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    #1

    Cemetery Fund

    The directors of a small cemetery association have filed the application for 501(c) status but have elected not to pay the IRS user fee. The user fee is more than annual donations for most years. Accordingly, the IRS has suspended approval and will reject the application.

    The granting of 501(c) status would have insured deductibility as an itemized deduction for all amounts donated.

    Does it follow that all donations are non-deductible, or does it mean that the deductibility is simply not guaranteed?
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    #2
    Means that the Service has the option of disallowing the deduction in a taxpayer examination. Everything is negotiable!

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      #3
      Undetermined

      Thanks for responding, jimm.

      Since the user fee was to cover "evaluation" then it follows that there was no evaluation. That means the cemetery association was not found to be deductible on its own merits. But if there was no evaluation, it also means they did not find anything lacking in its merits either, right?

      By the way, I am the Treasurer. That's what happens when you get into taxes and accounting -- everyone who knows you wants you to be "Treasurer" of something, usually with no compensation.

      Comment

        #4
        Two points.

        1. The letter of approval from the IRS does not grant anything. It is the IRS equivalent of a CPA's audit cover letter. (We looked at the info we received and it seems OK?) If an individual has knowledge that an organization is not operating as a qualified organization then contributions are not deductible regardless of the letter.

        2. See page 1 of the instructions for form 1023. If annual gross receipts are normally less than $5,000 1023 is not required.

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          #5
          Color me confused ...

          I thought that cemetery associations were 501(c)(13) organizations and that contributions were only deductible for 501(c)(3) organizations.

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            #6
            Non-Profit

            Don, cemetery associations are in fact 501(c)(13) orgs. When we applied on Form 1023, we had to designate which of the 501(c) family we were applying under.

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