IRS Rejects 501c3 Status!

[Michael Fisher]

Hmmmm... you know what we COULD do?? We could change into a non-charity with no bank account or income at all.

We could find people who would like financial help to remove their children from government schools, put a profile of them up on our website, and encourage people to send donations to them and notify us about it so we can track how much was raised.

All small gifts to individuals are tax-exempt under all tax laws that I'm aware of. 

Is this EVIL or what?

[Pat McCotter]

Isn't it ironic - you need permission NOT to make a profit.

[FSPinNY]

The Endowment Fund is generating income and will continue to as long as it exists.  As I am not an accountant or a lawyer, I cannot advise us about the taxation of the Fund or the Endowment.  It seems like we need professional advice, but I don't know anyone to ask.  I did ask my professional contacts here in NY previously, but they were not familiar with not for profits and, of course, NH law.

This is indeed frustrating.   ???

I'll bet a coordinated and orchestrated donation "scheme" would raise a red flag as well   

Brian

[Michael Fisher]

Hmmmm... you know what we COULD do?? We could change into a non-charity with no bank account or income at all.

We could find people who would like financial help to remove their children from government schools, put a profile of them up on our website, and encourage people to send donations to them and notify us about it so we can track how much was raised.

All small gifts to individuals are tax-exempt under all tax laws that I'm aware of.?

Is this EVIL or what?

"You may give up to $11,000 a year in cash or assets to an unlimited number of people each year without incurring Gift Tax liability -- so long as there are no strings attached."
"In actuality, the payment of Gift Taxes is relatively rare, thanks to the annual exclusion, and the unlimited marital and charitable deduction."
http://law.freeadvice.com/tax_law/gift_tax_law/gift_taxes.htm

"Taxable gifts generate a Gift Tax. But Gift Tax is not due until you give away over $1,000,000 in your lifetime."
http://law.freeadvice.com/tax_law/gift_tax_law/gift_become_taxable.htm

"Can I pay someone?s medical or education expenses and not be taxed for making a gift?
Yes. In addition to the $11,000 ($10,000 in 2001) annual Gift Tax exclusion, there is a 100% exclusion when you make direct payments FOR someone?s medical bills or tuition expenses. Both the medical and educational exclusions are allowed without regard to the relationship?so the recipient need not be a close relative or your dependent. The payments must be made directly to the medical care provider or the educational institution."
http://law.freeadvice.com/tax_law/gift_tax_law/pay_medical_expenses_tax.htm

This is excellent! ?Nothing we do will be taxed or tracked by the government in any way. ?No forms will need to be filed by anyone. ?Donations will not be taxed. ?We will not even need a government-approved tradename to operate. ?

[Michael Fisher]

The Endowment Fund is generating income and will continue to as long as it exists.? As I am not an accountant or a lawyer, I cannot advise us about the taxation of the Fund or the Endowment.? It seems like we need professional advice, but I don't know anyone to ask.? I did ask my professional contacts here in NY previously, but they were not familiar with not for profits and, of course, NH law.

This is indeed frustrating.? ????

I'll bet a coordinated and orchestrated donation "scheme" would raise a red flag as well? ?

Brian

People beg for money all the time, as individuals, and legally pay no taxes on it.? A few people have created websites begging for help with their tuition, and have paid no taxes on the tens of thousands of dollars they receive in the form of tiny donations from people browsing the web.

How would it raise a red flag if we were to organize something similar for individuals?

We can even have an "endowment fund" aspect to this.? "Donor" organizations and individuals set aside a personal "endowment fund", an investment vehicle that will generate income.? They vow to give all income from these investments to individuals for their tuition.? ?We track the amount of the promised endowment funds of the donors.? Would it be possible for someone to gift cash from the sale of a stock, for example, to an individual for their tuition expenses, without incurring taxes when selling the stock?

Or maybe they could directly gift part of the stock to the family without incurring taxes!? That is, the amount of stock that pertains to how much has been gained in investment income.? That would be even better.? But wouldn't the recipients pay taxes when selling the stock?

This part may be more difficult, or it may not be.? ????? Any idea about this, Brian?

[tracysaboe]

Tracy, I said using the system, not "supporting" the system.

You know, you people who equate "tax breaks" with government support almost remind me of those liberals who can't tell the difference betweem businesses figuring ways to keep more of their own money, and corporate welfare.

It really is nonsence to say that 501(c)3 is "using the system" The system is the taxation system. And if you don't pay taxes you get thrown in jail. 501(c)3 is a legal method of figuring out how to get out of that system. Albiet it does have strings yes, and it's up to you to decide whether those strings are worth it. But you're going to be supporting and working in that same system every time you pay taxes if you aren't 501(c)3. Unless you're planning on simply refusing to pay them. The people who donate to you still have to pay taxes if your not 501(c)3 complient. That's a lot of money going into the system from both you and your donors by you not legally figuring a way out of it.

But you guys are starting to sound like raving liberals who complain that businesses who use loopholes are getting "government benifits."

