Taxes

Congratulations to The Lens on its Section 501(c)(3) Determination!

The Digital Media Law Project would like to congratulate The Lens, the New Orleans area's first nonprofit, nonpartisan public-interest newsroom, on obtaining a positive ruling on its Section 501(c)(3) status from the Internal Revenue Service!

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The IRS Comes Through for San Francisco Public Press

I am very pleased to be able to share the news that, after more than two and a half years, the nonprofit San Francisco Public Press has finally received recognition of its tax exempt status from the IRS under Section 501(c)(3) of the Internal Revenue Code.

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The IRS and User-Generated Content

As we have reported previously, the Digital (nee Citizen) Media Law Project has been following a trend in delays at the Internal Revenue Service relating to Section 501(c)(3) tax exemptions for nonprofit journalism organizations.

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FTC's Provocative Discussion Paper on Saving Print Media

The Federal Trade Commission—which last year created guidelines to impose ethical standards on bloggers—is now taking on the ambitious task of saving the print media in the Internet era.

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Senator Cardin Introduces Bill to Allow Newspapers to Operate as Nonprofits

United States Senator Benjamin Cardin today introduced legislation that would allow newspapers to become nonprofit organizations in what he described as "an effort to help the faltering [newspaper] industry survive."

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Officials in Deltona, Florida Seek to Use Taxpayer Money to Fund Libel Lawsuits

Reacting to online criticism of its elected officials, the city of Deltona, Florida has authorized city employees to file libel lawsuits at taxpayers' expense.  On February 16, City commissioners voted 4-3 to pass this resolution:

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The Unspoken Peril for "Citizen Journalists" Surprise! You Owe the IRS Some Gift Tax!

StinkyJournalism.org: The Unspoken Peril for "Citizen Journalists" Surprise! You Owe the IRS Some Gift Tax!

Is the “donation” of a citizen’s content (video, articles, commentaries, images) to for-profit media outlets that exceeds a fair market value of $12,000 in any single year subject to gift tax? Judging from the IRS guidelines, the answer is “yes.”

This is a surprise, and an unwelcome one.

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New York City and District of Columbia Taxes

While many cities collect income taxes that are separate from and in addition to state and federal taxes, New York City taxes are notoriously complicated and burdensome -- not only re-taxing corporate business profits, but also collecting taxes from otherwise untaxed entities like LLCs, partnerships, and sole proprietorships.

Unincorporated Business Tax (New York City and Washington, D.C.)

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Introduction to the 501(c)(3) Application Process

We strongly recommend seeking the assistance of an attorney in applying for Section 501(c)(3) status. If you choose to apply for 501(c)(3) tax exemptions yourself, set aside an entire day to devote to the form; the IRS says it takes ten hours for the average person to complete. It is also important to understand how the IRS evaluates these applications; you can find more information about that process here.

Nonprofit Organization

Surprisingly, there is no legal definition of a nonprofit organization. In general, a nonprofit organization is one that is organized to achieve a purpose other than generating profit. Despite this, a nonprofit organization is not precluded from making a profit or engaging in profit-making activities. It is prohibited from passing along any profits to those individuals who control it, like founders, directors, officers, employees, and members. Nothing, however, prevents a nonprofit from paying reasonable salaries to officers, employees, and others who perform a service for it.

Double Taxation

The profits of corporations are taxed twice -- once at the entity level (at the applicable state and federal corporate income tax rate), and again at the individual level when profits are distributed to individual owners as dividends (at the applicable individual income tax rate).

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