Foley Hoag LLP

SUMMARY

On January 21, 2012, the Internal Revenue Service (IRS) released a revised version of Form 990 and accompanying instructions and schedules for tax year 2011. Notable changes to Form 990 and its associated schedules relate to joint ventures, investment partnerships, compensation disclosure and hospitals. In addition, the instructions to the revised form include many clarifications that were lacking in previous guidance.

SUMMARY

On Tuesday, September 27, 2011, the Massachusetts Joint Committee on the Judiciary heard testimony on H.3516 – a bill that would regulate compensation of board members for public charities. [more...]

SUMMARY

On April 14, 2011, the Massachusetts Attorney General issued a report outlining two steps that the Attorney General will take to limit – but not explicitly ban – independent director compensation at public charities. [more...]

SUMMARY

Directors of nonprofit corporations owe fiduciary obligations to the corporation. They are bound by Massachusetts law to perform their duties as directors in good faith, in a manner reasonably believed to be in the best interests of the corporation, and with such care as an ordinarily prudent person in a similar position would exercise under similar circumstances. As stewards of the nonprofit corporation, directors are required (1) to act with care in their oversight and, (2) to keep the interests of the corporation paramount above their own personal interests when acting for, or on behalf of the corporation. These legal duties are known as the duty of care and the duty of loyalty.

SUMMARY

Regulators continue to challenge executive compensation paid by nonprofit organizations. Indeed, even the commercial sector saw an outcry against executive compensation levels in the context of the recent bank bailout program, resulting in some limitations. State regulators are questioning the amount of compensation paid to nonprofit executives and the governing boards’ methods of setting the compensation. Recent examples in Maryland, Massachusetts, and New Jersey illustrate their displeasure and willingness to charge nonprofit organizations with a failure to properly justify compensation levels and poor governance practices. On occasion, the regulators discount reliance on comparability data - a key component in the IRS “rebuttable presumption” procedures for determining reasonable compensation. Through the questions addressing executive compensation on the revised Form 990 and recent compliance initiatives in the healthcare and education sectors, the IRS has also signaled its concerns about executive compensation.

SUMMARY

Organizations that have not filed a Form 990 with the Internal Revenue Service for the past three years risk losing their tax exemption if they do not file the applicable Form 990 by Monday, May 17, 2010. The IRS issued a reminder to this effect on January 21, 2010, stating:

“The Pension Protection Act of 2006 requires that non-profit organizations that do not file a required information form for three consecutive years automatically lose their Federal tax-exempt status. This requirement has been in effect since the beginning of 2007. " [more...]

SUMMARY

On December 21, 2009, President Barack Obama signed into law an extension of the federal COBRA subsidy created by the American Recovery and Reinvestment Act of 2009 (“ARRA”).

SUMMARY

The compensation practices of nonprofit organizations in Massachusetts just became subject to increased scrutiny. The Non-Profit Organizations/Public Charities Division of the Office of the Attorney General of Massachusetts announced yesterday that it is turning its attention to compensation paid by health care systems and health care insurers to their executives and directors. Depending on the outcome of its investigation and new reporting requirements, the Division may expand its review to other sectors.

SUMMARY

In Massachusetts, charitable corporations, trusts and associations are not liable for more than $20,000 in damages for injuries (“torts”) caused by the organization while engaging in charitable activities. An organization will be categorized as charitable if “the dominant purpose of its work is for the public good.” Its activities will be characterized as charitable if they contribute directly to its charitable purposes. (more...)

SUMMARY

Massachusetts recently joined 39 other states and the District of Columbia by enacting a version of the Uniform Prudent Management of Institutional Funds Act (UPMIFA). Most notably, and in contrast to prior law, UPMIFA permits Massachusetts institutions that hold funds exclusively for charitable purposes to tap into endowment funds whose values have depreciated below their “historic dollar values” (i.e., “underwater” endowment funds). The new law, which is effective as of June 30, 2009, also applies to funds held by a trustee for a charitable community trust.

SUMMARY

As a follow up to our June 18, 2009 Foley Adviser, we note that the Internal Revenue Service (the “IRS”) has announced an extension to the previously announced deadline for the Treasury Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts, commonly known as an “FBAR”) from June 30, 2009 to September 23, 2009 (without penalty) for filers who have paid all taxes and reported all income for 2008.