Please. The system is evil yes, but people who donate to you are in it whether or not your 501(c)3 statis and so are you.

As for me, I say take every legal tax loophole you can get. I'm with Rothbard. "Make the loopholes big enough for a Mack Truck to drive through."

And keeping more of your own money, is very different from taking blood money that the government stole from other people.

And about the comment about "people shouldn't care about tax exempt statis." Well, frnakly, you really shouldn't care what the people who donate to you care about except that you're using the money they gave you wisely. If by being 501(c)3 you can get 10 people or 100 people out of the government schools each year instead of 3 or 4 then you should quit picking about -- in reality what ammounts to as nothing. 

If you don't want the statis, at least give me some "real" reasons -- instead of this fluff about not using the system and nose-in-the-air "well I don't want your money if you're only doing it for tax purposes."

Tracy

[cathleeninnh]

When you exploit the loopholes you are gaming the system just like the lobbyists. Gaming the system is what makes the tax policy unfair and corrupt.

For most of us there is a balancing act. We want to survive, thrive, sleep with a clear conscience, and stay out of jail (most?.. well many).

Find your path but dont rave at us for choosing one that doesn't support corrupt practices.

Cathleen

[AlanM]

Tracy,
I see it as a matter of do we worry about what a corrupt system says, or do we lead the way to Freedom. If there were no tax deductions available for contributions would you stop making contributions? If so, why? Dave's situation shows how when one utilizes the system, one gets locked in. His options got limited because he took an available tax break. Don't you suppose this is how the system is designed? It is designed to get you dependent on certain aspects of it. I say to hell with the system. I will make my choices independently.

[Michael Fisher]

501c3 status would probably mean we cannot give scholarships for homeschooling and we would need to give scholarships only to "poor" people, rather than giving them as mere incentives to any type of person, which is the original purpose of the fund.? We will also be prevented from saying anything the government doesn't like.

Exploiting portions of the tax code in order to gain charitable revenue for the "greater good" is utilitarianism and machiavellianism in my eyes, and amounts to an indirect government subsidy.

If we remain a small organization because we refuse to violate our principles, then so be it.? I will not partner with the government.? I will not violate my principles, not even for the greater good of freedom, and not even to save my own life.

[Kat Kanning]

If only we had thousands like Mike...

[president]

I will not partner with the government.  I will not violate my principles, not even for the greater good of freedom, and not even to save my own life.

When are you going to stop paying taxes?

[Kat Kanning]

   You're really good at pointing out our inconsistencies.

[Michael Fisher]

I will not partner with the government.? I will not violate my principles, not even for the greater good of freedom, and not even to save my own life.

When are you going to stop paying taxes?

Good point. ?It's good to have president here to keep us in line. ?

I haven't had to pay taxes in a year because of the startup business, but I want to stop filing immediately. ?I'm not sure if my wife will stay with me when I do, so hopefully I can gain her support soon. ?I can't stop my part-time employer from withholding taxes, social security, or medicare. ?Nor can I stop my wife from paying property taxes on her house.

[tracysaboe]

Find your path but dont rave at us for choosing one that doesn't support corrupt practices.

Figuring out how to keep more of your own money is not corrupt at all. 2ndly, I've donated and lobbied for others to donate to this organization myself, so don't be sitting their telling me I don't have a right to an oppinion. The more people we can get out of government schools the better, and if we can make 3 times as much money from being tax excempt that's 3 times more people we can get out of the system.

I will not partner with the government.  I will not violate my principles, not even for the greater good of freedom, and not even to save my own life.

When are you going to stop paying taxes?

That was basically my point. You're already in the system.

And no, exploiting tax loopholes so you can keep more of your money, is vastly different from the lobbiest who lobbies for more laws and protectionism, and government subsidies.

Again, you're sounding like a bunch of raving liberals.

501c3 status would probably mean we cannot give scholarships for homeschooling and we would need to give scholarships only to "poor" people, rather than giving them as mere incentives to any type of person, which is the original purpose of the fund.  We will also be prevented from saying anything the government doesn't like.

Now THAT is a valid reason. I can stand behind that, if you honestly believe that those strings aren't worth all the extra money you'd get. If the entire mission of the organization is voided by being 501c3 statis, then I agree you don't want it.

I just get sick of all this meaningless idealistic pandering. Not that ideals aren't important -- but you're in the corrupt system already. Either you pay taxes or you don't. Figuring out how to keep more of your own money isn't supporting this system, and it's far better from paying into it and supporting it.

Tracy

[Michael Fisher]

I just get sick of all this meaningless idealistic pandering. Not that ideals aren't important -- but you're in the corrupt system already. Either you pay taxes or you don't. Figuring out how to keep more of your own money isn't supporting this system, and it's far better from paying into it and supporting it.

Tracy

With all due respect, I will live by my principles as much as possible, with the goal of living by these principles as an absolute.? Yes, that may seem strange at times, but that is my decision.? The practical results of our principles may seem strange at times, but that's something all libertarians must learn to accept, and each of us has a different set of principles in addition to ZAP.