ability to fight and win wars and they trump her rhetorical explanation.”
“In 2004 . . . Miss Kagan took the law into her own hands blocking military recruiters in direct violation of law.”
Kagan said she opposes the military’s discriminatory recruitment policy, “but as a legal scholar she know better. She knows the policy she abhors is not the military’s policy, but a policy enacted by Congress and imposed on the military.”
While at Harvard Kagan invited and met with numerous members of Congress who voted for the don’t ask, don’t tell law.
Harvard law school has three chairs endowed by Saudi Arabia which executes gays.

“The real moral injustice in granting a lifetime appointment is someone who when it matters most, treated military recruiters as like second class citizens.”

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