SUMMARY

Two recent laws, the American Recovery and Reinvestment Act of 2009 (“ARRA,” commonly known as the stimulus package) and the Edward M. Kennedy Serve America Act, provide funding opportunities for nonprofits and social entrepreneurs to expand their services and accommodate additional volunteers. Organizations can apply for ARRA funds immediately. While funding for the Serve America Act will depend upon the 2010 federal budget, organizations may wish to assess their needs now in anticipation of the Act going into effect on October 1, 2009.

SUMMARY

As a result of a new requirement first implemented in 2008, tax-exempt organizations with gross receipts of $25,000 or less may be required to file IRS Form 990-N, the “e-Postcard.” The e-Postcard must be filed no later than the 15th day of the fifth month following the end of the organization's tax year. For example, an organization whose tax year ends December 31 must submit the e-Postcard by the following May 15.

SUMMARY

Under new regulations effective January 1, 2009, any pass-through entity that maintains an office or engages in business in Massachusetts must withhold tax on a quarterly basis from each member’s share of the entity’s Massachusetts source income, unless either the entity itself is exempt from this requirement or the member timely certifies that it is exempt. This withholding obligation applies regardless of whether the pass-through entity actually makes any distributions to its members.

SUMMARY

On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (the “Act”). The new law is the centerpiece of President Obama’s efforts to create jobs and revive the economy and includes over $787 billion in spending and tax incentives.

In particular, the Act represents a multi-prong approach to stimulating innovation and encouraging investment in the energy and clean technology sectors. It includes new energy-related spending and tax incentives as well as expands existing tax incentives for businesses and individuals. A summary of certain key provisions is provided below.

SUMMARY

Providing strategic advice and litigation services to our business clients nationwide

Our long-standing strength in representing employers in labor relations and employment litigation defense issues is complemented by our experience in dealing with the emerging issues confronting employers in the 21st century.

Our goal is to provide pragmatic business advice and a cost-effective approach aimed at helping our clients achieve results – prompting those clients to place our Labor and Employment lawyers at the top of the Chambers USA rankings for four consecutive years.

Topics include:

• Labor Law Strategies
• Wage and Hour Litigation
• Non-Competition Agreements and Related Issues
• Employment Discrimination and Harassment Litigation
• Wrongful Discharge and Other Disputes
• ERISA and Benefi ts-Related Litigation
• Business Immigration Services
• Preventative Counseling

SUMMARY

Most public charities organized, operating or soliciting funds in Massachusetts are required to file Form PC with the Massachusetts Attorney General’s Non-Profit Organizations/Public Charities Division within four and one-half months of the end of each fiscal year.  The Form PC requires several attachments, including financial statements for public charities having minimum amounts of gross support and revenue.  The Massachusetts legislature increased the minimum threshold for filing such statements from $100,000 to $200,000.

SUMMARY

The Internal Revenue Service (IRS) has released final instructions for completing the Form 990, the annual information return filed by most non-profit entities, which has undergone its first major redesign in almost 30 years.  The new Form 990 will be phased in over three years, starting with fiscal years beginning on or after January 1, 2008.  The old Form 990 will not be accepted beginning with the 2008 tax year.  Full instructions on the new Form 990 are available on the IRS Web site.

SUMMARY

We know that the recent financial crisis and related economic downturn unfortunately are causing many employers to consider ways to reduce operational expenses, including through workforce restructuring and layoffs. We offer a few preliminary considerations: any such reduction-in-force (RIF) must be carefully planned and executed both to minimize exposure to liability under various employment laws and to mitigate negative effects on employee morale and operations. The following are some issues for employers to consider as they grapple with whether and how to implement a layoff.

Questions Include:

• Is a Layoff Necessary?
• Voluntary or Involuntary Program?
• Develop Uniform Selection Criteria
• Conduct a Layoff Analysis
• Is Advance Notice Required
• Severance and ERISA
• Asking for a Release
• Don't Forget Immigration Implications
• Don't Lose Sight of Termination Basics

SUMMARY

Chapter 151B, the Massachusetts anti-discrimination statute, does not apply to small employers, meaning those with fewer than six employees. However, last Friday, the Massachusetts Supreme Judicial Court (“SJC”) held that an employee may nonetheless sue a small employer for discrimination under the Massachusetts Equal Rights Act. The decision has potential ramifications for all employers -- large or small -- because it suggests that a plaintiff has a claim for discrimination under the Massachusetts Equal Rights Act whenever Chapter 151B does not apply, such as discrimination claims brought by non-employees.