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Nonprofit Law/Not for profit vs nonprofit benefits

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Question
I'm interested in starting either a non or notfor profit organization in Washington state. My quandary is, can I offer some tangible benefit to "volunteers" as they are not allowed any tax benefit for their time. My idea is to offer insurance of some sort to those who give their time, possibly having that be a benefit to membership which would place stipulations on thei minimum contribution. Does a designation of either non or not for profit allow for this and if so would having part or all of the insurance premiums donated have any bearing on its legality or the ability for the charity to operate under tax exempt status?

Answer
Volunteers may be reimbursed for expenses, but if workers are offered tangible benefits, that is considered compensation that is taxable. See, for example, http://pages.citebite.com/r8v8l8p8pdin
which is a newspaper story describing a situation when the State determined that organizations that promised "volunteers" gifts over the value of $50 per quarter were subject to state wage regulations for employees. That was an Oregon case but other state laws are similar. That case was about a sports foundation's "volunteers" being promised a season pass if they work roughly two dozen days helping put on races at the ski area.

But, the IRS does allow 501(c)(3) organizations to give someone compensation just so it is not more than what  is reasonable. Starting on pdf page 10 of www.irs.gov/pub/irs-tege/eotopici93.pdf the IRS discusses many of the factors it would look at to decide whether a salary is reasonable.

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic

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I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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